Moody, the credit rating agency, released its outlook for the chemicals markets of Europe, the Middle East, Africa and North America recently. While the forecast is relatively positive, demand growth will slow due to the generally low growth rate of consumer goods.

Moody expects a stable outlook for the global chemical industry in 2019, with the industry (EBITDA) rising 3 to 4 percent from 2018.The forecast, however, depends on whether China's economic growth remains stable and that Europe and North America do not suffer a deeper recession.Moody's cited political risk and trade tensions as the biggest factors changing the outlook for the chemical industry.

Moody said the outlook for european-based industrialisation in 2019 was less optimistic, as domestic and export demand growth was facing headwinds.The European commission for chemical industry (Cefic) expects European chemical production to fall 0.5 percent in 2018 and increase slightly by 0.5 percent in 2019.Demand for chemicals in Europe's automotive, agricultural and construction sectors is likely to grow in 2019 compared with 2018.

Moody sees slower demand growth in North America and Europe, more importantly, weaker demand growth in China.The slowdown in commodity markets is already evident, but China's demand for specialty chemicals remains stable.Lower oil prices will allow margins for specialty chemicals to slowly rise in 2019.Because the fall in commodity prices will gradually pass down the industrial chain.Bulk chemicals may underperform in most sectors, but profitability is expected to remain healthy.

Trade tensions were the top concern for most executives in the chemical industry in their analysis of the outlook for 2019.Consumers and investors are more cautious than in the past, and confidence among chemical companies has been dented.Moody points out that a trade war between China and the us has so far had only a slight negative impact on costs, with ethanol and cellulosic fibres being the most affected.Moody expects north American ethylene cash margins to fall to between $0.25 and $0.30 a pound by the end of 2019 as new cracking units from Sasol, Siemic and Lotte come on stream.

European chemical production margins will fall, Moody said.Polypropylene supply will remain tight in 2019 until new capacity is put into operation in 2020.The butadiene market is growing as new capacity comes on stream in Asia.Moody expects the U.S. ethane cracking facility to generate new butadiene supplies, although this is due to the accumulation of new capacity expansion.Europe's chlor-alkali production capacity grew more than expected, and imports will fall as a result, moody's said.The U.S. chlor-alkali market is likely to weaken slightly.