03 September 2010 15:57 [Source: ICIS news]
By Nigel Davis
Global chemicals output will be directed towards stronger markets - principally in Asia but also in
Underlying the changed market dynamics will be the question of cost. And the opportunities to access faster growing markets will be hard fought. This suggests that most producers will redouble efforts to drive into
The changed feedstock picture in the
Does that mean that further development of the sector continues to lie in the hands of state-run enterprises or of companies with a considerable proportion of state control? Petrochemicals is not necessarily a place for the investing public, as wise heads have said before.
The new feedstock outlook in the
The strains put on C3s and C4s by changed refinery and feedstock dynamics open up opportunities. The careful management of output to demand, driven itself by the financial crisis and the need to retain a much tighter hold on working capital, is a characteristic of this business that will not change any time soon. Subdued demand growth in the second half of 2010 and possibly only slow growth in 2011 will help see to that.
Also, companies will have to start spending again soon if they are to maintain operating reliability. The tight management of cash has put strains on parts of the supply chain and will continue to tell in certain markets.
A critical question for European producers is just how much longer they can continue to benefit from European demand growth.
The news is not all bad. Some analysts believe that the major European economies can continue to grow this year and next.
The second quarter was the strongest so far and it probably is down hill from here for the remainder of 2010. But the
Petrochemicals tend to be early reflectors of good and bad news.
European petrochemicals production was up 42% from the bottom of the slump, Cefic showed this week. But the chemicals trade group’s petrochemicals production index also indicated that output has yet to reach the peak achieved in January 2008.
The recovery has been remarkable, and particularly so in polymers in the first half of 2010, but polymers output was flat in June: probably a sign of things to come.
Chemical industry executives need to be cautious.
Germany’s chemicals trade group VCI on Thursday talked of less optimism in the sector against the backdrop of a looming economic slowdown: in the US, Europe and China.
The days of the big gains in output probably are over. The VCI suggests a return to more ‘normal’ levels of output growth.
The VCI is sticking with its earlier output forecasts for
In the uncertain second-half environment export sales will again be tremendously important. They rely heavily on demand from Asia and from
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