“Green shoots” likely to be “yellow weeds”

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The full extent of the recent damage to chemical industry output can be seen in the above chart, based on new figures from the American Chemistry Council. The story is stark:

• Global chemical output was down 14% in March, after falling off a cliff in Q4. The 1979-80 pattern repeated itself again, as the blog forewarned.
• All regions, with the exception of the Middle East (ME), were down at least 13% in March. And even the ME saw growth slip to just 3%.

The only positive is that the figures do indicate that we have reached at least a temporary bottom. The key markets of housing, autos and electronics ought now to be close to the end of the destocking process.

But the blog would be very cautious about assuming that this end to destocking will now be followed by an immediate and sustained V-shaped recovery in consumer demand.

Sadly, as noted by Nouriel Roubini in his latest analysis, today’s widely publicised “green shoots” are instead more likely to be revealed as “yellow weeds”.

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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