25 March 2002 18:15 [Source: ICIS news]
SAN ANTONIO, Texas (CNI)--Sanford Bernstein analyst Graham Copley said Monday he expects to see additional US chemical bankruptcy filings and warned the industry against placing too much stock in the talk of a rebound.
Answering questions from the press following his keynote address to the 27th annual International Petrochemical Conference (IPC), Copley downplayed the optimism that seems to be sweeping the industry as the US economy turns around.
He said: "This rally will put an extra charge in the life support machine right now but I think we will see more Chapter 11 filings."
The press conference followed a presentation in which Copley painted a dark picture of the US industry, charging it has lost its competitive advantage and urging companies to invest in radical product research and development.
Copley said that it had not been his intention to dampen the spirits of IPC attendees. As a financial analyst, however, he said he wants to do anything he can "to discourage these guys from building stuff."
During his presentation, Copley emphasised the shifting balance of trade in chemical products and the impact of an aggressive customer base that uses imports to keep prices low from US producers.
He said one major US home products supplier now maintains a "wall of shame" where it posts photos of managers who have agreed to price increases from suppliers.
Copley said: "Higher pricing in the US is attracting imports."
He also criticised the idea of investing in chemical stocks, following a theme he has offered at other conferences.
Citing the impact of natural gas costs, Copley said that many US plants "are simply not competitive" when those costs rise above certain levels.
Copley warned the industry against a focus on acquisitions but said later he encourages joint ventures "if they find ways to shut the capacity that needs to be closed."
Sponsored by the National Petrochemical & Refiners Association (NPRA), the IPC runs through Tuesday.
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