Mr. Michael Brown

GLG News by Mr. Michael Brown, President

Specialty Chemicals Growth in 2010 Will be Modest and Uneven and Led by China

October 21, 2009

Analysis of:10,000: Then and Now | www.nytimes.com

Signs are emerging in the specialty chemicals value chains that show an overall improving global economy, but one with unevenness by region and by economic sector. Our indicators show China leading all regions in 2010 growth while manufacturing will lead all sectors. Lagging will be housing and the regions of North America and Europe.

Flexible Packaging Industry depends on Consumer Spending for Growth

October 13, 2009

Analysis of:Flexible packaging will return to growth in 2011 | www.europeanplasticsnews.com

Flexible packaging volume growth is highly dependent upon the growth of consumer products, particularly non-discretionary products such as food. Value growth is dependent upon volume as well as pricing which has been under pressure in 2009 as the inputs associated with oil have dropped in price forcing packaging producers to pass on much of the decrease. Value will likely be down this year but volume will not.

Huntsman's Move In China Should be Polyurethane

September 28, 2009

Analysis of:Huntsman seeks deals in China | www.ft.com

Huntsman has announcement they are seeking deals for their textile chemicals business in China which seems misplaced given the strength and importance of their polyurethane business in this region.

BASF Nylon Plant Closure Reflects a Global Shift in Demand

September 21, 2009

Analysis of:BASF to Close Permanently Nylon-6 Plant in Germany | chemweek.com

BASF's closure of the nylon 6 plant in Rudolstadt, Germany is reflective of the broader global trends affecting nylon - slower demand growth that is shifting toward China and away from Europe and North America.

Chemical Industry Study on Greehouse Gases - an interesting framework

July 21, 2009

Analysis of:Chems industry reduced global GHG by 11% in 2005 - ICCA | www.icis.com

The International Council of Chemical Associations emissions be enabling applications and technologies that serve to reduce overall societal emissions. Of great importance are chemical-based insulation, crop fertilizer/protection chemicals and improved lighting.

BPA regulations pick up momentum

May 20, 2009

Analysis of:City of Chicago Bans BPA | chemweek.com

The recent regulation by the City of Chicago which bans the use of bisphenol A (BPA) in food/beverage containers for children continues the increasing trend that started in Suffolk County (New York).  Banning or limiting the use of plastics and resins containing (BPA) will impact the infant care and metal packaging markets the most.  BPA-free alternative technology is available but users and converters in these industries will have to make trade-offs and in some cases invest in new equipment and tooling to make the switch.

Rail shipments for chemicals remain weak

May 15, 2009

Analysis of:Rail group warns economic recovery still far off | finance.yahoo.com

The chemical industry is often considered to be a leading indicator of the broader economy.  Rail shipments are considered to be a leading indicator of the chemical industry since they are comprised predominantly of early value chain commodity chemicals.  Thus, chemical rail shipments can be considered a leading-leading indicator for the broader economy.

BPA has alternatives, but there are tradeoffs

April 6, 2009

Analysis of:Legislative floodwaters rise against BPA as packagers, suppliers evaluate options | my.packexpo.com

Recently enacted local regulations banning the use of resins containing bisphenol-A (BPA) will impact the metal packaging and infant care markets the most.  BPA-free alternative technology is available but users and converters in these industries will have to make tradeoffs and in some cases invest in new equipment and tooling to make the switch.

US Rail Shipments Suggest No Bottom Yet for Chemicals

March 25, 2009

Analysis of:Key figure of U.S. chemical demand falls | www.reuters.com

Rail shipments are considered to be a leading indicator of demand in the chemicals industry, trending downward the last couple of weeks suggesting chemicals has yet to see the bottom for demand in the US.

Dow Must Make the Rohm Deal Happen

March 6, 2009

Analysis of:Dow Chemical shares drop to new 24-year-low | www.reuters.com

The headlines are filling this week with analyses of the Dow/Rohm and Haas deal as both companies head to court next week.  The focus of many analyses continues to be on short-term financial and legal challenges, not the more important longer-term future of Dow.  As painful as the next few weeks and months may be, Dow must press through and close this deal to position itself for the future.

Doing the Rohm Deal is Not Dumb

March 6, 2009

Analysis of:Making Dow Do The Rohm Deal Is Dumb | www.forbes.com

Too much continues to be said about the near-term implications of Dow closing the Rohm and Haas deal.  Rohm provides a very good pathway in Dow's transition to a purer specialty chemical company.  This is not a dumb deal, but rather an unfortunately timed deal that Dow must work through and close.

