Chemical companies see upturn, but not yet a sustained recovery ahead
on May 1, 2010

The chemical industry is a well-known leading indicator for the world economy. Yet 18 months after the financial crisis began, the blog’s review of quarterly company results reveals few signs of optimism that a sustained upturn is underway.
Q1 has certainly seen the forecast seasonal boost. But Asia, particularly China, remains the real focus of growth. PetroChina, Reliance and Sinopec all see a continuing boom underway, with Sinopec highlighting the importance of “state stimulus measures”.
Dow Corning is certainly bullish, seeing “recovery in nearly every industry and geography”. Whilst Cognis, also focused on ‘green markets’, detects improved demand in Europe. But although Dow sees “demand growth returning in developed markets”, it notes significant “challenges” remain.
Equally, Akzo Nobel seems typical of the majority when noting it remains “cautious about the strength of the recovery”. BASF also notes that “recovery is not certain”. And several companies, including Rhodia, worry about the “uptrend in raw material and energy costs”.
Air Liquide. “In a context that remains contrasted, this first quarter of 2010 marks the return to growth”.
Akzo Nobel. “Expect pressure from further raw material cost increases during the year and remain cautious about the strength of the recovery”.
Ashland. “Asia-Pacific remained the most difficult market for recovering raw materials costs; Europe remains tough due to the competitive environment”.
BASF. “Limited supplies of certain chemicals as well as restocking of inventories among customers buoyed demand…. We expect that national stimulus programmes around the world will wind down. Further recovery is therefore not certain and surprises cannot be ruled out for 2010.”
Bayer. “The decline in business momentum at HealthCare and CropScience was being offset by the recovery at MaterialScience”.
BP. “Petrochemicals margins would come under pressure due to new capacity coming on stream”.
Celanese. Asia is “the only region in the world that’s growing”.
Cepsa. “A more buoyant global operating environment with better product prices”.
Clariant. “We expect the economic recovery to remain fragile and raw material costs to further rise heading into the seasonally weaker second half of the year”.
Cognis. “Business conditions improved due to a pickup in worldwide demand, especially in Europe”.
ConocoPhillips. “Chemicals experienced improved market conditions.”
Cytec. “There is still some uncertainty about the recovery, and higher energy prices will show up in our costs for the second quarter.”
Dow. “Demand growth was returning in developed markets, with strengthened consumer spending in areas such as electronics, appliances and automotive …balancing out challenges in residential and commercial construction, inflation in emerging markets and sovereign debt issues in southern Europe”.
Dow Corning. “Seeing this recovery in demand in nearly every industry and geography we serve”.
DSM. “Uncertainties remain in the medium-term economic outlook.”
DuPont. “Expected stronger sales growth operating margins as global economic improvements continued, with particularly strong demand in Asia Pacific.
Eastman. “Expected continued volatility in raw material and energy costs”.
ExxonMobil. “Q1 chemical product sales were 6.488MT, up by 961KT in Q1 2009, primarily due to improved global demand”.
Honeywell. “The timing and shape of the recovery is uncertain and we remain conservative in our planning assumptions”.
Idemitsu Kosan. “Demand for petrochemical products recovered, assisted by China’s economic stimulus package.”
INEOS. “Just as the orders dried up suddenly in August 2008 so they have abruptly resumed in the past couple of months”.
Kemira. “Uncertainty remained regarding the development of demand”.
Lubrizol. “Do not expect full recovery to our 2008 volume level until 2011…also expect tight supply conditions for some of our raw materials that will result in upward cost pressure.”
Occidental. “Significant margin erosion in 2009 carried over into the first quarter of this year.”
Olin. “Had a Q1 operating rate of 75%, compared with 65% in Q1 2009.”
PetroChina. “Ethylene output surged 37% year on year in Q1, with production of other petrochemicals also strong.
PPG. Saw continued “moderate recovery” in several of its global end-use markets over the quarter.”
Quaker. “Anticipate somewhat lower product volume in H2 …due to credit-tightening actions in China, seasonal factors, the ending of inventory restocking and the conclusion of tax incentives for auto purchases in several countries”.
Reliance. “Domestic demand for most petrochemical products remained strong in the January to March period, with polymers demand up by 19% and demand for polyester and fibre intermediates up by 15%”.
Rhodia. “The upward trend in raw material and energy costs is expected to continue”.
Rockwood. “Difficult to determine what impact customer inventory rebuild is having on our sales.”
SABIC. “Overcoming the impacts of the global financial crisis, as well as continuing our strategy of growth and investment in new industrial plants”.
Shell. “Industry refining margins had significantly declined reflecting reduced demand for refined products”.
Sherwin Williams. “Sales were slightly stronger than we anticipated, although domestic demand remains soft”.
Sinopec. “In light of state stimulus policies, demand… grew steadily and the company took various proactive measures to expand the market and optimise the product mix”.
Syngenta. “Expects volume growth from Q2 onwards”.
Tessenderlo. “Visibility on H2 remains low”.
TOTAL. “Chemicals has benefited from the economic recovery since the start of the year.”
Trelleborg. “Warned that the demand scenario remains uncertain”.
Unilever. “Commodity costs will increase in the second half, economies remain sluggish and competitive intensity will remain high”.
Vopak. “We notice the first signs of structural recovery of the European chemicals market.”
Wacker. Focused on ” improving our cost structures and increasing our competitive edge.”

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