Summary
The chemical industry is a leading indicator for the global economy. The recent company results season gives no support for the idea that earnings are about to stage a major recovery.
Analysis
The good news is that the stabilisation seen in Q2 has been maintained. But chemical companies remain cautious on the outlook, to judge from Q3 reports.
CEOs are sceptical about the impact of government stimulus efforts in the West, and fear demand will fall back as these end. The only optimists are in China and India:
Akzo. "Overall we don't foresee a quick recovery."
BASF. "A very slow recovery and an uneven recovery at that."
Bayer. "Too early to speak of a self-sustaining upswing in industry".
Borealis. "We are seeing a slow grind upwards".
BP. "Margins under pressure in Q4 due to new capacity".
Bunge. "Fertilizer business pressured by weak pricing."
Celanese. "See modest recovery of global economies."
Croda. "Tough market conditions".
Dow. "Do not count on material improvements in market conditions."
Dow Corning. "Still feeling the impact of the global economic recession."
DuPont. "Seeing market stabilisation and early signs of recovery".
ExxonMobil. "Earnings down by 19%, mainly due to weak margins".
WR Grace. "Dynamic and challenging market conditions."
Henkel. "We see stabilisation in our markets".
Ineos. "Challenge is the slow return of domestic demand."
Lonza. "Environment of high volatility is expected to continue".
LyondellBasell. "Outlook weakened by signs of declining US PE exports."
Nalco. "Starting to return to a growth path as economies recover."
Occidental. "Continued weakness in the US economy".
PetroChina. "Ethylene output in the 9 month period rose".
Polimeri Europa. "Prolonged weakness in industry fundamentals".
Praxair. "Demand has yet to show meaningful signs of recovery".
Quaker. "Still a great deal of uncertainty in our end markets."
Reliance. "Demand for most petrochemical products remained strong".
SABIC. "Has maintained the same operational levels."
A Schulman. "Signs of economic recovery could prove misleading."
Sherwin-Williams. No real signs of "the rumoured economic recovery."
Shell. ""Affected by the weak global economy."
Sinopec. "Demand upturn of chemical products".
Solvay. "Continued to be affected by the difficult economic environment"
Trelleborg. "Demand in many segments remained weak".
Yara. "Distributors still unwilling to build inventories for the spring".
Yule Catto. "Uncertainty remained about the global economic situation".
BASF. "A very slow recovery and an uneven recovery at that."
Bayer. "Too early to speak of a self-sustaining upswing in industry".
Borealis. "We are seeing a slow grind upwards".
BP. "Margins under pressure in Q4 due to new capacity".
Bunge. "Fertilizer business pressured by weak pricing."
Celanese. "See modest recovery of global economies."
Croda. "Tough market conditions".
Dow. "Do not count on material improvements in market conditions."
Dow Corning. "Still feeling the impact of the global economic recession."
DuPont. "Seeing market stabilisation and early signs of recovery".
ExxonMobil. "Earnings down by 19%, mainly due to weak margins".
WR Grace. "Dynamic and challenging market conditions."
Henkel. "We see stabilisation in our markets".
Ineos. "Challenge is the slow return of domestic demand."
Lonza. "Environment of high volatility is expected to continue".
LyondellBasell. "Outlook weakened by signs of declining US PE exports."
Nalco. "Starting to return to a growth path as economies recover."
Occidental. "Continued weakness in the US economy".
PetroChina. "Ethylene output in the 9 month period rose".
Polimeri Europa. "Prolonged weakness in industry fundamentals".
Praxair. "Demand has yet to show meaningful signs of recovery".
Quaker. "Still a great deal of uncertainty in our end markets."
Reliance. "Demand for most petrochemical products remained strong".
SABIC. "Has maintained the same operational levels."
A Schulman. "Signs of economic recovery could prove misleading."
Sherwin-Williams. No real signs of "the rumoured economic recovery."
Shell. ""Affected by the weak global economy."
Sinopec. "Demand upturn of chemical products".
Solvay. "Continued to be affected by the difficult economic environment"
Trelleborg. "Demand in many segments remained weak".
Yara. "Distributors still unwilling to build inventories for the spring".
Yule Catto. "Uncertainty remained about the global economic situation".
Paul Hodges consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
