Chemical Week
What can producers expect from the rest of 2024?
Aug 27, 2024
Rob Westervelt, a contributor from Chemical Week, joins experts Neirin Gray Desai and Mujidah Yahaya from S&P Global Commodity Insights to decode the chemical industry's climate. They discuss the troubling decline in demand, especially in Europe, and its effects on construction and chemical sectors. With rising costs and strategic plant shutdowns, the duo highlights the cautious investment climate. They also tackle the sluggish lithium market and the investment shifts towards hydrogen technology amid uncertain economic conditions.
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Quick takeaways
- North American chemical producers are facing decreased earnings due to high interest rates and diminished consumer spending, particularly in construction-related sectors.
- European producers are adopting capacity rationalization tactics, including asset shutdowns, to cope with weak demand and maintain profitability amidst a challenging market environment.
Deep dives
Impact of Consumer Spending on Chemical Producers
Consumer spending has significantly influenced the earnings of North American chemical producers, primarily due to high interest rates and inflation. This economic pressure has led to a decline in sales of durable goods, resulting in lower earnings for companies like Dow and Alpek, specifically within the construction sector where demand for polymers like PVC has diminished. Additionally, DIY-related spending decreased, impacting businesses like Home Depot and Sherwin-Williams, which rely on consumers enhancing their homes. Despite the bleak outlook, sectors such as polyethylene reported stable demand, particularly due to its use in essential home and personal care products.
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