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The Indian chemical industry is well-positioned to benefit from the ongoing challenges faced by Europe's chemical sector, according to a report by B&K Securities.
The report noted that the high operating costs in the European Union (EU27) have made production less competitive, creating a window of opportunity for Indian chemical companies to expand their presence in the region. However, the report also added that this opportunity comes with its own set of challenges, particularly from China and weakening demand in Europe. It said "EU's struggles present Indian chemical companies with an opportunity to gain market share; however, it faces hurdles such as Chinese Predatory Pricing - which undermines Indian competitiveness". China remains a strong competitor in the global chemical market, and its influence on pricing often affects the competitiveness of Indian exports. Chinese predatory pricing continues to be a major hurdle for Indian chemical manufacturers trying to increase their market share in the EU. Adding to the difficulty is the sluggish demand environment in Europe. The latest update from the European Chemical Industry Council (CEFIC) shows a weak start to 2025. EU27 chemical output is expected to grow by less than 0.5 per cent this year, compared to 2.5 per cent growth in 2024. One of the main reasons behind this slowdown is the high gas prices in Europe, which are more than 3.3 times higher than in the United States. This has weakened the region's manufacturing competitiveness and impacted chemical production. Despite these challenges, India remains an important trading partner for the EU27. It ranks fifth in terms of chemical exports to the region, with a 2.0 per cent share worth around Euro 11.9 billion. In comparison, EU27 exports to India stand at Euro 6.0 billion. While Europe's struggles offer Indian companies a chance to step in and fill the gap, the path ahead will depend on two key factors, stabilising demand in the EU and dealing with pricing pressures from China. The report mentioned that a sustained recovery in European demand is essential for Indian chemical exports to grow in the long run. Until then, Indian companies may find it difficult to fully capitalise on the situation despite having a favourable position in the global market. (ANI)
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