April 29, 2024

European and American Chemical Industry Says Chemical Market is Unpredictable in the Second Half of the Year

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The debt crisis in Europe is evolving toward the never-ending drama. The latest protagonist after Greece is the long-term credit rating of the two major banks. It is downgraded from grade A by Fitch to two gears. The best newcomer is Italy's contract. 2 trillion euros of debt (accounting for 120% of the country's GDP) has attracted worldwide attention. The United States has a "brake" on the road to recovery. In May, the unemployment rate rose to 8.2%. The economic growth rate in the first quarter was recently revised downwards from 2.2% to 1.9%. More and more countries in the Eurozone are in crisis, and the slowdown in demand in the Chinese market, which has been consistently strong since this year, has shrouded the global economy. The U.S. and European chemical companies have greatly reduced their confidence and expressed that the chemical market outlook in the second half is unpredictable.

Although the US chemical industry is still immersed in the joy of having a large amount of shale gas resources and is looking forward to the future competitive low-cost advantages, many CEOs of the company are turning negative on the outlook for the future. At the recent annual meeting of the American Chemical Industry Council (ACC) in Colorado Springs, American chemical company executives generally believe that the chemical market will be in trouble in the next few months. The debt crisis in the Eurozone and the drop in demand from China are the biggest concerns for them. At the same time, the drop in crude oil prices also puts pressure on chemical prices.

Chuck Anderson, OxyChem's president, said: "The market is now unpredictable and there are a lot of uncertainties. The company's performance will be extremely bad in June and July. Because the current crude oil price has fallen from more than $100/barrel. Below $85/barrel, chemical buyers are expecting lower prices. As a result, people are aggressively reducing inventory, and this situation will continue for some time until analysts think the price has bottomed out.” Chemical market performance in the first quarter was relatively strong, but in the past month, demand has significantly slowed. Anderson is very worried about the debt crisis in the euro zone and the slowdown in China’s economic growth: “The United States cannot be left unaffected.”

Although many chemical companies and analysts had predicted economic recovery in the second half of the year, they soon discovered that this hope is not realistic. “In the early days, most people in the industry thought that the market would be quite strong in the second half of the year. But after communicating with their peers, they changed their views.” Craig Morrison, president and CEO of Momentive Advanced Materials Corporation, said .

Pierre Brondeau, president and CEO of FMC, believes overall chemical demand is difficult to predict. “No one knows how the market will change in the future. The demand changes every week. It is difficult to predict the future trend.”

Western European producers’ confidence is also declining. According to a newly released report by the Ceresana Research Corporation, the number of chemical companies and plastics companies in Western Europe that have taken a positive attitude toward their operations has now dropped to 36.7%. This spring, the figure was 41.7%.

Ceresana pointed out in its report that the European debt crisis continues to pose risks to the global economy. When asked about their views on the current situation, less than half (47.1%) of the interviewees said they were "satisfied" with the current situation. 36.7% answered "good" and 16.2% said "not good." ". The situation in the Asia Pacific region is more optimistic. Two-fifths of respondents rated their operating conditions as "good" and 42% rated their operating conditions as "satisfactory." The most negative attitudes are in Eastern Europe. Only 32% of respondents believe that the business environment is “good”.

The report also pointed out that the global chemicals industry generally believes that in the next 6 to 12 months, the operating status may improve (42.5%) or remain unchanged (47.4%), and only 9.8% of respondents expect business The environment will get worse.

However, the prospects for some regions and chemicals are still promising. Morrison said that unlike the economic recession of 2008-2009, which was extremely wide-spread, this economic slowdown is selective. “Although, on the whole, Europe has been hit hard, the German market has been plagued, and the Netherlands is getting worse, Austria’s auto parts makers are still doing well.” He pointed out that with the depressing Compared with the first quarter, the Chinese market began to show dynamism: “In the first quarter, it was difficult for small-scale producers to obtain cash because of the tightening of lending policies. However, the current government is trying to stimulate demand again and the market is starting to improve.”

Anderson pointed out that as a large demand for soda ash and polyvinyl chloride, the construction industry is a growth point in the U.S. economy: “The construction market is constantly improving, especially in the housing sector, although the municipal construction market is still struggling. It has reached the level of 2006, but the market environment is improving.” Broondo also saw more opportunities in the fields of agrochemicals, lithium batteries and food additives.

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