GLG News by Mr. Paul Hodges, Chairman
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Chemical companies see upturn, but not yet a sustained recovery ahead
May 3, 2010
The chemical industry is a well-known leading indicator for the world economy. Yet 18 months after the financial crisis began, my regular review of company's quarterly results reveals few signs of optimism that a sustained upturn is underway.
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Propylene and butadiene prices rise above ethylene in Europe
March 27, 2010
The arrival of the new ethane-based crackers in the Middle East is starting to have its anticipated impact on olefin markets. This week, for the first time ever, European contract prices for propylene and butadiene were settled higher than ethylene. This is the first sign of the major impact that this new capacity will have on world markets, as demand growth continues to disappoint.
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UK media speculate over Ineos asset deals as EBITDA doubles
March 16, 2010
Ineos' EBITDA doubled last year to €1222m from €594m in 2008. Its liquidity has also improved by €100m as a result of the Kerling divestment, whilst the $350m fluorochemicals sale completes later this month. But as its Chairman Jim Ratcliffe told The Times in December, "at some stage there has to be an asset sale". Ineos is the UK's largest privately-owned company. The UK media are therefore starting to keep a close eye on developments.
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Chemical companies see no sign of a quick recovery
February 26, 2010
BASF damps hopes of quick recovery | www.ft.com
The chemical industry is a well-known leading indicator for the world economy. If a recovery was in sight for 2010, then companies would be seeing it by now. In fact, my usual survey of quarterly reports shows great unease, with CEOs worrying what will happen in the West as stimulus programmes fade. Sinopec also now sees challenges ahead. Only Reliance, focused on the Indian market, strikes an optimistic tone.
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Restocking not the same as Recovery
January 25, 2010
The Profit and Pain of Stimulus | online.wsj.com
Chemical companies are certain to report better results in comparison to the dreadful picture seen in Q4 2008/Q1 2009. But restocking, and support from government stimulus programmes, is not the same as a full consumer-led recovery. Volumes and margins are likely to remain under pressure, compared to the Boom years of 2003-7.
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Lenders in the driving seat with INEOS
December 5, 2009
Sales the key as Ineos juggles £5.9bn debt | business.timesonline.co.uk
Lenders are retaking control of debt markets, after a long period when buyers had the upper hand. Leading chemical company INEOS says it may be forced to make asset sales, if EBITDA targets are not met. But valuations today are much lower than in the Boom period, and buyers have become more choosy.
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Reliance offers c$10bn for LyondellBasell
November 22, 2009
Reliance offers about $10bn for Lyondell | www.ft.com
First IPIC, now Reliance. The ongoing crisis is the petrochemical industry is encouraging deep-pocketed buyers to step forward. These are strategic purchases, but they are taking place at very discounted values compared to those of the 2003-7 Boom years.
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Abu Dhabi looks to build its petchem activities
November 18, 2009
IPIC Mulls Bayer Joint Venture, Not Acquisition, Chairman Says | www.bloomberg.com
The Middle East is continuing to grow its role in petrochemicals. The latest move is by Abu Dhabi, to access technology for its ambitious new multi-$bn Chemaweyaat project.
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Chemical Companies remain Cautious on the Outlook
October 31, 2009
Looking at the world from a stable but low level of activity | www.icis.com
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.
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Chemical Companies face Bumpy Road in 2010
October 17, 2009
10,000: Then and Now | www.nytimes.com
2010 should be a better year for the chemical industry, as demand grows in line with a recovery in global GDP. But a quick V-shaped return to the 2003-7 Boom years in terms of volumes/margins seems unlikely.
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China's Economic Recovery "Uncertain" - Premier
August 27, 2009
Economic recovery will take some time, premier warns | www.chinadaily.com.cn
China is a major player in the global chemical industry. But doubts are now emerging about the underlying strength of its recent economic revival.
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The Analysts have got it Wrong - No Sign of an Upturn in Chemicals
August 1, 2009
Chemicals: What have We Learned This Week? | internationalechem.blogspot.com
Many analysts, having failed to spot last year's downturn, are now making the opposite mistake and hoping to spot a quick recovery in chemical demand. But a large number of companies reported this week, and only China's Sinopec saw any sign of strong demand ahead. BASF, the world's No 1, was even worried things could get worse again.
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US Chemical Demand Bouncing along the Bottom
July 2, 2009
US June auto sales fall 29% | www.icis.com
The freefall in US chemical demand has come to an end, now inventories have been reduced down the value chain. Latest figures on housing and auto demand show we are bouncing along the bottom, but give no sign of any green shoots of recovery.
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Ineos talks of PetroChina Deal for Grangemouth
June 18, 2009
Fresh speculation over future of Ineos | www.falkirkherald.co.uk
An INEOS senior manager has told the local council that the company is in talks to sell part or all of the Grangemouth refinery in Scotland. The cash would come in useful, given that Ineos has to agree a new businesss plan with lenders next month.
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Chemicals M&A: V-Shaped Sellers meet L-Shaped Buyers
June 8, 2009
Oil, gas M&A transactions derail in 2008 | www.ogfj.com
M&A activity is much lower than in the past. At the moment, many deals are stalled due to sellers adopting a V-shaped outlook, and expecting a quick profits recovery, whilst buyers are worried about the potential impact on profits of a prolonged L-shaped downturn
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New US Auto Fuel Standards provide Chemical Companies with Major Opportunities
May 19, 2009
Obama to Toughen Rules on Emissions and Mileage | www.nytimes.com
President Obama is introducing tough new standards for auto fuel economy from 2012. This will provide good opportunities for the major polymer companies to replace current use of metals and glass. It will also lengthen European gasoline markets, providing petrochemical companies with the opportunity to obtain advantaged cost feedstock from struggling refineries
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Chrysler Bankruptcy puts Major Pressure on US Chemical Sales
May 4, 2009
Chrysler bankruptcy to shake US supplier chain | www.icis.com
Two years ago, the US auto market was worth $46bn in chemical and polymer sales. The market will be worth just $24bn this year, if auto sales continue around the 9 million level. The closures recently announced by the world's top 3 chemical companies (BASF, DOW Chemical and LyondellBasell) are only the start of the cutbacks.
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Difficult times call for tough decisions
April 15, 2009
LyondellBasell plans 14 plant closures, 4,800 job cuts | www.icis.com
LyondellBasell has appointed a COO for the first time, with a brief to consolidate management of the worldwide businesses. The new man has wasted no time in announcing major cost-cutting, with $1.3bn already targeted for year-end 2010. He has also been very realistic about the market outlook.
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Dow Chemical buys high, fails to sell its petchem assets
March 11, 2009
Dow Chemical Capitulates, Agrees to Buy Rohm & Haas | online.wsj.com
The implementation of Dow Chemical's strategic transformation from commodity chemicals to a more innovation-driven portfolio has not gone well to date. Dow has also lost a lot of respect within the chemical industry, as a result of its failure to have developed a Plan B, to cover the risk that Kuwait would walk away from the K-Dow deal.
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BASF - The German Oil and Gas Company
March 2, 2009
BASF to Close Plants in Cash Drive as Dividend Upheld | www.bloomberg.com
BASF advertises itself as 'The Chemical Company'. It has also built up a wide range of global businesses. But its 2008 profits show it is becoming increasingly dependent on the oil and gas sector, and its German operations, as the recession develops.
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