MADRID (ICIS)–Latin American petrochemicals prices remain in the doldrums due to global oversupply, but domestic producers are hoping a sustained increase in freight costs and protectionist measures could start improving their dented market share. Petrochemicals in the world’s quintessential ‘price taker’ region – Latin America remains a net importer and therefore is at the mercy of global price swings – have had some of the toughest years in memory: high levels of lower-priced imports have heavily reduced operating rates in the region. In Brazil, producers’ operating rates stood in May at a record low of 58%, according to the country’s chemicals trade group Abiquim. The story repeats itself in most Latin American countries, perhaps with the only exception of Mexico. There, the government increased import tariffs in several chemical products and the country’s North American status makes its petrochemicals industry less prone to the woes its southern neighbors have to deal with. Still, Braskem Idesa, the largest polyethylene (PE) producer in Mexico, has not been able to avoid the competition from imports from Asia and the US in a much-oversupplied polymers market, with its sales and profit also hit by the situation. Most economists believe Argentina’s GDP is going to fall around 4-5% this year, with a stronger rebound in 2025. However, most petrochemicals suffered heavy falls in demand this year of around 40%, according to some sources. In Latin America as a whole, players in the PE and polypropylene (PP) markets, two of the most widely used polymers, expect little improvements in demand in coming months, under a global oversupply which is expected to remain or even widen as yet more capacities come on stream. BRAZIL: THIRST FOR GASPetrochemicals producers in Latin America’s largest economy, Brazil, have been losing market share for the past two years as China’s dumping of its oversupplied chemicals to the rest of the world continues apace. The chemicals trade group in the country Abiquim, in which polymers major Braskem has a commanding voice, grasped its opportunity when President Luiz Inacio Lula da Silva took office in January 2023. Abiquim started then a lobbying campaign for higher import tariffs – the previous liberal-minded administration of Jair Bolsonaro had lowered them – to protect domestic producers’ market share, but also calls about high natural gas prices which, producers say, is making the industry uncompetitive in the global stage. Lula’s cabinet, whose declared aim is to create more and better industrial jobs, has listened to Abiquim and in 2023 raised tariffs twice, and another increase is widely expected by September after a public consultation in which the industry – Abiquim as well as individual companies – requested increasing tariffs in more than 100 chemicals. On the other hand, a coalition of a variety of trade groups who import most of the chemicals they use in their manufacturing processes – plastics converters, for example – have been lobbying on the opposite direction: for tariffs to stay unchanged or, in their best scenario, even lowered. In natural gas, Brazil’s prices are admittedly much higher than the US’, the other large Americas’ chemicals market. According to Abiquim, they are five times higher, although that multiple varies according to the obvious gas price swings. In June, Lula and several ministers went to gas-rich Bolivia to sign deals to increase imports of natural gas as well as fertilizers, taking with them several executives from manufacturing trade groups; Abiquim’s head, Andre Passos, was part of the entourage. Only time will tell if, as Abiquim put it, the deals for natural gas end up representing a “historic step” for chemicals in Brazil, who supposedly could sharply lower their gas costs if more supply from Bolivia – and potentially from Argentina – went to Brazil. Despite this progress, Brazil’s industrial sectors continue to import chemicals because they are simply not produced in the country, which imports nearly half of all the chemicals it uses in its factories: the country lacks special chemicals production which, in times of crisis, could help it weather global downturns. As a consequence, the three main chemicals producers, mostly producing basic chemicals or polymers, have been hit hard by the global downturn. Braskem and Unipar’s financial results continued suffering in the first quarter of 2024, while Unigel remains involved in a battle for its survival after its natural gas-based fertilizers division, combined with the downturn in the chemicals division as well as a high debt burden put its finances against the wall. Unipar and Braskem are set to publish second-quarter