Asia demand critical to Europe chems in downturn

22 October 2008 16:17  [Source: ICIS news]

LONDON (ICIS news)--The development of demand in Asia is critical for European chemicals producers to ride the current markets downturn as growth in Europe and the US grind to a halt, Standard and Poor’s said on Wednesday.

 

Speaking at the Standard and Poor’s chemicals seminar, credit analyst Tobias Mock said geographical diversity was key for European companies to cope with the weakening economic environment.

 

“The only thing which holds up the GDP equation at the moment and gives some hope is Asia. This makes it even more clear how important Asia will be for the chemicals business,” he said.

 

“If we see disappointments in Asia this would be really bad for the industry,” he added.

 

S&P analysts predicted European GDP to grow by as little as 0.5% in 2009, showing a sharper downturn than the last trough in 2002, while US was forecast a GDP decline. Asia was expected to drive global growth to around 2.5%.

 

S&P said the global average operating rate for petrochemicals could drop as low as 79% if demand growth dropped to 2%.

 

Mock warned that Europe's chemicals industry was less robust in the latest downcycle compared to he 2002 trough, with the sector's average credit rating having deteriorated. 

 

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By: Mark Watts
+44 20 8652 3214

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