Chemical companies have mixed views on outlook

The blog’s regular review of quarterly company results presents a mixed picture.

Compared to a year ago, some have certainly become more optimistic – Dow, for example, are now “confident in a sustained global recovery“, whereas in 2009 they did “not count on material improvements in market conditions”. But others, whilst pleased with current results, remain cautious: BASF expects growth “to decelerate, but do not foresee a double-dip recession“, much in line with 2009′s view of “an uneven recovery“.

Equally, companies in different parts of the value chain see recent crude price rises differently: Borealis notes that “better than expected pricing for crude had supported polyolefin prices“, whilst both Akzo Nobel and Sherwin Williams are more negative on its impact.

The blog was also interested to see LyondellBasell focus on “operating issues among competitors” as a contributor to margins. This confirms the blog’s own fears earlier this year, about the rise in force majeures due to reduced maintenance budgets.

The one constant versus 2009 is that Asian companies remain optimistic. Korea’s LG sees “strong growth” ahead, whilst Sinopec focuses on “on-going tight supply“. However, Reliance’s reference to “margin reduction” in key business segments perhaps indicates this key Region may be at a turning point.

Akzo Nobel. “Reason for caution in mature markets, due to continued softness in construction and housing”.
Arkema. “Revenue was boosted by 10.5% increase in sales volumes.”
Ashland. “A very challenging quarter. Despite double-digit sales growth, raw-material cost pressures continued to temper margins.”
BASF. “Economic growth is likely to decelerate, but do not foresee a ‘double-dip’ recession”.
Bayer. “Significantly higher demand in our main customer industries. Selling prices also rose.”
Borealis. “The global economy was still volatile and the positive trend in the polyolefins business would not be a steady upswing. Better-than-expected pricing for crude had supported polyolefin prices.”
Braskem. “Brazil remains one of the best-positioned countries in the current economic scenario.”
Bunge. “Price volatility was expected to persist in the near term due to the tight supply environment.”
Celanese. “Expected continued healthy demand in the fourth quarter”.
ConocoPhillips. “Ethylene industry cash margins more than doubled versus 2009″.
Croda. “Continued strong progress in Q3″.
Dow. “Confident in a sustained global economic recovery. Robust growth in emerging economies will continue, with improved growth in North America and Europe.”
Dow Corning. “Strong global demand for our silicon-based products amidst this uncertain economic environment”.
Eastman. “Improved end-use demand in the packaging and durable goods markets.”
ExxonMobil. “Improved margins increased earnings by approximately $1.7bn while higher volumes increased earnings about $370m.”
Henkel. “Strong contributions from adhesive technologies business.”
Huntsman. “A continuous recovery in global demand for all of our products and margins are increasing in most product lines.”
INEOS. “Demand for polypropylene continues to be strong and domestic demand for polyethylene continues to recover.”
Kemira. “Short-term risks and uncertainties were connected to raw material availability and prices.”
Kronos. “Demand rose in all market segments, the result of a strengthening economy”.
LG Chem. “Expected the strong growth in product prices to continue on favourable supply and demand conditions.”
Lanxess. “Higher volumes in key customer industries, positive currency effects and price increases, which fully-offset higher raw material costs”.
Lubrizol. “Steady improvement for the markets and applications we serve”.
LyondellBasell. “Much of the company’s strong olefins margins this year were due to operating issues among competitors.”
Marubeni. Increased sales and higher petrochemical prices”.
Mitsui Chemicals. “Increased sales from its functional polymeric materials business.”
Mitsubishi Gas. “Increased sales volumes and higher market prices”.
Nalco. “Particularly strong sales to Brazil, Russia, India and China (BRIC), which were up by more than 40%.”
Olin. “Chlor-alkali earnings were likely to decline sequentially in the fourth quarter as weaker seasonal demand was expected to offset improved pricing.”
Orlen. “Stable sales growth of olefins and polyolefins and higher demand for fertilizers.”
Polimeri Europa. “Recovery in product margins, cost efficiencies and a 1.6% sales volumes increase.”
PotashCorp. “Rapidly rising prices for a number of key crop commodities pushed our industry past the inflection point.”
Reliance. “Margin reduction in polypropylene-propylene and most of the products in polyester and ethylene chain had offset the positive impact of margin improvement in PVC.”
Rhodia. “Markets we serve continue to display favorable dynamics”.
SABIC. “Improvement in production and sales, as well as better prices for most products.”
Shell. “Improved realised chemicals margins, higher chemicals sales volumes and lower operating costs.”
Sherwin Williams. “Cautiously optimistic about the stability of end-market demand and was working hard to mitigate the effect of rising raw material costs.”
Showa Denko. “Profit almost halved, due to the impact of high feedstock costs.”
Sinopec. “Strong demand for ethylene, benzene and polymers amid an ongoing tight supply would boost earnings in Q4.”
SK Energy. “Expect the company’s performance to be further driven by favourable market conditions.”
Solvay. Chemicals businesses excluding soda ash had shown an improvement”.
Syngenta. “Improving conditions in the crop protection market and significant advances in its seeds technology.”
TOTAL. “Increase was driven essentially by an improvement in the petrochemicals; the specialties continued to show solid performance.”
Wacker. “Even if demand edges down over coming months, which seems likely, market conditions will remain favourable.”

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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