The past few weeks have not been good for the chemical industry, with 4 major companies suffering significant problems: BASF warned that “customer demand in key markets has declined significantly” since October, and have temporarily shutdown 80 plants worldwide, whilst reducing production at another 100 plants. Dow suffered a major reverse with the last minute […]
Chemicals and the Economy
The impact of banking crises
The blog has been searching the websites of the major central banks, such as the IMF, World Bank, Federal Reserve and Bank of England, for research on the history of credit crises. Several readers, including Paul Noble of Parsons Brinckerhoff, have also kindly forwarded helpful studies. The most comprehensive study that it has found analysed […]
Is this a V, U, W, or L-shaped recession?
There is now general agreement that we are in a global recession. The World Bank’s new ‘Global Economic Prospects’ report expects global GDP growth of only 2.5% this year, and just 0.9% growth for 2009. This is well below the 3% level that signals recession. And the Bank also forecasts that world trade will contract […]
One rule for banks, another for manufacturers
The excellent Gretchen Morgenson makes a good point in her New York Times column today. As she puts it, “here in Bailout Nation, you’ll be surprised to learn, some of us are more equal than others”. Her argument is that Congress is operating to double standards. Last week, it refused to support $14bn of lending […]
Soros on leverage
George Soros is one of the most successful investors in recent decades. The blog came across today a report of Soros’ graphic description of the dangers of having too much debt in a business, or personally: “Leverage was like driving along a straight, clear freeway with a sharp spike pointing from the centre of the […]
The Age of Austerity
The world’s major retailers, particularly Wal-Mart and Tesco, keep a very close finger on the global economic pulse. They spotted looming recession 18 months ago – long before it became more widely apparent this year. Yesterday, Wal-Mart’s UK head went further, referring to “the dawning of the age of austerity”. He added that “this won’t […]
INEOS obtains covenant waivers
INEOS has now confirmed that it has obtained the required covenant waivers from its banks. They had little choice, as pushing INEOS into bankruptcy would have destroyed value on a massive scale for everyone concerned. But as the blog expected, lenders successfully demanded an increased interest charge in exchange for their consent. Investors’ attention will […]
Bankers turn to internet adultery
London’s largely-male banking community has a new way to pass its time, now financial markets have collapsed. According to Lucy Kellaway at the Financial Times, many are prospecting for adulterous affairs on a website called Illicit Encounters. Lucy says she has “picked up 247 men” since joining – including “a formerly powerful hedge fund manager, […]
China focuses on domestic growth
In September, the blog wondered whether “China’s interest in remaining the manufacturing capital of the world may be starting to wane”. Yesterday, Lou Jiwei, the chairman of China’s sovereign wealth fund (China Investment Corporation) confirmed the new focus on domestic growth. He suggested that “if China can do a good job domestically, that is the […]
INEOS’ covenant waiver request causes concern
INEOS is the world’s 3rd largest chemicals company. Its €7.29bn debt burden ($9.2bn) means that it is also Europe’s largest issuer of high yield debt. This is an unfortunate combination, given today’s chemical markets. Last month, INEOS was forced to ask its lenders for a waiver on its debt covenants. It offered to pay a […]
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