04 November 2008 22:58 [Source: ICIS news]
By Nigel Davis?xml:namespace>
GM's executive director of global markets and industry analysis, Mike DiGiovanni, has called the 2m drop in cars and trucks sold between September and October “frightening”.
"Clearly we're in a dire situation," he was quoted as saying on Monday.
If that’s the auto industry talking then chemicals makers should be greatly concerned.
The extremely tough auto industry environment is spreading - to Europe and
This is the credit crunch ploughing its way through the sector. Consumers haven’t the appetite, or the financial resources to buy.
The downturn is expected to last through 2009 as the credit crunch and recession take hold. Banks are being asked to help free up credit to put more life back into the business.
The chemical industry already has been hard hit by the auto downturn and faces a difficult period as its key customers struggle, some to even keep afloat.
The auto sector’s woes have an impact on a wide range of chemical intermediates, on coatings, rubber and on plastics.
Indeed, the light vehicle industry, which includes the manufacture of automobiles, light trucks and vans, continues to be an important customer for most manufacturing industries.
Some hope could be pinned on stronger demand growth in the developing world but these markets are small by comparison to those in North America,
The impact on chemicals then is global.
The relationship with the auto industry is particularly strong in basic and specialty chemicals because, as the American Chemistry Council (ACC) says every light vehicle produced in the
The chemical makers had been sitting pretty; this figure was up 9% from the year before and followed two consecutive double-digit annual gains.
“Virtually every component of a light vehicle, from the front bumper to the rear taillights, features some chemistry,” the chemicals trade group said in its just updated report on the
Included are antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tyres and hoses, upholstery fibres, coatings, and adhesives as well as the basic and specialty chemicals associated with processing. The market in
The autos sales slump, therefore, hits North American chemical producers hard. There is also concern in the chemicals sector that there will be a greater threat from imported vehicles as demand plummets and
Most visible, perhaps, will be the impact on plastics and composites. The average automobile or van contains 8.1% of plastics and composites by weight.
The negative impact of much slower auto sales is already being seen in the performance of the world’s chemicals makers.
Output is expected to slip in 2009, according to forecasters polled in the latest ACC auto industry report.
“We expect domestic light vehicle sales will average 10.6 million units in 2009 and 2010, down from a high of 14.5m units in 2000,” the ACC said.
Coping with this downturn in demand has proved mighty difficult for the big North American auto producers. The big makers in
More plastics and other chemicals ultimately will be used in automobiles and vans, but this sharp slowdown in the industry presents many chemicals producers with a real challenge.
Relief, in the form of a return to stronger demand growth, may be a long way off.
($1 = €0.79)
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