Suppliers' profit growth may slow
Staff -- Purchasing, 11/4/2004 2:00:00 AM
Bolstered by price increases and continuing strength in shipment volumes, chemical firms are expected to post significant gains in profits in the third quarter. However, sister Reed Business Information publication Chemical Market Reporter says some analysts are expressing caution for fourth-quarter earnings as oil and gas costs continue to climb and certain leading indicators point to a slowdown. "With anecdotal comments suggesting that volumes remained strong through September and that price increases continue to gain traction, it appears the September quarter, even with high feedstock prices, will be a strong one for chemical companies," Deutsche Bank analyst David Begleiter tells CMR. However, with high feedstock costs likely to rise, and the first signs of moderating demand from high energy costs now appearing, earnings upside will be limited."
Gains are expected to be greatest in the major and commodity chemical sector. Specialty chemical companies should post solid, but more modest gains. Wall Street has been rushing to boost profit estimates, especially forecasts for 2005 and 2006. While a number of analysts had long expected margins at the next peak to be below those of the previous peak in 1994 to 1995, they are becoming more optimistic on prospects of a strong recovery. "Ethylene/polyethylene margins will recover to 1995 peak levels, despite the step change in crude oil and natural gas prices," forecasts Merrill Lynch analyst Donald Carson.
EG price spikes on demand surge
10/03/2004World copper price jumps to $2.70/lb
08/04/2009Feedstock costs pressure polypropylene
08/01/2004
Now Playing: 