Demand up, but customers cautious - SABIC IP

12 May 2010 21:36  [Source: ICIS news]

By Clay Boswell

NEW YORK (ICIS news)--Demand for engineered thermoplastics has rebounded, but the outlook remained uncertain, the chief executive of SABIC Innovative Plastics (SABIC IP) said on Wednesday.

“Overall, the market has rebounded nicely from a very, very low point in first half of last year, and we're seeing steady growth on global basis,” said Charlie Crew, president, CEO and chairman of the management board of US-based SABIC IP.

Customers were “cautious, but not worried,” he said.

Crew traced the turnaround to the third quarter of 2009. “Demand has gotten progressively better,” he said.

Automotive and consumer electronics, both major markets for SABIC IP, have led the way after turning around in the third quarter, according to Crew. He noted that auto production rates continued to increase this year, even after automakers ceased giving buyers rebates.

Crew said that consumer spending on personal computers, cell phones, televisions and other consumer electronics “seems to be very good” as well.

Industrial markets such as agricultural equipment were also growing again, although their recovery began later, he added.

“One of the markets that has yet to pick up, as far as demand, is the building industry,” he said. “It's still in a tough spot. Certainly home sales have improved, but new construction starts are very low,” Crew noted.

He said that sales volumes had not returned to the levels seen in 2007 and early 2008.

“We’re hopeful that we’ll get back to those levels, but it’s very hard to say when,” Crew said. “This recovery has very short visibility. I think the second half is a big question mark, from a customer perspective.”

Visibility in the market is limited, however. Asian customers were able to estimate demand through September, Crews said, whereas customers in Europe and the US  were having trouble projecting beyond July.

“Customers are cautious about building inventory, cautious about where true demand is going to come from, and cautious about whether financial issues or the lack of stimulus packages will get in the way of the growth that we’ve seen in the first four months,” he said.

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By: Clay Boswell
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