Press release 10 April 2006

CHEMICAL INDUSTRY FEDERATION OF FINLAND
Press Release

MODEST GROWTH IN FINNISH CHEMICAL INDUSTRY, DESPITE HARD YEAR 2005

Production in the Finnish chemical industry increased in 2005 a little more than 1%. This year the growth of the Finnish chemical industry will accelerate modestly, as the industry is recovering from the major labour market problems in the pulp and paper industry of 2005.

Even a modest growth in 2005 is a surprise

Production in the Finnish chemical industry increased modestly in 2005, a little more than 1%. Year 2005 included a labour dispute in the pulp and paper industry, the main customer of the chemical industry. This added with a maintenance shutdown in the oil refining industry, even a modest growth can be considered as a surprise.

According to the Business Climate Survey of EK (Confederation of Finnish Industries), the expectations of the Finnish chemical industry deteriorated during winter 2006. Although it was one of the most pessimistic sectors of the Finnish industry, the chemical industry companies expect their production growth to accelerate. Employment in the sector has declined but now the expectations are neutral.

Basic chemicals weak, even after production delays

The Finnish production of basic chemicals has recovered slowly from the labour dispute in the pulp and paper industry, its main customer, in summer 2005. The maintenance shutdown in the oil refining industry in autumn 2005 cut production of some petrochemicals. These production hindrances left behind, one could have expected strong production growth in the Finnish basic chemicals industry. Still, the production growth was weak during the last few months of 2005. In spite of relatively weak development, the pulp and paper industry has succeeded in passing on increasing production costs to chemical prises, so the market situation is relatively good.

Growing demand for chemical products

The decline in production of chemical products ended in 2005, although the yearly average production was still lower than in 2004. Year 2005 was positive in almost all sub-sectors of chemical products and the outlook looks good in both domestic and export markets. Building construction was on a solid growth path until the end of 2005. In spite of some contradictory data, there seems to be a continuing growth trend in paint and colouring materials. However, the strongest phase of growth in exports seems to be over in paints, since more and more of the growing paint demand in Russia is satisfied by local suppliers.

Demand outlook for plastic industry products still positive, after decline

Production in the Finnish plastic products industry has declined since autumn 2005. Until that the growth rate had been rapid. In January 2006 the production volume in the Finnish plastic products industry was about 10% below the production level of summer 2005. However, latest data indicates that the demand for most plastic industry products is still quite strong.

The outlook is based on the material of the Finnish Outlook dated March 24th, 2006.

Further information:

Chemical Industry Federation of Finland

Mr Kari Teppola
Tel. +358 9 1728 4315
kari.teppola@plastics.fi

Mr Pasi Ahde
Tel. + 358 9 1728 4307
pasi.ahde@chemind.fi

www.chemind.fi

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