Is the Lube Market Really Recession Resistant?

March 6, 2009

Analysis of:Hot Lube Markets Will Weather Downturn | www.imakenews.com

The lubricant market has many segments and one should be careful broadly characterizing it as "recession resistant" or "capable of weathering a downturn" as the article title implies.  Certainly the lube market for transportation engine oil is relatively stable due to the high number of vehicles already on the road, all of which must be maintained.  However, half of the lubricant market is for products consumed in manufacturing processes, a sector of the global economy suffering significant loss of demand.  Especially hard hit has been automobile manufacturing where volumes are down 30-40% from 2008.  The process oil and metalworking fluids segments are suffering from substantial demand loss and should not be considered "recession resistant".

Stimulus Impact on Chemicals will be Modest

March 5, 2009

Analysis of:President's stimulus bill: will it help the chemical industry? | www.icis.com

The author continues to investigate and comment on the impact the Economic Stimulus Package will have on the chemicals industry.  Consensus is building that the impact will be modest, especially in light of the substantial drop in demand the chemical industry has suffered the last six months.  Producers most likely to benefit will be those supplying chemicals in to concrete, asphalt and commercial building products such as paints, plastics and adhesives.  The impact will likely be extended over three years, with much of the demand coming in 2010.

Impact of the Economic Stimulus on Specialty Chemicals

February 19, 2009

Analysis of:US stimulus throws lifeline to construction | www.ft.com

The impact of the American Recovery and Reinvestment Act (aka "Obama Stimulus package") on the specialty chemicals industry, specifically paint and coatings, is becoming clearer as details emerge about the type, location and timing of spending.  Construction and infrastructure projects will create new surfaces that need the protection of paints and coatings. Suppliers of these specialized industrial coatings include Sherwin William, PPG, RPM, Valspar and Akzo Nobel.  Most of these coatings are based on epoxy and polyurethane chemistry, so the suppliers of these resins will also be winners including Hexion, Dow Chemical, Bayer MaterialScience and Huntsman. The roughly $300 billion of construction and infrastructure projects are expected to create $750 million to $2.25 billion of demand for paints and coatings over three years.  This equates to about 2-3%/yr of growth - only modestly stimulating in an industry that lost 9% volume in 2008 and is expected to lose another 7-10% in 2009.

Too Much Focus on DOW's Near-Term

February 9, 2009

Analysis of:Paulson urges Dow to close Rohm and Haas deal | money.cnn.com

There has been considerable focus on the ROH deal and the short-term implications to DOW.  DOW had a clear strategy pre-deal to focus on specialty chemicals and to divest away from commodity chemicals.  Contract language is not the only reason this deal should go through.  Management should stick to pre-deal plan (for which they received broad support) and focus on the long-term vision for the company.  Moving away from commodity chemicals and focusing on specialty chemicals is vital to the long-term health of the company.

Akzo has other options but ICI remains a good option

July 24, 2007

Analysis of:Akzo Nobel stays silent on ICI | www.ft.com

While ICI remains a very good option for Akzo, they do have other acquisition options for growing their coatings business and maintaining their global market share lead.  These options include Sherwin Williams, PPG, Valspar and DuPont Performance Coatings (carve-out). Each of these target brings a different set of market synergies and challenges.

Why is GE Selling its Plastics Unit?

January 11, 2007

Analysis of:G.E. Is Said to Be Seeking a Buyer for Its Plastics Unit | www.nytimes.com

GE, the industry leader in engineered plastics is set to divest one of its highest profile businesses, a business in which Jack Welch earned his stripes early in his career.  The reasons that GE has publicly given for the divestiture do fully portray the complete picture of how the engineered plastics market has fundamentally changed. This causes not only GE, but its competitors such as DuPont to rethink their participation.  The miracle materials of the mid-1900's have matured and with this maturity comes the pains and problems associated with specialty materials becoming basic materials.

Recycle of Consumer Plastics for Automotive Applications

August 9, 2006

Analysis of:GE Plastics gains strength | www.berkshireeagle.com

The recycle of polyester consumer waste is a moderately important trend in automotive for the following reasons:

1.  Recycled resins generally reduce the cost of the resin sold to the automotive part molder allowing compounders such as GE to address the continual cost pressure from the automotive OEMs.

2.  Properly coordinated, the message of recycle can be marketed by GE ("Ecomagination") and the automotive OEMs to capitalize on the consumer trend of increasing emphasis on the environmental impact of automobiles in their purchasing decisions.

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