Dutch Chemical Industry on the Rise

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Researched by Industrial Info Resources (Sugar Land, Texas)--The first quarter of 2011 has shown encouraging figures for the Chemical Processing Industry (CPI) in the Netherlands. Statistics Netherlands' (CBS) (The Hague, Netherlands) figures for the first quarter of 2011 show that output grew almost 3% compared to the same period in 2010. In the first quarter, sales have increased 22% from the same period last year, which is attributed mainly to higher selling prices and, to a lesser extent, increased production. The CBS also reports that companies in the Chemical Industry have indicated that they tend to invest 73% more in 2011, compared to 2010, when investment dropped from €1.4 billion to €900 million ($1.98 billion to $1.27 billion). Planned investment is primarily in the areas of optimisation, research and development, efficiency improvement, and some deferred expansion investments.

Another positive for the industry is the selection of the Chemical Industry as one of the innovative top-sectors that are the focus of the Dutch government's National Reform Programme, under which €1.4 billion ($1.98 billion) will be allocated between nine key industrial sectors in the coming years. Currently, the Dutch Chemical Industry accounts for 25% of the country's total expenditure on development and innovation.

Whether 2011 turns out to be a better year than 2010 also depends on economic and geopolitical developments elsewhere in the world, according to Dutch Chemical Industry Association Chairman Werner Fuhrmann. These include the euro crisis, the after-effects of the Japanese earthquake and tsunami, inflation in China, and the turmoil in the Middle East. The chemical industry is primarily oriented toward exports, which makes it very sensitive to such developments, currency rate movements, and fluctuating oil and raw-material prices.

The Chemical Industry is the country's largest sector after the Food & Beverage Industry, with 400-plus chemical companies employing a total workforce of 66,000 employees. The Port of Rotterdam acts as the largest hub for raw materials for the Chemical Industry in Europe. As a consequence, the Netherlands has the largest per capita refining capacity in Europe: 3.7 tons per person per year. About three quarters of the chemical products produced in the Netherlands are exported, of which 75% goes to countries in Europe, while 25% is exported to countries elsewhere. In 2009, exports amounted to approximately €60 billion ($86.7 billion), more than 19% of all of the exports from the Netherlands.

The Dutch Chemicals Industry is known as a bulk producer of basic chemicals, with two-thirds of all chemical sales coming from this group. For some base chemicals, such as methyl tertiary-butyl ether, paraxylene and styrene, the Netherlands has the highest production volume of all Western European countries. The basic Chemical Industry in the Netherlands is concentrated in several clusters. For producers of basic chemicals, being part of a cluster offers advantages, such as receiving raw materials by pipeline from nearby suppliers, delivering finished products to nearby customers and sharing support functions. These factors are also the reason that a relatively high number of investment projects in the Chemical Industry are expansion projects at existing sites.

The vast majority of companies in the speciality chemicals sector are small to mid-size companies. Leading sectors include coatings, printing inks, flavours and fragrances, catalysts, adhesives, and pharmaceuticals and their intermediates.

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