China growth essential for N America, EMEA chems – Moody’s

23 May 2012 13:38  [Source: ICIS news]

LONDON (ICIS)--North America and Europe, Middle East, Africa (EMEA) chemicals sector performance hinges on China growth and domestic demand in North America, Moody’s said on Wednesday.

The debt ratings agency’s sector outlook was stable, it said, as it suggested that growth in developing markets and in North America would offset the impact on sector firms of a mild recession in Europe.

"Moody's stable outlook reflects its current forecast of moderate growth in US earnings and flat to moderately lower earnings in Europe," said Elena Nadtotchi, a vice president - senior credit officer in Moody's Corporate Finance Group. Nadtotchi added, however, that downside macro-economic risks have increased.

"We would consider revising our stable outlook if the euro area recession deepened, there was an oil price supply-side shock or if there was a meaningful slowdown in emerging markets and particularly China, as these would all affect industrial demand," she said.

Moody’s expects growth to slow in some sectors where demand is weak including styrene, butyl rubbers, polyethylene terephthalate (PET) and polyester fibre; in construction-related chemicals such as polyvinyl chloride (PVC), decorative paints and some polyurethanes; and in electronics chemicals.

“Strong momentum is expected to continue for selected segments including personal care, food, nutrition and medical applications; fertilizers; seed and crop protection; industrial gases; and several commodities including propylene, butadiene and titanium dioxide,” it said.

“Price increases will remain a leading driver of growth in 2013,” the agency added in a sector report. “The ongoing high-price environment continues to favour commodity chemicals over specialty chemicals.”

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By: Nigel Davis
+44 20 8652 3214



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