Pricing power – ING’s concerns

Since posting yesterday, oil prices have moved further ahead, with WTI closing at $93.53.

I have also had an interesting dialogue with Paul Satchell of ING Bank, one of the leading chemical analysts, who has kindly allowed me to summarise his comments. Paul believes that investors have become ‘dangerously complacent’ about the industry’s ability to cope with increases in oil prices, following the success of companies such as BASF at passing-through input cost rises since 2004.

He sees a growing danger that commodity chemical producers may suffer the same fate as specialties companies such as Ciba and Clariant, who ‘seem to have suffered a major loss of pricing power’.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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