UpdateEurope chems nervy as stocks plunge

22 January 2008 17:49  [Source: ICIS news]

(releads and updates stock prices in paragraphs 3-4)

 

By Lucy Craymer

 

Europe chemicals down on global recession fearLONDON (ICIS news)--Europe’s chemical producers were waiting to see what impact share prices would have on their markets as stocks clawed back from earlier losses on Tuesday after the US Federal Reserve cut interest rates.

 

The Dow Jones Euro Stoxx Chemicals index recovered from earlier trading and had climbed 1.03% after a drop of 3.3% at 08:46 GMT. The chemical index fell by more 5% on Monday.

 

Among Europe’s top chemicals producers, Bayer was down 0.69% compared with the previouos day's close and Akzo Nobel lost 1.03% in value but BASF bucked the trend and was up 0.85%.

 

Germany’s DAX index was trading down 0.31% but the London’s FTSE 100 was up 2.9%, following a 5.5% loss at Monday’s close.

 

The Fed cut interest rates by three-quarters of a percentage point to 3.5% in an attempt to booster the economy.

 

“It looks dangerous... [if we] cannot separate the US problems from Europe, we will see a fall in demand... hopefully we can delay this to the second half of the year,” a European acrylonitrile-butadiene-styrene (ABS) producer said.

 

The producer expressed concern about market prospects for 2008, warning that talk of a recession was often a self-fulfilling prophecy.

 

But Europe's polymethyl methacrylate (PMMA) buyers and sellers argued that while key sectors were seeing diminishing returns, the consumer electronics market would continue to grow.

 

“We still want flatscreen TVs and that isn’t about to change,” a distributor argued.

 

Many European PMMA players saw the market as insulated from its foreign cousin and thought the European market was likely to prove more robust during the next year.

 

“We don't expect the market to crash. We took the blows before the storm,” an aromatics trader said

 

But a polyvinyl chloride (PVC) producer said fears of a recession greatly concerned the industry because the largest end-user for PVC was the construction industry.

 

For the moment, any downturn or nervousness in the US construction industry would have a limited effect given the current strength of eastern Europe as an emerging market, he added.

 

“Some customers are worried about a slowdown in the European economy on the back of what is happening in the States, particularly in the building sector,” said a phthalic anhydride producer.

 

“But downstream clients are still confident that the market will be healthy in spring and summer as long as the weather is good," added the producer.

 

Fears of a global recession and drops in crude prices have already resulted in premium unleaded gasoline prices in Europe reaching their lowest point since October 2007.

 

Early trading saw 10 ppm (parts per million) gasoline fall $16/tonne to $749/tonne (€516/tonne) FOB (free on boad) AR (Amsterdam, Rotterdam).

 

($1 = €0.69)

 

Adal Rafiq, Julia Meehan, Sam Weatherlake, Heidi Finch, Carl Roache, Peter Salisbury, Shelley Kerr, Charlie Shaw and Ed Cox contributed to this story

 


By: Lucy Craymer
+44 20 8652 3214



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