NPRA '02: Chem industry recovery might not be sustainable

25 March 2002 21:46  [Source: ICIS news]

SAN ANTONIO, Texas (CNI)--Anticipation of a chemicals market recovery is being clouded by concerns that newly boosted prices and demand might not be sustainable, an industry observer said here Monday.

An industry analyst attending the 27th annual International Petrochemicals Conference (IPC) here told CNI today - on condition the analyst not be identified - that recent improvements in chemicals pricing and demand do not necessarily signal a turnaround and may be short-lived.

"The question is," he said, "is how much of the price/demand increase we're seeing is anything more than short-term." The industry observer suggested that price and demand improvements now apparent in some sectors of the industry might be nothing more than "pre price increase" buying and re-inventory purchases by customers.

This clouds the issue, he said, of determining just how much demand is out there.

There are a number of indicators suggesting that 2002 will slowly get better, he noted. "But the US chemical industry," he added, "is in a bit of denial now in terms of their long-term competitiveness against other regions of the world that are feedstock advantaged."

Even new product technology - such as the single wall carbon nanotube (SWNT) technology advanced at this IPC by former Lyondell chief executive Bob Gower - may not be enough to stem the flow of US chemicals assets to other regions of the world, he said.

"There's no question but that the US chemicals industry is under spent on research and development [R&D] of new products," the analyst said, noting that "It can take 5-10 years of development for a new product to reach the marketplace."

"There is no immediate fix" for what ails the US chemicals industry, he said.

Sponsored by the National Petrochemical & Refiners Association (NPRA), the IPC concludes here on Tuesday.

By: Joe Kamalick
+1 713 525 2653

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