Economic Recovery Stimulates Global Chemical Market, Industry Forecast: Chemical Industry “Good Days†Sustained to Next Year
March 12 14:21:31, 2021
After a four-year depression, this year's chemical manufacturers finally ushered in a rare profitable opportunity. Although the rising cost of raw materials has put pressure on companies, the unusually strong market demand has driven the price of chemical products to rise. This has completely compensated for the negative impact of the increase in raw material costs and reduced profits. Market analysts said that this good day is expected to continue into next year. At present, with strong market demand, U.S. chemical company's installations are being fully loaded to meet demand. With this limited capacity and increasing demand, chemical companies have gained priority in product pricing. Since a relatively long period from investment to output is required, this market situation that exceeds supply will not be changed in the short term. Due to the general recovery of the global economy, the rising cycle of the chemical industry will continue for at least 18 months. Another analyst believes that the duration will continue longer. From chemical giant DuPont to ethylene producer Leonard, the profitability in the second quarter of this year exceeded analysts' expectations, because the global economic recovery stimulated the increase in demand for chemicals from industry, agriculture and consumer products. American FGP analysts believe that due to the further recovery of the global economy, the good performance of chemical companies in the second quarter will continue. Dow Chemical's sales revenue in the second quarter of this year hit a record high of US$ 9.84 billion, while profits jumped by 74%. The company told investors that although the performance in the second half may not be as strong as in the second quarter, the company believes that the profitability in the second half of this year will remain very strong. DuPont’s indicators in the second quarter of this year also increased significantly, while the company also raised its forecast for full-year profitability. BASF's second-quarter report also showed that its sales revenue in North America business increased by 11%, due to the increase in both sales volume and retail price. However, the inconsistent factors that lurk in the good quarterly reports—the rising cost of production also attracts attention. Despite a sharp increase in sales revenue of 13% in the second quarter of this year, Eastman's chief executive officer is still alerting investors not long ago: While we benefit from the economic recovery, we are also facing raw material and With high energy costs, the company will continue to work hard to find price increases for its products to make up for the negative impact of increased costs on the company's profitability. Kyle Loughlin, a credit analyst for Standard & Poor’s chemical business, pointed out that rising raw material prices, especially record high oil prices and natural gas prices, have become a factor that petrochemical companies must overcome. In order to ensure that the increase in raw material costs does not adversely affect the company’s profitability, chemical manufacturers must retain priority pricing of the products. The pricing of chemicals that use petroleum products as the main raw material is particularly important at the moment, and the chemicals involved include medicines, soaps and detergents, textiles, adhesives, coatings, pesticides, fertilizers, and plastics. According to an Exxon Mobil Corporation spokesperson, chemicals producers usually have a hard time with crude oil prices soaring, but the second quarter is an exception. Because of the strong economic recovery, the global market for petrochemical products The demand for polymers and polymers have shown strong growth in the context of rising prices. This is very rare. According to statistics, at the end of July, the spot price of ethylene in the United States has reached a high of $606/ton, a sharp increase of 35% from the price at the beginning of the year. The rise in the price of ethylene, which is the most important basic raw material for the petrochemical industry, will inevitably have a major impact on the product prices of the entire petrochemical industry. A Dupont company spokesperson said that the retail prices of vinyl products in 2003 and 2004 were no longer comparable.
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