InterviewVIDEO: Any Q1 rebound will be a false dawn - consultant

11 January 2013 12:14  [Source: ICIS news]

LONDON (ICIS)--If chemical markets improve during the first quarter (Q1) this will not be a sign of any real upturn and recovery during 2013, a leading consultant said on Friday.

Seasonal factors plus restocking after a weak fourth quarter 2012 will drive any improvement in global chemical markets, rather than underlying strength, according to Paul Hodges, chairman of UK-based International eChem.

Referring to mature regions he said: “We can hope that there will be some sort of rebound in the first quarter a) because it is seasonally stronger and b) because there hasn’t been much buying or demand in the fourth quarter. But I don’t see any underlying surge of demand that’s going to take operating rates a lot higher on a sustained basis.”

Commenting on emerging markets Hodges added that their dependence on exporting to mature regions means they will also struggle to see sustained growth during 2013: “There could be another stimulus package – another rocket to the moon – we can’t rule that out if things get bad. But look at China today – exports are only up a few percent because people in the West don’t have much money and can’t afford to buy much.”

Looking at 2013 and beyond, Hodges believes that population demographics are driving chemical markets in a powerful way. A new generation of post-55 year-olds now make up around 30% of the population in mature economies and an increasing proportion in emerging economies too. Older people spend less and save more.

“We’ve got to be cleverer – that’s the challenge. Let’s stop trying to sell lots of things to young people who don’t exist anymore. Instead let’s focus on the other 30% of the population who would like to buy products if they were affordable and if someone bothered to make them. We need to kick manufacturing companies to stop focusing on the youth market and to start waking up to where the growth is.”

He added: “Let’s abandon the preoccupation that has served us so well for the last 20 years that all [growth] will be a multiple of GDP. Instead let’s look at the demographics. Where are the people with the money and what are their needs?”

There will be huge opportunity for those in the chemical industry who focus on providing affordable products focusing on basic needs such as food, water, shelter, health and hygiene and transport. 

“These are trends which will last for 20 years,” he added.

($1 = €0.75)

By: Will Beacham
+44 20 8652 3214

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