29 March 2011 16:12 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS)--The global economy will face rising volatility and prices on many fronts, including in energy and chemicals, the CEO of US-based Huntsman said on Tuesday.
“We see future volatility with an upward trajectory in prices – it will happen in oil prices and well as chemicals,” said president and CEO Peter Huntsman, at a speech at the International Petrochemical Conference (IPC).
High oil prices above $100/bbl are unlikely to cause demand destruction in developing countries such as China, India and Brazil, he said.
“The consumption of autos and oil from these countries has risen faster in the last five years with high oil prices. The average consumer there has been dealing with $70-$100 oil – it is business as usual,” said Huntsman.
The Huntsman CEO also estimates that spare OPEC capacity stands at less than 500,000 bbl/day based on an annual run rate of about 90m bbl/day based on February world oil demand.
In the chemical sector, capacity constraints are likely to continue as little new major capacity hits the markets in the coming years, he said.
“There is not a great incentive for boards to risk liquidity to build grassroots capacity. Capacity is more expensive to build, permitting takes longer worldwide and so there is a greater risk,” said Huntsman.
“You can count the number of announcements of grassroots chemical facilities in the US on one hand. Usually at this point in the economic cycle, such as in 1995, people would already be etching our tombstones with all the planned capacity,” he added.
On the demand side, Huntsman said he expects US GDP (gross domestic product) growth of around 3%, and China GDP of 7-8% in the coming years. European growth will be muted, but with Germany leading the way.
Sponsored by the National Petroleum Refiners Association (NPRA), the IPC ends on Tuesday.
For more on Huntsman visit ICIS company intelligence
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