VIDEO: Oil prices, interest rates, debt and protectionism top risks for 2018 – consultant

BARCELONA (ICIS)–Chemical industry executives should be aware of the risks potentially affecting their companies in 2018 and prepare now through scenario planning, according to a leading industry consultant.

Instability in oil prices and interest rates, high levels of indebtedness, plus protectionism and public rejection of ‘business as usual’ politics top the list of destabilising factors which could disrupt business next year, says International eChem consultant Paul Hodges.

In a video interview and ICIS Chemical Business article, Hodges explains why he thinks it is wise to plan ahead for potential disruption.

In oil markets Hodges flags up the transformational changes in Saudi Arabia and political instability in the region which could push up oil prices. On the other hand record amounts of money are flowing into US shale gas and oil production.

“There is a disconnect here between rising prices and inventory-building and the explosion of activity in US production,” he said.

Interest rates are already rising in the West and in China and India have spiked significantly. Hodges questions borrowers’ ability to repay this debt at higher interest rates and asks if lending may seize up, as it did in 2008 before the last financial crisis.

The election of Donald Trump, the Brexit vote and rise of the far right in Germany signal a “howl of protest” by ordinary people about globalisation and falling living standards, he says.

“Outside the silo of the chemical industry these are the most uncertain times that any of us have lived in,” he says, adding that sustainability offers a fantastic opportunity for the chemical sector.