The latest quarterly survey by the Chemical Business Association (CBA) reveals that while the UK chemical supply chain remains robust, growth appears to be stagnating. Key findings include a decline in order books, sales, and employment expectations. Despite some improvements in logistics disruptions, ongoing challenges such as rising road haulage costs and regulatory issues continue to impact the industry. The CBA emphasizes the need for urgent policy intervention to address these concerns and ensure the UK's competitiveness.

Stagnant Sales and Margins Highlight Industry Concerns

The survey highlights a concerning trend of stagnant sales and margins within the UK chemical supply chain. A significant portion of respondents reported no change in their order books, with only a small fraction noting improvements. This trend is reflected in both current and projected sales figures, indicating a potential slowdown in growth. Additionally, future margin expectations show signs of decline, with more companies anticipating worsening conditions.

In detail, the survey results reveal that 55% of respondents indicated that their order books remained unchanged, while just 18% saw improvements. Only 20% reported better sales over the past three months, marking a 15% downturn from the same period in 2023. Looking ahead, only 19% expect an improvement in sales for the first quarter of 2025, down from 34% in Q4 2023. Furthermore, 69% of respondents noted no change in sales margins, while 32% anticipate worse conditions in the coming months. These findings underscore the growing concern about the industry's ability to sustain growth amidst economic uncertainties.

Logistical Improvements Amidst Ongoing Challenges

While the survey points to some logistical improvements, persistent challenges remain. Fewer companies are experiencing disruptions related to the Red Sea and Suez Canal, and road haulage capacity issues have decreased significantly. However, escalating road haulage costs and regulatory hurdles, particularly those linked to Brexit, continue to pose obstacles. The CBA stresses the importance of addressing these issues to enhance the sector's resilience and competitiveness.

Specifically, the survey shows that 48% of respondents still face disruptions due to the Red Sea and Suez Canal, a notable reduction from 70% in Q4 2023. Similarly, only 3% reported ongoing road haulage capacity issues, compared to 22% in the final quarter of 2023. Despite these improvements, members highlighted ongoing challenges such as rising road haulage costs and unresolved regulatory issues, especially concerning UK REACH. Since December 2021, when DEFRA announced plans to explore a new model, meaningful progress has been lacking, leading to uncertainty and hindered trade and investment. The CBA remains committed to working with the government to find practical solutions that drive growth and resilience, ensuring the UK chemical supply chain remains competitive on the global stage.