06 June 2012 04:04 [Source: ICIS news]
By Joseph Chang
“There is tremendous volatility and uncertainty in the market right now. June and July are going to look pretty ugly, mainly due to uncertainty on the pricing front,” said Chuck Anderson, president of chlorvinyls company Occidental Chemical (OxyChem), at a press briefing at the event.
“With crude oil falling from over $100/bbl to the mid-$80s, buyers expect lower prices. So you are seeing people destocking pretty dramatically and this will continue until we find a bottom from a pricing perspective,” he added.
While the first quarter was relatively strong, demand has slowed markedly in the past 30 days, he noted.
“There is no way the
Craig Morrison, chairman, president and CEO of Momentive - a producer of epoxy resins, adhesives, silicones and other specialty chemicals - noted that unlike the downturn in 2008-2009 which hit industries across the board, this slowdown has been more selective.
“Auto parts makers in
And the picture in
“When you look at the official numbers, I don’t know how you can talk about 7-8% growth in
However, he said activity in
“In the first quarter, small manufacturers had a hard time getting cash to buy materials because of government policies tightening credit to shift China from an export economy to one based on domestic consumption,” noted Morrison.
“But the government is now trying to re-stimulate demand and things are picking up to some extent,” he added.
While many companies and analysts had been hoping for a second-half recovery, those hopes appear to be quickly fading.
“Earlier, most people thought the second half would be fairly strong. But talking with our peers, they now don’t think that will be the case,” said Morrison.
Pierre Brondeau, chairman, president and CEO of soda ash, agricultural chemicals and lithium producer FMC, sees strength in select areas.
“Some sectors such as ag[ricultural] chemicals are healthy and should be very strong in the short and medium term. The lithium and food additives businesses are also very healthy, so we have some pockets doing well,” said Brondeau.
However, he characterizes overall chemical demand as erratic on account of lack of visibility.
“There is no visibility on where things are going. Demand changes week to week. It is tough to understand what the trend is,” Brondeau noted.
For soda ash – typically a GDP business - he sees a slight slowdown in Asia, whereas demand in
The construction sector, heavy consumers of soda ash for glass windows and polyvinyl chloride (PVC) for pipes, siding and window profiles, is a bright spot in the US economy, noted OxyChem’s Anderson.
“Construction markets are going to be improving, especially on the housing front, although the municipal [building] market is struggling,” said Anderson.
“Demand is not close to 2006 levels, but things are definitely improving,” he added.
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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