04 December 2008 00:02 [Source: ICIS news]
“In my view, the biggest impact [of the financial crisis] is on the psychology of our customer base, which is driving them to reduce working capital as rapidly as possible,” said Jeffrey Lipton, CEO of NOVA Chemicals.
Echoing the views of Lipton was Ben Van Beurden, executive vice president of Shell Chemicals.
“There is a bit of a phoney war going on at the moment. Everybody is quite uncertain of what is going to happen in the near to medium term. Nobody is quite sure where demand is because we’re not quite seeing underlying demand," Van Beurden said.
Both executives were speaking at the Gulf Petrochemical and Chemical Association (GPCA) forum.
Lipton said NOVA’s customers are consuming their products faster than they are buying it. This has, in turn, driven down both inventories and working capital.
“It's the economical pressure and belief that [the customers] would be able to buy our products for less later,” he said.
“I believe some stability in the oil price and the eventual need to purchase products just to match their consumption will make things turn more quickly than many of the economic pundits are predicting,” Lipton added.
Van Beurden was confident that the global petrochemical markets would reach a point in 2009 where the current destocking frenzy would hit “rock bottom” and a slight rebound would follow.
“However, on the other hand, the market will also experience a little bit of pressure from the new capacities in the Middle East. It's a bit of a mixed picture still,” he added.
The GPCA forum ends on 4 December.
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