Global chemical production “slowing”

ACC OR% Sept10.pngGlobal chemical production seems to be “slowing“, according to latest data from the American Chemistry Council (ACC). They note that total chemical output, including pharmaceuticals, rose just 0.7% between July and August, against a 9.4% rise versus August 2009.

The good news is that the ACC believe “at the headline level, the previous peak has been reached, turning global recovery into expansion.” But they warn that output performance is uneven – “some nations and regions lag, and have yet to reach the prior peak.” The blog will look at this in more detail next weekend.

The ACC has also introduced the above new chart, showing capacity utilisation in the global industry (again including pharma), since 1989. This shows the clear improvement since the bottom of the crisis, with utilisation rates at 86.9% in August versus 80.9% in August 2009.

Utilisation is well down, however, versus the 2007 peak of 93.5%. It is also down versus the 1995-2007 average of 90.1%. Demand grew by 80% over this period, from 56.7 on the ACC’s Index to 101.8. But since 2007, demand has only risen 8%, whilst capacity is up 26%.

The risk for pricing and margins is that demand growth now disappears, as the stimulus programmes end, whilst more Asian and Middle Eastern capacity continues to come online. This would inevitably lead to a new decline in the utilisation rate.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. 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.

2 Responses to Global chemical production “slowing”

  1. Collins Pt 4 October, 2010 at 11:45 am #

    Great topic here.
    Work of many people on this issue of plastic, there are several plastic materials recycling organic-based view. In February, for example, Imperial College London and bioceramic drug polymer biodegradable plastic from sugar derived from the decay of lignocellulosic biomass. There is also an existing plant more corn starch and plastics based on paper, including household goods and food packaging, bioplastics toys, plastic dynamic Cereplast. Metabolix also several lines of plastic products from corn, in cooperation with partner companies.

  2. George 17 October, 2010 at 12:41 pm #

    so does this shows that the economy may once again be in downturn, at least for chemical industry ?

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