Companies remain cautious on the outlook
on March 1, 2012

Q3 results showed chemical companies being cautious over the outlook. Q4’s results have now confirmed the external environment remains difficult. The reasons are not hard to find:

• Slow growth in the global economy – BASF expect 2.7% again in 2012
• Uncertainties over the Eurozone debt crisis and its wider impact
• Concerns over the impact of high oil prices on consumer demand
• Worries about the future pace of growth in the US and China

To some, these represent the typical ‘wall of worry’ that promises outsize gains for brave investors. To others, they represent real and so far unsolved challenges.

Chemical companies can do very little to influence these events. Instead, they need to ensure their Base Case strategies have been tested against both positive Upside and more negative Downside Scenarios. Then at least, they will know what they need to do, whatever occurs.

Air Products. “Economic growth continued to slow this quarter”.
AkzoNobel. “Challenging year against the background of weaker global economic conditions and unprecedented raw material price inflation”
BASF. “Customers were more cautious in their ordering, reduced their inventories and put off orders in expectation that the economy would decline and prices could possibly soften”
BP. “Weakening market conditions as additional Asian capacity has come on stream at a time of weaker demand”
Bayer. “Overall business development in Q4 showed a mixed picture”
Brenntag. “Expectation of slower but nevertheless growing world economy”
Clariant. “Strength of the business unit catalysis and energy “
Dow. “Times like these demand a focused approach and strong resolve”
Dow Corning. “Prices softened in the face of global economic volatility”
DSM. “Challenging economic environment impacted most material sciences businesses”
DuPont. “Supply-chain inventories are low, and we expect demand to pick up slowly, starting late in Q1 or early in Q2”.
Huntsman. “Lower demand trends and aggressive customer destocking within Q4”
INEOS. “Offtake has picked up after heavy destocking at year end”
LyondellBasell. “We expect overall Q1 economic activity to remain slow in Europe and Asia”
Methanex. “Methanol demand growth is expected to significantly exceed new capacity additions over the next few years”.
OxyChem. “Higher caustic soda pricing more than offset higher feedstock costs”.
PPG. “Customers curtailed inventory and remained cautious with their ordering”.
PTT. “Earnings were negatively impacted by lower petrochemical margins”
Polimeri Europa. “Cracker margins were severely hit by higher supply costs of oil-based feedstock”
Praxair. “Higher volumes and prices also contributed to better sales figures”.
Reliance. “Weakness in economic conditions resulted in reduced earnings, particularly in our refining and petrochemicals businesses”
SABIC. “The decrease in net income is mainly driven by lower pricing environment in global markets for most of the products, despite increase in sales volumes.”
Solvay. “Significant slowdown in demand for vinyls in Europe, and to a lesser extent in its polyamide segment”
TOTAL. “Suffered from deteriorating margins in the second half of the year in Europe and in the US”

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