Chemical companies face a clear risk of a synchronised slowdown in demand in all 3 major Regions during H2.
• The US is hitting a ‘soft patch’ at best, if not a full ‘double dip’
• China’s demand seems to have already slowed.
• Europe, sadly, seems to be following the same path.
Not only are its governments increasingly focused on austerity measures and reduced spending. But fear of unemployment is making consumers nervous about major expenditures (autos and housing), which drive chemical demand.
EU auto sales (red line) fell again in June, for the 3rd month running, as shown in the above chart from ACEA (Europe’s Auto Manufacturers Association). France joined the list of declining markets, whilst Germany was down 32% and Italy 19%.
The UK (up 11%) and Spain (up 26%) were therefore 24% of total EU sales in June. But this support seems unlikely to continue, as their major government stimulus programmes are replaced by austerity measures. In Spain, for example, the €100m ($130m) scrappage scheme is now out of funds, and the sales tax on autos rose 2% on 1 July.