The above chart, from the excellent American Chemistry Council (ACC) weekly report, shows how Operating Rates (OR%) have changed in the global chemical industry since 1989.
From 1994 - 2003, they were broadly in an 87% - 93% range. They then moved up to a seemingly stable 92% - 94% range until 2008, before crashing down to an all-time low of 77% in December 2008.
Since then, they have recovered well. But they are still only back to 2003 levels, at 87.4%. And as the ACC note, production in important markets such as the USA, excluding pharma, has been "essentially flat" over the past year. Whilst in Asia, "the upward gain has moderated".
This highlights the uncertainty over the Outlook for 2011-13, as discussed in the blog's newly published 'Budgeting for Uncertainty'. And so the blog has therefore added 3 arrows, to illustrate the different Scenarios it has identified:
• A Base Case, where OR% maintain the improvement since 2008.
• An Upside Case, where they continue to improve and deliver a full recovery.
• A Downside Case, where they fall back again as demand growth stalls.
The blog has been recognised in the Financial Times and elsewhere as being one of the very few forecasters to correctly warn of the global downturn, and then highlight the recovery seen this year.
But it feels no such certainty about the Outlook for next year. It therefore hopes its Scenario analysis is helpful to companies, as they grapple with this key issue.