18 November 2008 17:45 [Source: ICIS news]
HOUSTON (ICIS news)--Petrochemical customers have cut purchases as they expect prices to continue falling - a trend that has masked the true level of demand during the global economic slowdown, the CEO of LyondellBasell said on Tuesday.
Starting in the third quarter, customers reduced purchases on the expectations that prices would fall in upcoming weeks, said Volker Trautz, LyondellBasell CEO, during a conference call.
Such destocking accelerated in the fourth quarter, Trautz said.
At the same time, demand has dropped because of the global economic slowdown, he said. "The economy has clearly slowed."
LyondellBasell will not have a clear picture of underlying demand until the first quarter, he said.
The company has reduced its 2009 capital expenditures programme to $800m (€632m), the minimum deemed necessary to meet safety and environmental standards, Trautz said. LyondellBasell has also adopted a cost-cutting programme.
In the upcoming months, LyondellBasell may consider selling off noncore assets, such as real estate, the company said.
In all, the company should generate cash in the fourth quarter, which should allow it to reduce its net debt, Trautz said.
In other news, LyondellBasell expects to remain in compliance with its covenants in the fourth quarter and in 2009, the company said.
($1 = €0.79)
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