21 November 2008 12:34 [Source: ICIS news]
LONDON (ICIS news)--The credit crisis has led Europe’s chemical companies to demand extra guarantees or ask for cash when selling products as payment problems become widespread in the industry, market players and analysts said on Friday.
With demand falling across the sector driven by downturns in the automotive and construction industries, producers are desperate to destock but increasingly nervous about selling to customers with poor credit.
“As demand is falling from the established customers they’re having trouble being happy selling to less established customers that don’t have the credit ratings,” said ING chemicals analyst Samuel Simon.
“We may see more chemicals companies insisting on cash in advance or cash on delivery or shorter credit periods,” he added.
One petrochemicals trader said his company had cancelled all trade lines with a major producer, and had now instigated 50% credit on some products.
“We get emails from credit insurers every week telling us who is now not insured,” said another trader. “I have to tell my sales people that it’s no-go to certain companies – it has to be cash in advance or nothing,” he added.
“There is no benchmark for this,” added a large buyer of solvents.
“We are destocking generally across the board. Cash is king.”
Nel Weddle and Jane Massingham contributed to this article
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