A matter of chemistry: the trends of Italian chemical sector

You’ve heard it said a thousand times: in relationships it’s all about chemistry.

It is often considered a mysterious, overwhelming force that magically makes us attracted to another person.

Chemistry is the thing that in longer relationships makes compromises acceptable, those things you would never do for anyone else and that, from one day to the next, you find yourself doing for her or him.

In a relationship, everything is not always rosy, but chemistry is the thing that drives you to make up, binds you and makes your relationship easier.

Personally, I’ve always had an attraction to this industry: from the time I was a student all the way up to now, when I’m working on export solutions and internationalisation.

Italian chemical sector: market trends

2020 was a “not easy” year, as for many other sectors of Italian and global industry.

Chemical production in Italy, despite a significant setback, is holding up better than industry in general (-9.6% year-on-year in the first 10 months compared to -13.3%).

We are waiting for the official data for the first half of 2021, but the sector – recognised as essential – has not suffered any production stoppages and has operated with continuity, also thanks to a deep-rooted safety culture.

On the other hand, the unprecedented contraction in many customer sectors has inevitably affected demand for chemicals.

Demand is growing for all chemical products essential for health: oxygen, reagents and active pharmaceutical ingredients, disinfectants and products for personal and environmental hygiene.

Here, supply has been increased to maximum capacity and there have been several cases of conversion.  Safety requirements also drive demand for plastics, which are used not only for personal protective equipment but also to ensure optimal food storage conditions.

The summer months marked the start of a gradual recovery in demand, even from the customer sectors most affected by the health emergency. The recovery was lively in the construction sector, significant also in the automotive sector, and more sluggish in the textile and leather sector. The persistent weakness of the fashion system and of some specialisations typical of Made in Italy – together with a more restrictive lockdown – explain a trend of chemicals in Italy that is more negative than the European average (down only 3.6%) after 4 consecutive years in which national production had shown much stronger growth (+6% in 2015-19 compared to +1% in Europe).

After the collapse at the beginning of 2020, aggravated by logistical problems, Italian chemical exports experienced a decisive rebound in September with levels slightly higher than those before the pandemic (+1.4% in value compared to -6.8% in the first 9 months).

The main destination markets showed mixed trends: in addition to the boom in exports to China (+45.7%), significant progress was made in Germany (+10.3%), Poland (+10.1%), Turkey (+5.9%) and Spain (+4.7%), while France (-9.8%) and the United Kingdom (-8.0%) were still very negative.

Imports fell by 7.5% in value in the first nine months, although the recovery trend was more limited than for exports: the trade balance for the sector thus showed a moderate improvement.

In addition to fuelling Italian and European exports, the decisive Chinese recovery is also redirecting local production towards the domestic market, generating limited availability and upward pressure on prices for some intermediate products.

Looking ahead: growth forecasts

In any case, the sector remains one of the most solid from an economic-financial point of view: this is borne out by the low incidence of non-performing loans on bank loans in our industrial landscape (1.3% in September 2020 together with pharmaceuticals, compared to an industrial average of 7.9%).

In a framework full of uncertainties, there will be a partial recovery of chemicals in Italy in 2021.

During 2021, chemical production may return to expansion (+4.0%) without, however, fully covering the losses of 2020.

Looking to the future, there are many signs that make us think optimistically: however, courage and the desire to evolve will be needed, taking advantage of the help of technology and new digital solutions.

The world has already changed, and like a new or old love, if there is no chemistry, it becomes very difficult to survive.