A note from Goldman Sachs on the European chemical sector from mid-week.
![eur Goldman Sachs 30 September 2022](https://images.forexlive.com/images/eur%20Goldman%20Sachs%2030%20September%202022_id_eb7c8e7b-a068-440b-a0b3-8eed4124938b_original.jpg)
Some points:
- We... now expect a protracted period (>2 years) of lower production for European chemicals on the back of the region's energy crisis.
- We see up to 40% of Europe's chemical industry (petrochemicals and basic inorganics) at risk of permanent rationalisation unless a sufficient economic assistance package is introduced, or natural gas prices fall to/below c.f70/MWh.
- If chemical assets in Europe are forced to close, we would expect a sharp rise in import requirements to meet an inelastic global supply base and drive inflation over the mid-term.
But the implications of the energy crisis are much wider than one sector.
- Including all materials-based industries currently curtailing output due to high energy prices (chemicals, glass, paper, steel, ceramics, cement etc) and the downstream "value add': we find €1.6tn sales, 5.1% European workforce (c.11mn jobs) and 7.9% of European IP exposed to deindustrialisation risks.
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This is ugly stuff.