Chemicals sector sees improvement, but troubles remain

There are signs of a recovery in the chemicals business, but the start-up of a large volume of new capacity will pin down operating rates for some years, Martin Quinlan writes

THE WORLDWIDE chemicals business experienced a slight improvement in operating conditions last year – and some encouraging first-quarter 2010 results back up the view that the latter half of 2008 saw the trough of the business cycle. But new capacity due to start up this year in China and the Middle East seems set to depress operating rates elsewhere, so a rapid upturn in profitability is unlikely. Last year opened with the chemicals business depressed by de-stocking, as customer industries limited their exposure in the face of weak demand. But by the end of the year, there had been a transition, with customers cautiously rebuilding their stocks in readiness for demand growth. There was als