28 September 2009 17:52 [Source: ICIS news]
By Nigel Davis
Chemicals producers are in a difficult place at the end of the third quarter.
But small companies in the west at least continue to find the going particularly hard. The banks have not yet eased lending restrictions sufficiently to give any small-to-medium sized operators much of a sense of security – or support.
Demand has been lifted by the stimulus packages introduced by governments worldwide, that much is clear. No one is clear, though, on what happens next.
Chemicals prices have drifted lower, seeming to lose the impetus that has kept them buoyed, pushed higher by demand as well as the stronger oil price for the past seven months.
Demand in China has drawn in imports and helped underpin some businesses in Europe and the
But everyone now appears to be waiting for what happens to the
European buyers came back into the market after the summer holiday period, resulting in a mini-phase of panic buying. But the markets have gone extremely quiet in the second half of September.
Buyers do no seem greatly concerned with moving feedstock prices but their actions, rather, reflect the fact that regional European demand is so poor.
European producers of all sorts have benefited from better
“There is no real restocking but destocking has come to an end,” said DSM CFO Rolf-Dieter Schwalb. He added that the company’s order book was a lot smaller than prior to the crisis.
Dow said on 16 September that business conditions were stabilising and that emerging economies were driving growth.
Business is calling for extensions to governments’ economic stimulus plans.
There are signs worldwide that industrial activity is increasing slowly, but there are concerns also about the sustainability of industrial output.
Some companies operating in some economies are more exposed than others. The outlook outlined for the
Basic chemicals output has recovered only disappointingly from the deep trough at the end of 2008, Oxford Economics said.
It now predicts a decline in
Chemicals output generally remains depressed. And, while one hears of bouts of enthusiasm, there are deep concerns about the sustainability of demand. Petrochemical prices can fall once again if they are not more strongly underpinned. A weakening oil price, too, removes much of the floor for current prices in numerous markets.
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