Destocking follows previous recession experience
on February 24, 2009

stocks feb09.jpgDestocking is currently a key issue for the chemical industry. The above chart, from Andrew Sentance of the Bank of England, provides some useful clues as to where we are in the cycle. It shows current performance (the green line) versus the history of stock levels in the recessions of the early 1980’s (blue) and 1990’s (red). It is based on UK industry, but should be reasonably representative of global conditions.
Each line begins 5 quarters before the start of the recession. They show that the onset of recession typically causes a period of “aggressive destocking“. History would therefore suggest that we are now past this point. However, they also indicate it will be some time before demand picks up sufficiently for inventories to return to pre-recession levels.

Share This Post
Leave A Reply