APLA ’09: Full economic recovery still a year away - consultant

09 November 2009 23:12  [Source: ICIS news]

MEXICO CITY (ICIS news)--The global economy bottomed out in the third quarter of 2009, but it will take another year for it to fully emerge from the financial crisis, a consultant said on Monday.

“The economy will return to the pre-crisis level only in the third quarter of 2010,” said Esteban Sagel, director of polyolefins for North America at consulting firm Chemical Market Associates Inc (CMAI).

Economic growth will be uneven across the globe, he said, adding that China would lead the way while the recovery in the US would lag that of countries such as Brazil and Japan.

Sagel said the petrochemical industry benefited from the resilience of the Chinese economy in 2009.

The relatively weaker impact in China helped the industry through the crisis, the consultant said during a presentation at the 29th Latin American Petrochemical Association (APLA) annual meeting in Mexico City.

The industry also benefited from delays in the start-up of new capacity in the Middle East, he added.

Sagel also said that the latest financial created a “more disciplined” petrochemical industry, with production now closely matching demand.

The consultant predicted that the cost advantage of ethane over naphtha was expected to continue in 2010, limiting the output of co-product propylene and driving up the price of the monomer.

That in turn will further squeeze polypropylene (PP) margins, he said.

According to Sagel, polyethylene (PE) margins were high in 2009, but that is unlikely to continue next year as capacity in the Middle East gradually comes online.

The APLA annual meeting began on Sunday and continues through Tuesday.

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By: William Lemos
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