Growth in the chemicals sector is forecast to continue in 2015, on the back of UK’s robust economic performance.
Market performance at a glance
- The UK chemicals sector has recorded growth in sales and exports in Q1 of 2015, despite the rather modest performance of the UK manufacturing sector in this period. Growth is forecast to continue in 2015, on the back of robust UK economic performance.
- While concerns remain in relation to energy and commodity costs, the sector benefits from high entry barriers. Therefore, the majority of chemicals businesses are well established, with stable profit margins and sufficient equity strength, despite high research and development expenditures.
- Only the petroleum subsector shows some weaknesses, as the market suffers from oversupply, leading to intense price competition while fixed costs are high.
- The average payment duration in the UK chemicals industry is 90 days. The number of protracted payments, non-payments and insolvency cases is very low, and it is expected that there will be no change in the coming months.
- Due to the general positive indicators, our underwriting stance for the British chemicals sector is currently relaxed.