Momentive’s customers in China still hit by tight credit – CEO

09 November 2011 20:11  [Source: ICIS news]

HOUSTON (ICIS)--The CEO of US-based Momentive Specialty Chemicals said on Wednesday that credit availability among its customers in China remains tight – contrary to some indications that the situation may have eased.

China has been tightening monetary policies to rein in inflation while preventing a collapse in property prices that could destabilise its economy.

“We are seeing, in general, still a very tight policy by the Chinese [authorities],” Momentive chief executive Craig Morrison told analysts during the company’s third-quarter results conference call.

He was responding to an analyst who noted that another US chemicals firm recently indicated some relief in China’s credit market conditions.

Morrison said that China’s economic policies can be very targeted, impacting industries and product lines in different ways.

As such, it may well be possible that one chemicals firm, with a different product line from Momentive’s, could see an improvement in credit conditions among its customers as the Chinese government targets a specific segment for growth, he said.

Earlier on Wednesday, Momentive cited tightness in Chinese credit markets and a reduction of Chinese government subsidies for certain wind energy projects as factors that hurt the company’s specialty epoxy business in the third quarter.

Overall, Morrison said Momentive is seeing customers accelerating drawdowns of their inventories because of concerns about “general economic conditions”,  partly because of the eurozone debt crisis.

However, the situation is not as bad as in the fourth quarter of 2008 when, at the start of the 2008/2009 crisis, companies took “dramatic action across the board” in almost every industry and region to cut inventories, he said.

“I think it’s a little more of a mixed bag right now,” Morrison said.

“It [the inventory drawdown] is not as universally across the board as we saw in the fourth quarter of 2008, and therefore not as severe."

For its part, Momentive still has a positive view on market conditions in North and South America. Some of Momentive’s segments, such as autos in North America, are still doing quite well, Morrison added

For more on Momentive Specialty Chemicals and other producers visit ICIS company intelligence

By: Stefan Baumgarten
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