A note from Goldman Sachs on the European chemical sector from mid-week.

eur Goldman Sachs 30 September 2022

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.


This is ugly stuff.