Dubai World will not derail US chemical recovery - ACC

01 December 2009 22:07  [Source: ICIS news]

NEW YORK (ICIS news)--The potential default of Dubai World on more than $60bn (€40bn) in debt will not derail the expected recovery in the US chemical industry, American Chemistry Council (ACC) chief economist Kevin Swift said on Tuesday.

“This reminds us that over a year from the start of the financial crisis, we have not gotten back to normal. The global financial situation is still shaky,” said Swift at a meeting with the trade press in New York City.

“However, the overall economic outlook has improved considerably since last year,” he added.

On the positive side, end-use market inventories remain lean, the weak US dollar is boosting exports, and US natural gas prices remain at low levels, improving manufacturing competitiveness, he said.

“Exports are being aided by the weak dollar and favourable natural gas prices,” said Swift.

“US exports of thermoplastics are up by 16% to date year over year,’ he added.

The economist said he expected the US trade balance in chemicals to be positive for the first time in nine years in 2009 at $2.4bn, rising to $3.9bn in 2010 before falling into deficit of $1bn in 2011.

Swift’s base case scenario, with a 45% probability, calls for overall US chemical industry production volumes to rise by 3.4% in 2010, 4.0% in 2011 and 4.2% in 2012, after falling 9.4% in 2009.

Excluding pharmaceuticals, he said he expected production to rise by 3% in 2010, 3.3% in 2011 and 3.4% in 2012.

In a sharp V-shaped recovery (30% probability), he predicted ex-pharma volumes would rise by 6% in 2010, 5.3% in 2011 and 4.7% in 2012.

But if the economy relapses into a recession (25% probability), he said he saw ex-pharma volumes falling by 0.2% in 2010, rising by 1.8% in 2011 and 2.9% in 2012.

($1 = €0.67)

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By: Joseph Chang
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