Manufacturing & Supply Chain

Improving outlook for UK chemicals industry

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Improving outlook for UK chemicals industry

Improving outlook for UK chemicals industry
March 10
09:47 2023
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The latest quarterly survey of Chemical Business Association (CBA) member companies has revealed insight into the sector, with order books, current sales, and margins showing some improvement*. Despite supply chain constraints remaining a concern, the business outlook for the next three months is beginning to look a little more positive.

In addition to obtaining information on order books, sales, sales margins, and employment trends, the survey also focuses on the impact of key supply chain issues on members of the Association.

The CBA has been the voice of the chemical supply chain industry for the past 100 years and represents distributors, manufacturers, traders, warehouse operators, logistics and transport companies, many of whom are the main industry interface providing products and services to thousands of downstream chemical users.

Although matters have generally improved since the previous quarter, 46% of respondents said they have experienced rapidly escalating shipping costs, with around 11% revealing they have experienced shortages of shipping containers. This is however, down from 62% and 36%, respectively.

Approximately 30% of companies reported issues with haulage and capacity in both the UK and the EU and almost half, 46% of respondents, stated that they are still facing challenges as a result of the Ukraine/Russia conflict.

In addition to supply chain issues, the survey asked companies to provide information on their order books, sales, sales margins, and employment.

Members were asked if their order books were better, worse, or the same as the previous three months. The latest survey showed an order book balance of +34% – a substantial increase from the +15% reported in September 2022.

According to the survey, sales volumes had increased from +18% (September 2022) to +31%, with the forecast for January to March 2023 looking positive at +28%. Sales margins also improved slightly, showing a positive balance of +22% compared to the +12% reported in the previous quarter. Sales margins are forecast to stage a slim recovery in the next three months to +13%.

Employment and training showed a sharp improvement to +47% (+38% in the third quarter of 2022), while member companies also indicated a positive investment in training, with current training levels at +28% and future training levels projected to reach +42%.

Tim Doggett, CBA’s Chief Executive, said: “The survey does appear to indicate the outlook is improving, albeit there is hesitancy due to macro-economic factors such as the Ukraine war. The chemical supply chain industry has always been resilient and although many of our members are still facing serious supply chain constraints, the impact of these disruptions has lessened in recent months.”

The CBA’s Supply Chain Trends Survey represents the independent chemical supply chain. It has been published since 2003 and aims to provide a snapshot of short-term trends in the UK’s chemical supply chain.

The chemicals and pharmaceutical industry is the UK’s second biggest industry and is the nation’s number one manufacturing exporter, and CBA members contribute more than £3 billion to the UK economy and employ over 10,000 people. Chemicals are vital for society and with more than 95% of all manufactured products containing inputs from the chemicals industry, CBA members handle around 6.75 million tonnes and make over 2.5 million deliveries of chemicals each year. Health and safety, people and sustainability are at the heart of the CBA, and it leads and participates in many initiatives such as the ‘Responsible Care Programme’ which it has been part of since 1993.

*The survey sample polled 32 members.

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