Bold predictions 2009

01 January 2009 00:00  [Source: ICB]

Will 2009 be a time for keeping a low profile, or will the ball start rolling toward recovery? We ask the industry for its bold predictions

"During the first year of the new administration, there will be disagreement and tension between the White House and the new Congress, which will be run by the California coalition (Pelosi, Waxman, Miller, Boxer, Feinstein), which has its own agenda.

Chemical security legislation and Toxic Substances Control Act reform legislation will pass, but there will be no major climate change legislation signed into law until 2010 at the earliest, and most likely not before 2011.

Hillary Clinton will not serve more than two years, at the most, as Secretary of State. Too much 'Clinton' drama and political ambitions will get in the way." 

Joe Acker, president, US-based Synthetic Organic Chemical Manufacturers Association (SOCMA)

"Demand trends: we expect the US market to be the favored region in 2009, after years of lagging the rest of the world. Inventory liquidation should lead to a bounce in demand by the middle of next year. On pricing: we expect derivatives pricing power to fade quickly, much as it did in the 1980-1981 recession. And in regulation: toxicology should emerge as one of the top issues for 2009-2010, particularly with respect to chemicals that act as endocrine disruptors."

Laurence Alexander, chemical analyst, US-based investment bank Jefferies

"2009 will be the most challenging year in the chemical industry for 50 years. Chemical producers and distributors who have strong balance sheets, low debts and lean organizations will be the industry winners and future beneficiaries of the crisis."

Marc Fermont, senior partner Switzerland-based consultancy DistriConsult

"Today, companies and their senior managements are relatively unprepared for the arrival of a major downturn. Everywhere one looks, there are signs of distress in key chemical markets…. Plus, banks are still being forced to deleverage after the “liquidity party” from 2003–2007, and so even good-quality borrowers are finding it difficult to access cash"

Paul Hodges, chairman UK-based consultancy  International eChem (see feature in this issue)

"An unprecedented economic climate will present major challenges for chemical companies in 2009. The strongest businesses will be those agile enough to respond to the changing needs of their customers as they navigate through the recession - some will focus on innovation, while others will be driven by affordability and accessibility."

Brian Chermside, chief marketing officer, US-based silicon firm Dow Corning

"Chemical distribution will play a major role within the chemical supply chain in 2009. Knowledge of market developments and ability to add value in the chain will become increasingly important and lead, in the long term, to an even stronger position of the distribution sector within the chemical industry."

Hendrik Abma, director general, European Association of Chemical Distributors

"Companies with a very high degree of flexibility to react to market shifts and a strong financial backing allowing them to grasp upcoming opportunities will be the winners in the consolidation process of the 2009 economic cycle."

Hans-Jorg Bertschi, CEO, European logistics firm Bertschi

"2009 will be the year during [in]which solar energy will really be put on the world map as a viable alternative. This represents a major opportunity for the chemical industry to deliver the material-based solutions that will enable more efficient and cost-effective manufacturing technologies for this key future industry."

Eric Peeters, global executive director, solar business, US-based Dow Corning

"At 2:32 in the afternoon of Thursday, January 29, 2009, a purchasing agent at a major convertor will place the order that will reverse everything and start the ball rolling and momentum to recovery."

Kevin Swift, chief economist, US trade group American Chemistry Council

"The post-credit binge hangover will lead to a consumer backlash in the developed world that will drive environmental and sustainability issues to the top of the political agenda once the worst of the recession is over."

Simon Smith, global industry director, chemicals and pharma, France-based consultancy Atos Origin

"The Valence 100 Index of chemical stocks will be up over 50% during 2009."

Telly Zachariades, senior managing director, US-based merchant bank Valence


Here are some of last year's predictions. Despite the tumultuous year, it turns out that some of these predictions were uncannily accurate.

"The chemical industry will increasingly be defined by the players who have access to the feedstocks, markets and technology of the emerging world and whose people are familiar with doing business in all corners of the globe. Companies that ignore these trends do so at their peril."

Andrew Liveris, chairman and CEO, US-based Dow Chemical

"Activists and NGOs at the forefront of the sustainable development movement will publicly and aggressively begin to champion nuclear fission as the preferred solution to the threat posed by global warming."

Raj Gupta, chairman and CEO, US producer Rohm and Haas

"Mitt Romney will be the Republican candidate for US President and Barack Obama the Democratic candidate."

Joseph Acker, president, US-based Synthetic Organic Chemical Manufacturers Association

"The depth of a recession is difficult to call, and depends on views of new capacity. I suspect that capacity increments will not be as bullish as some commentators predict, and thus the depth and length of recession will not be as great as once feared."

Tom Crotty, chairman, UK-based INEOS Fluor and ChlorVinyls

"In 2008, Reliance Industries will emerge as a globally attractive polypropyl-ene [PP] player, with commissioning of its new 900,000 tonne/year PP capacity."

Ujjal De, senior vice president, India-based Haldia Petrochemicals

"2008 will see peak prices and profits for polyolefins, as tight supply drives margins above feedstock price increases."

Robert Bauman, vice president of polymers, US-based consultancy Nexant

"Alberta's oil sands to crude oil potential is now well on its way to becoming the second-largest supply in the world. It is now a competitive potential source of petrochemicals and intermediates to the North American market and could redress the global production balance in the next decade."

Fred du Plessis, senior vice president, consultancy Kline Europe

"2008 will be the year of Reach chaos and among many other highlights will feature: the EU Chemicals Agency Reach-IT system in Helsinki crash[ing] some time in November, as everyone races to enter their preregistrations at the last minute. At least one EU chemical company will emerge from its Tardis in 2008 and ask 'What is this Reach regulation all about? We've never heard of it!'"

Judith Hackitt, chairwoman of the UK government's Health and Safety Executive

"Soaring oil prices and climate change will favor in 2008 a shift of chemicals distribution from road to rail."

Hans-Jorg Bertschi, CEO, Bertschi

"The paraxylene [PX] downturn will come in 2009, and if we are to believe all of the announcements by 2011 the market will be at its lowest point ever."

Steve Jenkins, managing director, UK-based consultancy PCI Xylenes & Polyesters

"Ongoing costs reduction in boththe UK head office and, to a lesser extent, the sales force. UK head office costs need to drop by approaching 10% in 2008, with more to come in subsequent years. Inevitably thismeans people."

Paul Jukes, UK managing director, France-based producer Arkema

By: Will Beacham
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly