Chemicals demand is on the upswing
Suppliers paint rosier picture, buyers see demand growth heading into fourth quarter
Dave Hannon -- Purchasing, 10/19/2009 3:24:20 PM
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The chemicals industry has been hit as hard, if not harder, than other industries by the recession, but there are more signs that demand for chemicals is on the upswing.
In Purchasing's latest buyers' survey, 35% of buyers at chemicals-consuming companies said business was improving this month and the business conditions index for chemicals-consuming firms (53.6) has remained above 50 (indicating growth) for three months. To put that number in perspective, at its low point, the business conditions index for chemicals-consuming companies hit 22.6 in December 2008.
While longer-term (90-day) buying plans at chemicals-consuming companies slipped below the 50 line in October, they were growing for July, August and September. Short-term buying plans for organic and inorganic chemicals have been hovering in the high-40s for most of the year.
Overseas, China remains one of the biggest demand drivers for petrochemicals. Following his company's recent earnings relased SABIC CEO Mohamed al-Mady said prices climbed in the third quarter from the second.
"Demand is coming mainly from Asia," al-Mady said at a press conference reported by Bloomberg. "We've seen an improvement in prices and demand."
Asian giant Sinopec said it plans to start up a major petrochemical complex in eastern China's Zhejiang province by the end of the first quarter of 2010 at the earliest, as scheduled. The ethylene plant will churn out more than one million metric tons per year and will be the fourth major ethylene project to come on line since this year as China moves to reduce its dependence on imported petrochemicals.
But with firming demand comes increasing prices. After spending most of the first half of 2009 below the expansion line, organic and inorganic prices have shown growth in the third quarter, according to buyers.
"Chemical prices dipped down significantly for the first eight months of the year, but that trend is reversing now," says the director of supply at a surfacing firm in the Northeast.
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