22 September 2008 05:18 [Source: ICIS news]
By Hong Chou Hui
SINGAPORE (ICIS news)--The Asian petrochemicals industry’s traditional year-end peak season demand orders could be delayed or even reduced due to last week’s financial turmoil which rocked Wall Street and bourses worldwide, producers and traders said on Monday.
“There won’t be much festive cheer when Christmas comes this year because many people in the ?xml:namespace>
“Asian petrochemical makers have always depended heavily on the festive demand from these markets so there’s going to be a major trickle down effect,” he added.
Wall Street and global major stock exchanges took a severe beating early last week as bad debt fuelled by the sub-prime credit crisis sent Lehman Brothers into bankruptcy and threatened to bring down others.
A relatively high 84,000 US jobs were lost in August according to statistics from the US Department of Labor’s website.
“It’s going to impact on demand for consumer goods because buyers in the
Feeling the heat from weaker export orders was
“Our lull season normally ends by early September in previous years because buyers will normally start placing orders to prepare for a demand spike driven by the festive season,” a maker of POY based in southern
“Right now, we’re just sitting around twiddling our thumbs because there’s no reason for us to run our production lines at full,” he added.
The Chinese downstream garment and textiles sector recorded fabric transaction volumes of 5.58m metres at the benchmark
The tepid performance was a far cry from the normal levels of 8-9m metres per day and boom levels of 10-12m metres daily, industry sources said.
“The financial woes in the
While the Chinese government had tried to stimulate its economy recently by cutting the one year key lending rate and reducing the reserve requirement at certain banks, resin producers said the impact would only filter through to the broader economy in the next few quarters.
Demand for benzene from the key downstream styrene monomer (SM) segment has been lacklustre in the third quarter of 2008, even though from September onwards the traditional styrenic plastics season should commence, said traders.
Demand for derivative styrenics for making gifts, toys and electronic items were usually seen to be on the rise from this period in the run-up to the year-end festivals.
The slowdown in major economies such as the
“It [the outlook] depends on US and Chinese markets, [as] SM makers are not increasing operating rates in recent times,” a key Japanese benzene producer said.
Despite the proposed rescue package rolled out by the
“The start of the year-end peak season could be delayed to next month. We’re bracing ourselves for the worst case scenario that there won’t even be a peak season at all because further financial shocks could torpedo the market yet again,” said a trader of diethylene glycol (DEG) based in southern China in Mandarin.
Some petrochemical sectors, however, were unscathed by last week’s financial bloodbath.
“The US housing sector has gone into a complete slump which frees up 150,000 tonnes of soda ash for us but we’re not too worried because demand from Asia and the Middle East continue to remain strong on the back of a construction boom,” said a seller of US soda ash based in southeast Asia.
Producers said the price increases were necessary as they had staggered their price hikes to make them more palatable to end-users and they were still trying to catch up with the surge in energy costs seen earlier this year.
While TiO2 demand had been largely stable so far, a producer however admitted that the outlook for the Q1 2009 was less certain given the current financial turmoil.
Clive Ong, Mahua Chakravarty, Ng Hun Wei and Judith Wang contributed to this article.
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