Global chemical operating rates slip to 86%

ACC OR Aug13Global chemical operating rates have shown little improvement over the summer months.  As the chart from the American Chemistry Council (ACC) shows:

  • Rates in July were at 86.4%. compared to 87% in May
  • This compares with the average of 91% between 1987 – 2012, and 86.7% in July 2012
  • Total production was up 2.8% versus 2012, using a 3-month moving average
  • Despite the $33tn of government stimulus, it is just 17.9% above average 2007 levels

July also saw a mixed performance in terms of production volumes in the major Regions:

  • Asia was up 5% versus 2012, but the growth rate slowed from April’s 6.4% increase
  • China’s growth slowed to 6.2% from 7.4%, although India’s rose to 7.4% from 5.7%
  • The Middle East also saw growth slip to 2.8% from 4.2%
  • N America saw a welcome improvement and was up 1.7% versus 0.7%
  • The US jumped to 1.4% from 0.3%, whilst Canada was up 10.5% versus 5.7%
  • Central/Eastern Europe was up 1.3% versus a decline of 2.2%
  • Russia showed a gain to 2.9% from -4.1%
  • W Europe was also up at 0.7% versus a fall of 0.9%, with most countries seeing an improvement
  • Latin America was down 0.9% versus a fall of 1.2%, with Brazil stable at 1.2%

The ACC also report that “the most pronounced recovery occurred in the cyclical segments”.  It will therefore be critical to see whether July will mark a peak for the cycle, or whether production growth will continue through  H2.  One potentially worrying sign for the US market is that the 13-week moving average of chemical railcar loadings, the best real-time indicator of industry activity, was up only 0.9% in mid-August versus 2012, whilst actual loadings have fallen in 8 of the past 13 weeks.

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.