Asia leads the Lazy-V recovery

DOW CHEMICAL CEO and Australia native Andrew Liveris coined the term Lazy-V in describing the global economic recovery on the US-based company’s fourth quarter earnings conference call. Now we’ve all heard of a V-shaped recovery, but what’s a Lazy-V? “Aussie for moderate growth,” or slow, steady progress, translates BB&T Capital Markets analyst Frank Mitsch.

Looking at Q4 2009 earnings for Dow and other major chemical companies, most reversed losses from a devastating Q4 2008 when demand collapsed. Volumes were up 10% year-over-year for Dow and US major DuPont.

Taking a closer look, the gains were driven by Asia. DuPont’s and Dow’s volumes were both up 34% in Asia Pacific, while relatively flat in North America and Europe. The global market shift to Asia is becoming more apparent, reflected in Swiss specialty chemical firm Clariant, which announced further plant shutdowns, the largest of which will take place in Switzerland in the textile dyes and chemicals operations.

“We are often faced with the strange situation that we purchase raw materials in China, ship them to Europe, manufacture at significantly higher costs and then ship them back to Asia, where our customers are,” said CEO Hariolf Kottmann. “Hence, there is no value-creating alternative… but to transfer production to Asia.”

This trend, and many others, were part of my presentation on the Chemical Market Outlook for 2010 given to the joint meeting of the Societe de Chimie Industrielle and Racemics Group on February 17 in New York. Please let me know if you’d like the entire presentation, including text. Email

, , ,

Leave a Reply