29 May 2013 12:30 [Source: ICIS news]
BERLIN (ICIS)--There are some signs of recovery for the global chemical industry in the second half of 2013 and early 2014 but any improvement may not be as significant as hoped for, a senior industry figure said on Wednesday.
“Is there light at the end of the tunnel? The problem is, we don’t know how long the tunnel is, or how bright the light is,” said Daniel Brunink, head of economic and market intelligence at Evonik Industries, while referring to the global economic crisis.
Brunink, speaking at the 2nd ICIS World Polyolefins Conference, added that the consensus predicted a slight uptick this year and next year for most regions, with the second half of 2013 expected to be good.
No major forecasters expect lower economic growth in 2014 than in 2013, he said.
However, Brunink highlighted that the consensus is not always right.
“I cannot believe 2014 will be dramatically better than 2013,” he said. “That’s just my personal view.
"The economic data got worse over the year in 2012, and in 2013 economic data has been disappointing again,” he added.
He said the chemical industry in the eurozone is lagging behind other regions, which are starting to see more promising signs.
Brunink explained that a triangle of factors was intensifying the eurozone situation - the banking crisis, the growth crisis and the sovereign debt crisis are reinforcing each other, he said.
Tight credit conditions are slowing investment, while the recession is increasing credit defaults. Austerity measures reduce consumption, while tax reduction burdens government finances. Bank bailouts raise sovereign debt levels, while reevaluating the renewal of sovereign bonds is worsening banking balance sheets, Brunink said.
Meanwhile in the US, the underlying economy remains strong.
“There’s recovery on the consumer side, unemployment is going down, the housing sector is an engine for growth, and the US economy is profiting from investments in manufacturing, oil and gas mining and the chemical sector," he said.
While China should not be expected to grow at 10% as it has in recent years, a figure of 7.5% growth is more likely.
In Japan, meanwhile, the economy is expected to grow by 1.4% in 2013, driven by currency depreciation and higher global demand.
“The recovery of industry should be translated into chemicals growth,” Brunink concluded. “There are signs of some recovery in the second half of 2013-early 2014, but the light is not as bright as we’d like to see it."
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