CBA survey reveals the worst

EMPTY QUARTER

TRENDS • THE COVID-19 PANDEMIC HAS HIT DISTRIBUTORS HARD. CBA’S QUARTERLY SUPPLY CHAIN TRENDS SURVEY HAS THE FIGURES, AND A WARNING THAT THINGS COULD GET WORSE

CHEMICAL DISTRIBUTORS AND traders in the UK have suffered a major decline in sales and orderbooks over the past three months. That much comes as no surprise, given the disruption caused by the Covid-19 lockdown and the resulting collapse in consumer demand, but the quarterly Supply Chain Trends Survey from the UK Chemical Business Association (CBA), covering April to June, gives a clear indication of the extent of the downturn.

“This Survey shows the impact of the Covid-19 pandemic with order books and

CBA CHIEF EXECUTIVE PETER NEWPORT (ABOVE)

IS WORRIED ABOUT THE NEGATIVE TRENDS IN current sales showing more than a 60 per cent negative swing since our last survey in March,” says CBA Chief Executive Peter Newport. “Worryingly, trends in employment have turned negative for the fi rst time since we started running these surveys eight years ago.”

Even more worryingly, this could just be the start of an even more serious period, as Newport adds: “Emerging from the Covid-19 lockdown, an imminent and severe economic downturn, plus the increasing likelihood of a ‘No Deal Brexit’ represents a perfect storm for the UK’s chemical supply chain and are beginning to be refl ected in our survey.”

HERE’S THE RESULTS CBA’s Supply Chain Trends Survey asks companies to provide information on order books, 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.

In terms of orderbooks, the June survey shows a negative balance of -33 per cent, a 66 per cent adverse swing since the last survey in March 2020, when the same fi gure was a positive balance of +33 per cent.

Respondents also compare their current sales volumes with the preceding three months and indicate their expectations for the next three months. Current sales volumes have turned sharply negative at -31 per cent. In March, members companies reported a positive balance of +32 per cent, representing a signifi cant decline of 63 per cent in business sentiment. The outlook for the next three months remains positive at +9 per cent, better than the March fi gure of +5 per cent.

Companies compare their current sales margins with the preceding three months and also forecast their trend over the coming three months. Current sales margins are now barely positive at +4 per cent, a marginal improvement on the last survey when margins were neutral at 0 per cent. The outlook for future sales margins remains negative at -7 per cent, the same fi gure as reported in the March survey.

Member companies are asked if their employment levels will be higher, lower or remain the same over the next three months. For the fi rst time in the eight years that CBA has been conducting these surveys, member companies have reported a negative trend in employment of -8 per cent, a refl ection of the impact of Covid-19 and the future uncertainty in levels of business activity.

CBA’s membership includes distributors, traders, warehouse operators and others in the logistics and supply chain. Most of its members are small and medium-sized enterprises (SMEs), representing the main interface between the chemical industry and the thousands of downstream users in the UK. www.chemical.org.uk

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