Credit crunch causes demand destruction (2)

I gave an interview to ICIS radio at EPCA in September, in which I warned that the destocking process would go through two phases:

• The first, which took place during Q3, was when companies destocked in response to the falling oil price, to a more “normal” level of stock
• The second, which would occur in Q4, as companies destocked further on discovering that end-user demand was actually lower than “normal”

Two months later, Peter Salisbury has just documented in ICIS Insight the disastrous impact of this second phase, which is now taking place as forecast. Hundreds of millions of dollars has now been wiped off the value of chemical companies’ inventory.

The interview was highlighted in the blog, and I just hope that readers took the appropriate action in time, and have not suffered the full pain.

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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