Air Liquide to see weaker demand after Japan disaster - analysts

15 March 2011 15:02  [Source: ICIS news]

LONDON (ICIS)--Air Liquide will see demand weakening in the aftermath of the earthquake which hit Japan, analysts at JP Morgan Cazenove said in a statement on Tuesday.

The investment bank highlighted the short and long-term implications the recent earthquake, tsunami and ongoing nuclear crisis in Japan will have on major European petrochemical companies.

Air Liquide has been identified as having the largest group sales in Japan, occupying the number two market position in industrial gases in the country, selling mainly merchant liquid and specialty gases to the electronics industry.

“Should the current events in Japan lead to a migration away from nuclear power in favour of other forms of clean energy, then we would see Air Liquide and [German gases and technology firm] Linde as key beneficiaries over the longer-term,” analysts from JP Morgan Cazenove said.

According to reports, Japan’s four major car manufacturers are suspending production at their domestic plants through to at least Wednesday of this week. This means power rationing may lead to a long-term reduction in output at European chemical plants such as Air Liquide, JMAT and Umicore.

Japanese competitors Shin-Etsu Chemical and Sumco Corp have both made announcements of production shutdowns. JP Morgan analysts highlight this will have a short-lived effect.

According to the semiconductor research team, the risk of interruptions to Japanese production component manufacturers may impact further downstream, and lead to lower end-product production in the electronics chain.

French chemical company Arkema and Belgian chemical company Solvay may well be beneficiaries of reduced Japanese exports of acrylic acid and polyvinyl chloride (PVC).

“The Acrylics market is already tight and cannot easily accommodate a further reduction in supply. On the other hand, the PVC market remains weak, and any positive inflection point in global operating rates would be contrary to current expectations.” JP Morgan said.

By Tanzeel Akhtar
+44 20 8652 3214





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