Global chemical operating rates have shown little improvement over the summer months. As the chart from the American Chemistry Council (ACC) shows:
- Rates in July were at 86.4%. compared to 87% in May
- This compares with the average of 91% between 1987 – 2012, and 86.7% in July 2012
- Total production was up 2.8% versus 2012, using a 3-month moving average
- Despite the $33tn of government stimulus, it is just 17.9% above average 2007 levels
July also saw a mixed performance in terms of production volumes in the major Regions:
- Asia was up 5% versus 2012, but the growth rate slowed from April’s 6.4% increase
- China’s growth slowed to 6.2% from 7.4%, although India’s rose to 7.4% from 5.7%
- The Middle East also saw growth slip to 2.8% from 4.2%
- N America saw a welcome improvement and was up 1.7% versus 0.7%
- The US jumped to 1.4% from 0.3%, whilst Canada was up 10.5% versus 5.7%
- Central/Eastern Europe was up 1.3% versus a decline of 2.2%
- Russia showed a gain to 2.9% from -4.1%
- W Europe was also up at 0.7% versus a fall of 0.9%, with most countries seeing an improvement
- Latin America was down 0.9% versus a fall of 1.2%, with Brazil stable at 1.2%
The ACC also report that “the most pronounced recovery occurred in the cyclical segments”. It will therefore be critical to see whether July will mark a peak for the cycle, or whether production growth will continue through H2. One potentially worrying sign for the US market is that the 13-week moving average of chemical railcar loadings, the best real-time indicator of industry activity, was up only 0.9% in mid-August versus 2012, whilst actual loadings have fallen in 8 of the past 13 weeks.