Spain's chemical industry bucks the trend, growing 4.8% to 86.5 billion euros, while production is expected to grow 7.1%
The Spanish Federation of Chemical Companies (Feique) put out these statistics: In 2024, chemical sales in Spain are expected to rise 4.8% over 2023, amounting to 86.5 billion euros, whereas production is expected to rise 7.1% over 2023. Feique estimates that in 2025 the sale of chemicals in Spain is likely to rise further, by 4.2% when compared with the 2024 total, with the sales altogether going above 90 billion euros for the first time, and chemical production will increase by 3.2%. Compared with the other European countries, and particularly traditional economic powers like France, Germany, and Italy, Spain's chemical industry and macroeconomic data this year stand out impressively. However, industry insiders in Spain have indicated that there are still some issues in this country that must receive due attention and solution.
Recent communication about macroeconomic growth information has received positive responses on the chemical industry of Spain. The IMF recently raised the forecast for Spanish GDP growth in 2024 to a 2.9% growth, which is up by 0.5% from 2.4% from a previous interested year-on-year 2% growth. For 2025, a forecast presumes an increase in GDP by 2.1%, thus consecutively outpacing Germany and France- the two largest economies in the eurozone. From the same IMF forecasts, Germany would have no growth at all while France would grow up to 1.1% in 2024.
In Spain, healthy macroeconomic data permeate well into the chemical industry. In 2024, strong domestic demand and a recovery in exports allow the industry to weather the storm better than its peers in other major eurozone economies.
In the post-COVID-19 period of instability, as global chemical prices soared, Spanish chemical sales increased sharply in 2021 and 2022, but as prices fell. Spanish chemical sales in 2023 were nearly 7% lower than in 2022, and production was 0.7% lower than in 2022. In 2024, the situation improved significantly, as Feique Director General Juan Lavater predicted in July. "Spanish chemical prices are recovering from their lows in 2023, and by the end of this year, average selling prices should reach pre-COVID levels, because domestic demand is strong and exports remain healthy," said Rawat. "In Spain, the production of basic chemicals is recovering strongly, which is important because this subcategory had the largest decline in production in 2023, down 11%, but it grew 8% year-on-year in the first seven months of this year. Almost all chemical sub-sectors are performing well, including paints, personal care products, and pharmaceuticals. Considering the economies of the countries around us, Spain's economy is a bit like a rocket.". .
However, Feique President Teresa Lasserro still said that the overall positive data of the Spanish chemical industry masked the poor performance of key sectors. While consumer chemicals, specialty chemicals and health care products are growing healthily, basic chemicals are still struggling with high energy costs, even if the Spanish basic chemicals industry is performing better than other European countries.
Lasserro pointed out that Spain's public support for the transformation of energy-intensive industries is too low compared with peers such as Germany or France, making the survival of the basic chemicals industry worse. In EU terms, this is called carbon emission rights fee compensation. Feique pointed out that the figure for Spain is expected to be only 300 million euros per year in 2024, far less than the billions of euros provided by neighboring countries. "Compared to the few countries that have established similar systems, the compensation for emissions costs in Spain is almost non-existent," said Lasserro. "The problem is that the production of basic chemicals or other similar energy-intensive industrial sectors is essential to maintaining the strategic autonomy of the Spanish economy. We need more competitive energy prices and accelerate the decarbonization process, which is the key to the future manufacturing economy of Spain and Europe.".
Lasserro said that compared with other European countries, Spain's chemical ventures will need an annual investment of 3 billion euros to attain the design target of decarbonization on the eve of 2025 and well into 2050. It is woefully inadequate that the forecast is chilled to allow such government support of 300 million euros annually for Spanish chemical industries under the association's auspices, with the recognition that decarbonization would be impossible if all efforts came from the private sector. Of the 3 billion euros in annual assistance-according to the association-some 1.7 billion euros will go towards constructing and remodeling chemical plants, 850 million euros go to operational adjustments during technological transition, and 450 million euros go as overhauls to accommodate newly imposed regulations. This is the only way in which Spain's chemical industry can achieve the target of 12.4 million tons per year emission cuts of carbon dioxide by 2050.
In addition, Feique said that the domestic situation in Spain also has a negative impact on the Spanish chemical industry. In 2024, Spain's healthy macroeconomic and chemical industry data came against the backdrop of a political dilemma. Spain has not been immune to the current strong polarization trend in Europe. Since July 2023, Pedro Sánchez's cabinet has been unable to pass the 2025 fiscal budget because the ruling center-left government can only hold a minority of seats in parliament.
Although the cabinet can extend this year's budget to next year under Spanish law, if the cabinet cannot pass a new budget to fulfill its recent election promises, its strength will be greatly weakened. And for the Spanish chemical industry, which needs investment and transformation funds and urgently needs certain policies, the current political situation is certainly not a good thing.
