THE HAGUE - Any quick return to record Dutch chemical production volumes and sales is unlikely given the uncertain outlook, a sector association said on Thursday.

Describing 2009 as a hard year for the chemical industry in the Netherlands, Dutch chemical industry association VNCI said production fell an estimated 5 percent and sales by 25 percent compared with 2008, slipping back to 2003 levels.

If I look at the figures from the second half of the year then they are hopeful, but the situation is still uncertain, VNCI chairman Jan Zuidam said in a statement.

2010 is a transition year which will make clear whether the market will pick up and expand on the government-initiated economy recovery.

A full recovery depends on how consumers respond, the impact of governments ending subsidies for industries such as the automobile sector, how quickly governments move to reduce budget deficits and how the building industry develops after current large projects are completed, Zuidam said.

Zuidam said he hoped production volumes in 2010 would remain about the same as in the fourth quarter of 2009, but would not quickly return to record levels seen in 2007, while revenues of 50 billion euros ($75.6 billion) were also still a long way off.

Dutch paints maker Akzo Nobel (AKZO.AS) said in October it had seen signs of an improvement in emerging markets, but did not foresee a quick recovery as its markets remained tough.

Dutch peer DSM (DSMN.AS) said it had seen the bottom of the recession but forecast a bumpy road out, expecting fourth-quarter operating profit to fall from the previous quarter but rise year-on-year.


As the sector emerges from the recession, Dutch chemical production volumes in the second half of 2009 would be clearly higher than the first half, VNCI said.

Zuidam added the industry is still working on short-term, small orders, limiting the outlook for the sector, despite the fact that destocking has come to an end.

There is light at the end of the tunnel. But I don't know how long the tunnel is, Zuidam told reporters, but added that the downturn could last at least two to three years.

The VNCI said investment by chemical companies in factories and plants in the Netherlands was expected to fall by 5 percent in 2009 from the 2 billion euros invested in 2008. Investment is expected to fall a further 15 percent next year, it added.

This does not include investments in innovation.

Emission of CO2 and energy consumption by the Dutch chemical industry in 2009 fell by about 5 percent due to the lower production levels, VNCI said. ($1 = 0.6617 euro) (Reporting by Aaron Gray-Block; Editing by Dan Lalor and Simon Jessop)