Operating rates slip in most regions in August

ACC OR% Sept12.pngThe latest weekly report from the American Chemistry Council (ACC) includes a worrying picture of falling operating rates around the world. As their chart above shows, these fell quite sharply in August by 0.4% to 84.8%. By comparison, rates in August 2011 were 87.7%.

The ACC also note that the slowdown seems to be widespread:

• NAFTA production fell 0.5%, with the US down 0.3%, Canada down 2%
• Latin America was down 0.3%, with Brazil slowing fast
• W Europe was down 2.1%, with Germany down 4.6%
• CEE was down 5.4%, with Russia down 11.7%

On the positive side:
• MENA was up 4.3%, with its advantaged feedstock position
• Asia was slowing, but China was still up 9.7%

The ACC also report that global production rates were up 2.6% versus 2011. This highlights the major over-capacity that is developing in some regions.

The problem is that companies had assumed there would be a quick and strong recovery from the deep downturn in 2008/9. But this increase in demand has not occured, and so operating rates are falling as the new capacity comes online.

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.

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