The chemical industry has a long track record as a leading indicator for the global economy. Its position in the value chain means that it sees what is happening upstream in energy markets, and downstream in consumer markets.
Anyone studying Q2 results will therefore be concerned about the outlook.
This is a major shift from Q1. Then, some companies were relatively optimistic, whilst others were more cautious. This uncertainty led the blog to suggest that “Scenario planning, based on Dow’s Upside view and Unilever’s Downside view, could prove a very valuable exercise“.
Today, there are still some companies such as Bayer and DuPont who remain optimistic about their specific market sectors. But Dow’s change of heart is a clear sign of the likely problems that lie ahead: “the global macro environment is not improving at the rate previously anticipated, and we have structured our business plans accordingly”.
In difficult times, there is a natural tendency to hide under the bedclothes, and hope the problems will go away. But wishful thinking is not a strategy, and it could easily lead to disaster. Thus the blog recommends Shell’s comment ‘moving forward in volatile times’ as a motto.
As always, it stands ready to help and advise any Board or business who would value an external perspective on the challenges and opportunities that likely lie ahead.
Air Products. “Current economic uncertainty continues to impact our near-term volume growth”
AkzoNobel. “Concerns are focused on the risk of recession in Europe, delayed recovery of the US property market and the potential of a slowdown in Asia”
Arkema. “Challenging macroeconomic environment, marked by contrasted market conditions between the various geographic regions of the world and the price fluctuations of raw materials”
BASF. “”No-one can tell when business will pick up again… Customers continued to act cautiously”
BP. “Particular weakness in aromatics margins, resulting from growing capacity and subdued demand”
Bayer. “Confident for the second half of the year”
Borealis. “Weak economic sentiment in a decreasing price environment”
Brenntag. “Brenntag operates successfully even in the current challenging economic conditions”
Celanese. “Weakened economic environment in Europe and slower growth in Asia contributed to lower sales”
CEPSA. “The burgeoning economic crisis in Europe, and particularly in Spain, continues to weigh on the company’s results”
Clariant. “Slowdown in global economic growth and the crisis in Europe did not materially impact the non-cyclical business units”
DSM. “Global economic outlook in H2 is ‘more uncertain'”
Dow. “The global macro environment is not improving at the rate previously anticipated, and we have structured our business plans accordingly”
Dow Corning. “Oversupply and high raw material costs challenged the company’s profits”
DuPont. “Agriculture, food and bioscience businesses are performing exceptionally well globally”
Evonik. “We are on course in waters that are getting rougher”
ExxonMobil. “Underlying performance weakened because of lower margins and volumes”
INEOS. “Impact of steeply declining oil prices during Q2 adversely affected May and June”
Indorama. “The last 12 months have witnessed extreme volatility that closely shadows what we experienced in H2 2008”
LG Chem. “Expects a gradual improvement in demand from China in Q3”
Lanxess. “Expects raw material and energy costs to remain volatile “
LyondellBasell. “Fundamentals look good for the rest of the year”
Methanex. “Methanol demand has remained good and the pricing environment has been relatively stable”
Mitsubishi. “Sluggish demand from overseas markets”
Olin. “Improved prices and higher bleach and hydrochloric acid volumes, more than offset lower chlorine and caustic soda volumes”
PKN Orlen. “Market expectations of falling prices because of decreasing crude oil prices”
Oxychem. “Lower exports and prices”
PPG. “Challenging business conditions in Europe in tH”, and North America and Asia growth to remain inconsistent by end-use market”
PTT. “Weakening demand for intermediate and downstream derivative products”
Praxair. “N American business compensated for weakness in Europe and S America”
Reliance. “Weaker profit margins for polyester and polyester intermediates were slightly offset by margin deltas on polymer products”
SABIC. “Continuous slowdown in global economic growth, especially in Europe, China and North America, negatively impacted prices”
Shell. “We are moving forward in volatile times”
Siam Cement. “Negative effects of a global chemicals trough in Q1”
Solvay. “Business dynamics should remain healthy for our growth engines and challenging for our cycle sensitive businesses”
Sumitomo. “Feedstock prices spiked while selling prices of products fell”
TOTAL. “Operating margins also recovered in Q2 as a result of the decline in crude prices and reduced supply”
Unilever. “Deteriorating global economic conditions and a competitive environment which remains intense”
versalis. “Weak commodity demand impacted by the downturn”
Wacker. “Significantly lower prices, especially in the solar-silicon and semiconductor-wafer businesses