INSIGHT: Chemicals first half gains look weak

13 August 2012 14:44  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--Chemicals production was weak in the second quarter but globally marginally stronger than in the first three months of the year. The year to date gains on the first half of 2011, however, still look weak, a fact reflected across most of the second-quarter financial reports released by sector companies.

Changes in the American Chemistry Council’s (ACC’s) regional and national chemical production indices highlight the way in which the lack of growth in North America and western Europe were offset to an extent by expansion elsewhere.

The data, nevertheless, point to slowing growth in the major producing (and consuming) regions. The year-to date figures to the end of June hardly make easy reading for a sector which expects so little from the second half of the year.

Chemicals production in the US is barely growing. The contraction of output due mostly to the weakness of the macroeconomic and the industrial environment is widespread. China production has powered ahead while Asia Pacific growth has also been strong. But India’s rate of production is down. Chemicals production in Brazil continued to increase although output in other countries in the region was lower.

The point is that capacity utilisation sector-wide has slowed. Customers had put off purchases, expecting prices to track lower based on the weaker oil price towards the end of the quarter. Their nervousness then has been carried forward into July and August. No-one wants to get caught with costly raw material, or feedstock, inventory.

Restrained markets, economic concerns, particularly about the eurozone crisis but also the economic slowdown in China, have take their toll of a business in which many sector companies operate close to the front of the economic cycle.

A low capacity utilisation rate is a reflection of this nervousness. Global chemical industry capacity utilisation in June was 85.4%, 0.4 points lower than in May and well below the long-term average of 91.2%. In June 2011 global capacity utilisation had risen strongly to reach 87.2%.

Excluding pharmaceuticals, chemicals production was just 3.25% higher in June on a three month moving average basis. Man-made fibres and synthetic rubber production were showing the strongest gains and offset by a much slower expansion in petrochemicals & organic chemicals. Basic chemicals production was growing at a 3.2% pace while specialties output was up 4.1% the ACC data show.  

Region/country

% Change (Y/Y) 3 month avg

 

 

 

% Change (YTD)

 

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jun-12

North America

0.3

0.8

0.5

0.1

0

0.5

0.4

  United States

0.2

0.7

0.3

-0.1

-0.3

0.3

0.2

  Canada

1.6

0.9

1.9

3

3.6

3.8

2.5

  Mexico

1.4

1

0.8

0.5

0.1

-0.1

0.6

Latin America

0.7

1.1

1.3

1.4

0.6

0.1

0.8

  Brazil

-1.1

1.4

4

5.6

5

4.1

3.1

  Other Latin America

2.4

1

-1

-2.5

-3.3

-3.6

-1.1

Western Europe

-1.5

-1.9

-2.5

-2.5

-2.2

-1.7

-2.1

  France

0.5

-0.8

-1.8

0.9

2.8

5.1

1.1

  Germany

-2.8

-3.7

-4.1

-4.7

-4.8

-4.9

-4.2

  Italy

-3.2

-4.4

-6.2

-7

-5.5

-4.5

-5.2

  United Kingdom

-3.4

-3.1

-3.1

-3.7

-4.8

-6.6

-4.1

  Belgium

-3

-4.5

-8.4

-11.5

-13.3

-11.4

-8.8

  Ireland

2.9

-0.5

-1.4

-0.7

1.5

1.8

0.6

  Netherlands

-3.5

-1.3

1.6

2.1

3.3

5.3

1.2

  Spain

-3.4

0.5

-0.1

1.6

1.8

3.5

0.6

  Sweden

2.7

1.8

-0.7

-3.4

-4.2

-1.8

-1

  Switzerland

5.5

6.3

6.8

7

6.9

6.6

6.5

  Other Western Europe

-0.5

-0.9

-1.4

-1.9

-3.3

-3.7

-1.9

Central & Eastern Europe

-0.1

-0.7

-1.7

-2.9

-4.2

-4.1

-2.3

  Russia

-1.1

-2.9

-5.6

-7.9

-10.3

-9.7

-6.3

  Other C & E Europe

0.9

1.6

2.7

3.1

2.9

2.6

2.3

Africa & Middle East

4.6

3.2

1.9

1.1

1.7

3.2

2.6

Asia- Pacific

5.5

5.8

6.7

7.8

8.7

8.5

7.2

  Japan

0.4

-1.5

-2

-0.9

1.2

1.8

-0.2

  Asia-Pacific excl Japan

3.8

4.3

4.9

6.2

6.8

6.6

5.5

  China

6.5

7.4

8.5

9.6

10.2

10.1

8.7

  India

-1.3

-1.5

-2.3

-1.5

-1.2

-0.2

-1.3

  Australia

-1.5

-1.7

-1.7

-1.6

-1.4

-1.2

-1.5

  Korea

1

1.6

2

3.1

4

4.2

2.6

  Singapore

-6.3

-7.8

-8

-6.9

-5.4

-3.9

-6.4

  Taiwan

-8.9

-9

-8.2

-5.8

-3.9

-2.3

-6.3

  Other Asia-Pacific

8.4

8.5

7.3

9.3

8.8

9.4

8.6

Global Production

2.1

2.2

2.3

2.5

3

3.2

2.5

Read Paul Hodges’ Chemicals and the Economy blog
Bookmark John Richardson and Malini Hariharan’s Asian Chemical Connections blog


By: Nigel Davis
+44 20 8652 3214



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