WP_Post Object ( [ID] => 29716 [post_author] => 34 [post_date] => 2020-10-27 07:43:30 [post_date_gmt] => 2020-10-27 07:43:30 [post_content] =>

The latest quarterly Supply Chain Trends survey, carried out by the UK’s Chemical Business Association (CBA) in early October, shows a surprising positive swing in orderbooks and sales expectations compared to the previous survey in June. On the other hand, margins are expected to be squeezed and employment prospects look gloomy.

Peter Newport, CBA’s chief executive, says: “This survey shows the volatility of the current market. CBA’s view of the bounce back is that it is caused by a combination of two factors. Firstly, a return to more or less normal working by most downstream sectors after the full national Covid-19 lockdown. Secondly, companies are stock building to prepare for a No Deal exit from the EU. This Brexit outcome has also resulted in the three-month outlook for sales margins declining by more than 25 per cent.”

CBA’s Supply Chain Trends survey asks companies to provide information on orderbooks, sales, sales margins and employment, on a ‘better–worse–same’ basis. To measure short-term trends, the analysis ignores responses answering ‘same’ and focuses on the positive or negative balance provided by the difference between the ‘better-worse’ responses.

RESULTS IN DETAIL

CBA members were asked if their orderbooks were better, worse, or the same than during the last three months. The October 2020 survey shows a balance of +20 per cent, representing a positive swing of 53 per cent in the three months since the last survey in June, when the corresponding figure was -33 per cent.

Similarly, respondents compared their current sales volumes with the preceding three months and indicated their expectations for the coming three months. Current sales volumes have bounced back into positive territory, showing a balance of +25 per cent, a positive swing of 56 per cent since the last survey in June 2020. The outlook for the next three months is subdued, though, although it remains positive at +5 per cent, slightly lower than the figure reported in June.

Respondents compared current sales margins with the preceding three months and also forecast the trend over the coming three months. Current sales margins have turned negative at -6 per cent. Future sales margins are expected to accelerate this trend, having also turned negative (-32 per cent), a fall of 25 per cent since the last survey in June.

Finally, CBA members were asked if they expect employment levels to be higher, lower or remain the same over the coming three months. In June 2020, for the first time since CBA began conducting the survey in 2013, respondents reported a negative trends in employment prospects (-8 per cent); the latest survey sees this trend strengthening to a negative outlook of -11 per cent.

CBA represents the independent chemical supply chain, with a membership that includes distributors, traders, warehouse operators and logistics and transport companies; most of its members are small and medium-sized enterprises. Its distributor members have a combined annual turnover of £2.75bn and employ more than 8,700 people; its logistics member companies handle more than 4m tonnes of chemicals every year.

www.chemical.org.uk

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