OREANDA-NEWS. Fitch Ratings says the 2016 sector outlook for EMEA chemicals is stable due to lower oil-linked feedstock costs, the continuation of a weak euro and slowly recovering chemical product demand in the eurozone. These factors are forecast to aid earnings and margins for EMEA chemicals producers in 2016, despite low overall chemical prices.

Headwinds are expected to intensify in the medium term as a result of new capacity additions entering the market from 2017, as well as emerging market volatility, including the Chinese economic slowdown and recessions in Brazil and Russia impacting consumer goods and agro-chemical demand.

Rating Outlooks for integrated chemicals are generally Stable due to capex revisions, inflows from restructuring savings and divestments and a moderate pick-up in consumer end-markets. Pressure on ratings will come from aggressive M&A deals and unrealised divestments, high share buybacks and weakening margins on the back of lower chemical prices despite the impact of low feedstock costs.

Rating Outlooks for fertiliser producers are stable despite excess supply and slow-rising demand pressurising fertiliser prices, due to their positions on the lower end of global cost curves providing headroom to absorb price shocks, as well as weaker local currencies aiding costs versus dollar linked sales.