Emerging markets to help US, Europe chem sectors in 2012 – Moody’s

01 February 2012 18:52  [Source: ICIS news]

HOUSTON (ICIS)--Rising demand from emerging markets, as well as lower feedstock costs, should help North American and European chemical producers achieve a “reasonably good” 2012, credit ratings agency Moody’s said on Wednesday.

"Emerging markets will offset the chemical sector's weakness in industrialised nations,” John Rogers, senior vice president at Moody’s, said in a report.

Chemical companies in North America would benefit from low energy and feedstock costs, and from growing demand in emerging markets, Rogers said.

However, while European producers will also benefit from growing emerging markets, they will be hurt by the looming threat of a recession and weaker demand in Europe, he said.

In his report, Rogers cited US-based Celanese and Cabot, as well as Canada’s Methanex, as among those producers particularly well-placed to benefit from emerging markets.

Meanwhile, North American producers of ammonia, methanol and ethylene should benefit from advantageous feedstock prices. Rogers pointed to US producers such as CF Industries, Chevron Phillips Chemical and Westlake, as well as Canadian firms Agrium and NOVA Chemicals as beneficiaries.

Nevertheless, commodity chemicals producers with significant exposure to Europe such as Kerling or Styrolution would be hit by lower prices and weaker margins, as well as declining demand in Europe, the report said.

Also, should the outlook in North America worsen or Europe go into a severe recession, then even producers such as Celanese or Cabot could see the benefits they have from their exposure to emerging-market growth erased, it said.

Moody’s report also said that large pension burdens could pressure firms such as US-based fibre producer Invista or Germany’s specialty chemicals major Evonik this year.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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