18 August 2010 15:20 [Source: ICIS news]
The investment bank added that many chemical companies did better than expected in the first half of 2010 with most forecasting a strong performance for the year, after benefiting from a rebound in volume growth due to cyclical recovery, and by passing increased input costs over to their customers.
The analysts said that average output volumes were up by 16% in the second quarter of 2010 on strong demand in most of the key end markets; BASF’s second quarter volume grew 19% year on year, Lanxess saw a 22% increase, while Arkema and Clariant witnessed a 12% and 20% rise in volumes, respectively.
However, increases were moderating when compared with the 20.3% volume rise in the first quarter, they added.
“The weak comparatives from a depressed 2009, and the inevitable restock, were responsible for the surge in volumes, with companies’ ability to continue surprising likely to diminish as the year end approaches,” JP Morgan Cazenove said.
Average prices throughout the second quarter were up by 3.5% year on year, it added.
By contrast, analysts expected 2011 to bring much slower volume growth, possibly weaker prices, tougher trading conditions and mixed global growth trends likely to lead to weaker earnings growth.
Additionally, JP Morgan Cazenove said that the rate of upgrades on European petrochemical firms had slowed since the early stages of the global economic recovery, when company forecasts had risen rapidly following reports of the first signs of restocking, about a year ago.
“We may begin to see an expectation of downgrades to 2011-2012 if the macro background, particularly in the key region of Continental Europe, deteriorates, while relatively full valuations offer limited scope for this prospect in our view,” it added.ICIS plants and projects database
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