Lingering effects of the pandemic, Putin’s invasion of Ukraine, energy shortages and raised prices. You might think that it’s all doom and gloom when it comes to European economy right now. At least this is how it’s portrayed by a large part of the chemical industry.
Sure… some actors are suffering, but not all. Especially not the chemical producers — they’re actually doing fine, despite all that’s happening in Europe.
When reading the quarterly reports of some of the largest and most influential European chemical companies, it is clear that profits are in fact bigger than expected and according to the reports the future is looking bright.
EU chemical producers report increased sales
The German chemical producer BASF writes in its second quarterly report for 2022 that due to “the very positive business development in the first half of 2022”, they now expect sales to grow to as much as €89 billion this year (compared to the previous forecast of up to €77 billion).
BASF even sees openings despite the current economic situation, stating that “opportunities could arise from continued high margins, even in the case of an economic slowdown”.
Likewise, Bayer states in its Q2 report that, following the positive development of their business in the first half of 2022, they remain optimistic for the remainder of the year as they are “only marginally impacted by the war” and “do not currently see any material financial impact in full-year 2022”.
“We achieved the second-highest half-year earnings performance in the history of Umicore”
Umicore, another European chemical producer, states the following in its Q2 report: “In a market environment characterized by severe external challenges, we achieved the second-highest half-year earnings performance in the history of Umicore, which clearly demonstrates the resilience and strong position of our businesses”.
Sounds like the European chemical industry is thriving and predicting a bright future — the companies even state in their reports that gas shortages and the war in Ukraine will not affect their businesses in any significant way.
But incidentally, this positive outlook is not communicated in the EU policy world right now. As matter of fact, quite the opposite is being heard around the halls and meeting rooms in Brussels.
Why you wonder? Well, such a difficult economic situation would play right into the hands of actors trying to stall upcoming chemical regulations. Delaying regulations is a well-proven negotiation tactic, which we’ve seen many times before.
The crisis will be over before REACH affects industry
The current EU Commission — led by President Ursula von der Leyen — proudly presented the Green Deal at the beginning of the election cycle. The Green Deal has been the guiding light for years now and acted as the main indicator of success. But what concrete changes is it actually leading to?
“REACH will not have any short-term effect on the economy of the chemical industry”
Such an overarching initiative must be converted into strategies — such as the Chemicals Strategy for Sustainability — that ultimately end up in concrete regulatory changes. For chemicals, the revision of REACH is the key in this aspect as it would stand as a major legacy of this EU Commission and change the way we approach chemicals in Europe.
So, the strong voices in the chemical industry do what they can to stop this from happening. They refer to the current instability created by Putin and cry wolf.
But one has nothing to do with the other. In fact, the possible impacts of revising REACH will not be seen now during the high inflation, energy crisis, or even the war in Ukraine. The final version of REACH 2.0 will — at the earliest(!) — be presented mid-2024, but it is more likely that the negotiations between the Commission, Council, and Parliament will drag on and that it will be launched even later.
According to the Commission, the proposed regulations will also be implemented with a stepwise approach, which means it will take even longer for the industry to be affected by the changes.
Postponing negotiations on the revision of REACH will not have any short-term effect on the economy of the chemical industry — nor for the better or the worse.
By delaying REACH 2.0, the only thing they would accomplish is to undermine the von der Leyen Commission and create even further lack of predictability in an already uncertain situation.
We’ve read the reports — you can do it too. Here are the Q2 reports from the largest European chemical producers:
