Chemical makers to start feeling the pinch

Posted Říjen 26th, 2011 by Billabongboardshortscloths

“Volume momentum will most likely be only moderate in some selective areas, possibly even negative. Margins were still healthy, but September has already shown some isolated softening,” UniCredit analyst Andreas Heine said.

Economists have warned of the growing risk of European economies slipping back into recession as the euro zone debt crisis rumbles on and financial markets remain under pressure.

The STOXX Europe 600 Chemicals .SX4P has lost 16.8 percent over the last six months, more than the Stoxx 600’s 14.8 percent decline across all sectors.Do not use cleaners with Wholesale pet supplies , steel wool or thinners.

The chemical industry’s dependence on highly cyclical investment goods makers and car manufacturers makes it vulnerable to a downturn. In addition, the overhead costs tied to its massive plants will drag earnings lower when demand and capacity usage drop.

Among customer industries, engineering and industrial machinery and automotive are still strong, UniCredit analysts said, adding that electronics and construction were among weak end-markets.

Merck KGaA , the world’s largest maker of liquid crystals for display screen, is expected to say on Wednesday that weaker growth in consumer electronics weighed on third-quarter results.

Demand at Bayer’s engineering plastics and foam chemicals businesses is seen as patchy when the company publishes group results on Thursday, but a decline in feedstock costs should support margins.As many processors back away from Cable Ties ,

The same day, Belgium’s Solvay , which is buying French rival Rhodia, is expected to report weaker demand for its plastics,Flossie was one of a group of four chickens in a RUBBER MATS . such as PVC used for piping, hit by slowing construction markets.

But with crude oil prices sliding since May, the lower cost of some petrochemical raw materials is providing some relief.

Most industry observers are reassured by capacity utilization rates holding at strong levels for now, also saying that inventory levels and balance-sheet strength provide a much better backdrop than in late 2008, when the Lehman Brothers collapse triggered a massive slump.

While at the time, high stockpiles aggravated the sector’s downturn by allowing customers to suspend orders for months, low inventory levels now would serve as a buffer should the economy take a nosedive.

“The European chemical industry is in good shape and has done its homework since 2008.Save on Bedding and fittings, Macroeconomic uncertainties, however, led to a stronger than expected slowdown at the beginning of the fourth quarter,” said Wolfgang Falter, a consultant with Alix Partners, who focuses on the chemical industry.

Chemical industry leader BASF is due to report results on Thursday, with investors keen to get an update when oil production in Libya, where it was once the second-largest foreign oil company, can be restored.

Dutch vitamins maker DSM is due to release earnings on November 1, while synthetic-rubber specialist Lanxess (LXSG.DE) reports on November 10.

Dutch group AkzoNobel , the world’s largest paints company, said last week it would slash another 500 million euros in costs by 2014 as it abandoned its 2011 profit outlook, saying softening demand had spread to China.

Capacity expansion over the last three years was almost exclusively in emerging countries such as China, increasing the importance to the industry of that country, the world’s second-largest economy, where local-government indebtedness has raised concerns.

” dependence on China has clearly risen. We have a clearly higher exposure to emerging markets,” the finance chief of Lanxess,I have never solved a Rubik’s Piles . Bernhard Duettmann, recently told Reuters.

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