6 months ago, when reporting Q1 results, the blog strongly disagreed with the rosy outlook being offered by most analysts. It warned then that:
“The history of the past 40 years shows high oil prices have always led to:
• An initial boom in volumes/margin as buyers rush to secure supplies
• Then a period of severe destocking, once oil prices stabilise
“Sadly, many analysts have only focused on the immediate short-term benefits. Some even upgraded their forecasts, on the assumption that good times are here to stay. The blog hopes they may prove correct, and that ‘this time is different’, but would not invest its own money on this basis.”Today’s survey of Q3 results shows markets have since slowed considerably. Companies operating in the Middle East and China still expect their growth to continue, but this is due to the different context in which they operate.
The level of caution is also rising. Those companies who reported at the end of October were relatively more confident than those reporting in recent days. The EU’s problems are a particular concern, as it represents 26% of the global economy.
Air Products. “Near-term economic outlook is for continued slow growth, and is clouded by global economic and policy uncertainties”.
Akzo Nobel. “”The crisis has also taken far longer and hit far worse than many of us feared.”
BASF. “”We remain cautious … as economic growth is likely to slow further. In particular, credit restrictions in China, as well as the debt crises in Europe and the US will adversely impact economic growth.”
BP. “Strong refining feedstock optimisation in the US due to accessing WTI-priced crude grades”.
Bayer. “Earnings diminished by higher energy and raw material costs”.
Borealis. “We are planning with a low-growth scenario for next year”.
Braskem. “Oil market volatility and reduced demand for petrochemicals continue to affect the scenario”.
Celanese. “Higher pricing across all operating segments and favourable currency impacts”.
Clariant. Expect “further softening demand, volatile currencies and stable raw material costs”.
ConocoPhillips. “Earnings rose 49% because of higher ethylene margins”.
Croda. “Sales growth and margin improvement in our core businesses”.
Dow. “We expect high-cost crackers in Asia and western Europe to begin to feel the margin compression in the very near term”.