Britain’s chemical industry has seen a fall in activity but is still achieving growth.

“With energy prices increasing by at least 500% for many companies over the past 12 months, raw material costs rising by an average 30% and shipping delays showing little sign of easing, these are the most challenging times in recent memory for UK chemical businesses.  It is perhaps remarkable then that the industry continues to show some growth – a tribute to the fantastic performance delivered by every worker in our sector, right across the UK,” Steve Elliott, Chief Executive, Chemical Industries Association (CIA) of UK, said while publishing the full results of Q42021 survey.

Highlighting the survey findings, the Association’s Head of Economics, Tom Warren said “Over 95% of respondents experienced an increase in raw material costs in Q4, with 79% expecting that raw material costs will continue to rise through Q1 2022.

He continued: “89% of respondents experienced an increase in energy costs in Q4, 71% expect them to continue rising through Q1 2022. The costs for a trade-intensive sector are also escalating, with “74% of respondents reporting that the cost of importing increased in Q4 2021 while 67% reported increases in the cost of exporting – a situation not expected to improve in Q1 2022”.

Elliott concluded “the scale and cumulative impact of these rising costs will inevitably put pressure on investment decisions for UK chemical businesses, many of which are headquartered overseas. Whilst it’s true that many of these price rises are also being felt around the world, we do urge the Government to act now to address costs which are within its control.  The coming weeks will confirm if that can be achieved in the regulatory area as we reconsider the current design of UK REACH and we believe a similar approach should be taken to address increasingly uncompetitive gas, electricity and carbon costs for one of the UK’s critical manufacturing industries”.

However, the industry is optimistic that there will be strong sales and production growth in 2022, driven largely by exports, while business investment, employee numbers and R&D spend are all set for large increases. However, alongside this will be continued rises in the cost of energy, raw materials, finished goods and trade.