17 June 2008 13:46 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS news)--You wouldn’t win any prizes if asked to identify investment analysts' current top picks in chemicals.
Not surprisingly they are defensive, favouring the more specialty-oriented stocks over those exposed to commodities or the oil barrel, or to growing production capacities in the ?xml:namespace>
The business of producing many chemicals has got a lot tougher. This pressure, however, also marries with longer term trends that have pushed some of the major players towards higher added-value markets or to segments offering the prospect of steadier growth.
Bulk chemicals tend to grow fastest in emerging, rapidly expanding economies. Specialties can do better when industries and services are well developed.
Shifting demographics suggest that in some countries consumer and household chemicals will, over the next few years, grow the strongest.
So where are producers best positioned for growth, and to make money?
The giants in this business, if not integrated back to the well-head, tend to favour more sophisticated chemicals, or at least those linked much more clearly with relatively sophisticated end-use markets. Think coatings, construction chemicals, materials for electronics or, bio-products.
The chemicals world is still full of opportunity, it is just that those opportunities are becoming a touch more difficult to find.
The European industry has been grappling with such issues for years. Is
The trade group Cefic (European Chemical Industry Council), pointed out at a recent high level group (HLG) meeting on trade and competitiveness with other regions that
But the EU’s record has hardly been great in recent years in creating effective regulation for the sector and for avoiding market interventionism, particularly as it has pushed its sustainable development agenda. Other regions are gaining ground.
Cefic maintains, for instance, that the chemicals trade data indicate a significant loss in competitiveness in Europe in recent years although European competitive advantage still exists in segments like specialties, polymers and consumer chemicals.
The response is relatively clear: Battle to maintain competitiveness within the European market while grasping opportunities elsewhere.
A BASF presentation at this latest HLG meeting stressed that, given the right framework conditions and the right trade policy, “
The European chemical industry is strong but its competitive position is being eroded. The loss of export markets will hit some segments hard as will increased imports of polymers and specialties.
Europe has no feedstock cost advantage in olefins compared with the newer producing locations in the
And an ageing population and the seemingly diminishing rate of technology development have to give cause for concern.
Holding on to competitive advantage where it still exists will be a tough job but sector firms know they can continue to restructure and be competitive so long as the underlying regulatory and market frameworks remain supportive.
That is why the HLG work is so important.
The sector still needs to get its message across, reinforce the positive aspects of the industry and the goals it and
To discuss issues facing the chemicals industry visit ICIS connect
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections