Learned a lot lending an editorial hand here:
By Vijay Sarathy, Marcus Morawietz, Jayant Gotpagar, and Jeremy Bebiak
Chemicals companies face a formidable challenge: delivering profitable growth in a hypercompetitive, low-growth world.
The structural headwinds in the chemicals industry are blowing like a gale out of the global economy. In a funk since peaking in 2007, global economies have been unable to reach the 35-year GDP growth average of 3.5 percent in six of the past eight years. And the two years of “high” growth were more of a bounce back from the sharp downturn of 2009 than precursors of a sustained turnaround.
Within this problematic macroeconomic environment, made worse for many multinationals by the strong dollar, demand for chemicals has fallen. Overall industry sales growth increased an anemic 2.1 percent in 2016 as the sector faced declining industrial production and broad inventory rightsizing by many of its customers. Chemicals companies that sell petroleum-based products often fell short of these industry averages because lower oil prices led to sharp top-line declines, sometimes in the range of 30 to 40 percent. Only naphtha-based producers benefited from oil price weakness, because it translated into materials cost reductions of about 60 percent for some companies, which greatly improved profit margins. Read the rest here.
The structural headwinds in the chemicals industry are blowing like a gale out of the global economy. In a funk since peaking in 2007, global economies have been unable to reach the 35-year GDP growth average of 3.5 percent in six of the past eight years. And the two years of “high” growth were more of a bounce back from the sharp downturn of 2009 than precursors of a sustained turnaround.
Within this problematic macroeconomic environment, made worse for many multinationals by the strong dollar, demand for chemicals has fallen. Overall industry sales growth increased an anemic 2.1 percent in 2016 as the sector faced declining industrial production and broad inventory rightsizing by many of its customers. Chemicals companies that sell petroleum-based products often fell short of these industry averages because lower oil prices led to sharp top-line declines, sometimes in the range of 30 to 40 percent. Only naphtha-based producers benefited from oil price weakness, because it translated into materials cost reductions of about 60 percent for some companies, which greatly improved profit margins. Read the rest here.
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