Source of picture: oxo.typepad.com
Leaving China aside for a change - where the speculative frenzy continues apace -Paul Satchell, chemicals analyst, has a four-step measure for assessing whether the US and Europe are really out of the woods.
"Purchasing behaviour is strongly influenced by a customer's confidence, and, in the current context, four distinct phases could usefully be examined," he writes on his blog.
1. Normal buying patterns - annual/quarterly indications and regular (say, weekly) off-takes
2. De-stocking by customers - sharp reduction of off-takes, well below indications
3. 'Hand-to-mouth' purchasing - small quantities to satisfy immediate needs (indicator of low stock levels and weak confidence)
4. Gradual return to normal buying patterns as in 1.
"We expect that many chemicals manufacturers have experienced at least stages 1, 2 and possibly 3 since mid-2008. A move by major customers into stage 4 would give producers confidence to return capacity from idling.
Only when normal purchasing behaviour becomes commonplace, accompanied by reasonable volume trends, will we be confident that a recovery is soundly-based."
Who is going to be the first to put his or her head above the parapet?
If you are a chief financial officer who has just spent months explaining away how you lost your company so much money in Q4, do you really want to take that risk?