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.