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. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. 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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