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”.