financial results in coming weeks. Unigel has not released financials since Q1 2023, an option allowed by Brazil’s financial regulations for companies in financial distress. The severe floods that affected Brazil’s southernmost state of Rio Grande do Sul in May are likely to hit the country GDP growth in 2024, although bodies such as the IMF expect a strong rebound in 2025 as reconstructions efforts gather pace. While mostly out of the media spotlight by now, the floods were Brazil’s worst ever and its images will remain etched in Brazilians’ retinas for years. They left 182 dead, with 29 people still unaccounted for. Nearly 2.5 million people were affected at the peak of the crisis in the 11.5-million-strong state and its economy came to a standstill during May. Brazil’s vast geography makes it prone to be victim of a variety of weather phenomena which are only set to increase in number and severity as climate change continues its course. Experts agree the country needs to step up its climate change adaptation measures. IMF estimates (in %) GDP growth 2024 GDP growth 2025 Difference with April forecast 2024 Difference with April forecast 2025 Brazil 2.1 2.4 -0.1 0.3 Mexico 2.2 1.6 -0.2 0.2 Latin America and the Caribbean 1.9 2.7 -0.1 0.2 SHEINBAUM INCOGNITAIn October, Mexico’s Claudia Sheinbaum will take over as president from Andres Manuel Lopez Obrador, who handpicked her for the role. Sheinbaum will be sworn in after 60% of her compatriots backed  her, with her Morena party achieving in parliament a supermajority of two thirds of seats. The IMF also downgraded its GDP growth forecast for Mexico in 2024, as the presidential transition takes place and until Sheinbaum’s policies become clearer but upgraded them for 2025. Energy policies, greenhouse gas (GHG) emissions, and the burden of the overindebted crude oil state-owned major Pemex will be on the spotlight. Mexican manufacturing is showing signs of a slowdown due to internal policy but also because of the US November election, where the export-intensive economy sends most of the goods it produces. The downturn in the US manufacturing sectors remains, with its Mexican peers taking the collateral damage. Corporate Mexico was never too fond of Lopez Obrador’s left-leaning rhetoric, although the president did not really change much in the economic fundamentals. In public, and for now at least, companies think Sheinbaum will be a better ally for the private sector, although many still fear what she may do with the supermajority backing her in parliament. One-party constitutional reforms are possible. In an interview with ICIS, Sergio Plata, an executive at Braskem Idesa, said companies are liking the tune of Sheinbaum’s first steps as president-elect, and praised her visit to the petrochemicals hub of Veracruz after winning the election, in which she showed deep knowledge of the chemicals industry and its needs, he said. Despite enjoying better operating rates than its Brazilian peers and certain protection from higher import tariffs, Mexican petrochemicals producers also continue to be hit by the global downturn in the sector. Apart from the aforementioned Braskem Idesa, Mexico’s largest chemicals company Alpek and Orbia posted poor set of results for the second quarter. ARGENTINA REVIVAL?Many economists in Argentina and outside it have come to think the country has no solution as its economy became dysfunctional under a subsidy-dependent, corruption-prone, and closed to imports system where the large middle classes are now just a distant memory. According to official figures, around 60% of Argentinians live in poverty. The country’s demise is studied in business schools as a case of a developed economy which downgrades to emerging economy status. In December, however, Javier Milei was sworn in as president under the promise of turning the country upside down and make it a liberal bastion, with a largely deregulated economy. While his shock therapy has caused havoc, he is still backed by most Argentinians: the dislike for the previous failed administration and its mismanagement remains latent, and Milei had warned during the campaign the changes would be painful. While the economy may rebound strongly in 2025, petrochemicals are not expected to benefit much from it, as the recovery is expected to be led by export-intensive and foreign reserves-generating sectors such as crude oil, agriculture, or mining. The petrochemicals-intensive manufacturing and construction sectors have been hit the hardest by the recession. Inflation has started to slowly fall, but it remains at an annual rate of 271%. Petrochemical sources in the country are already bracing for more hardship in 2025, with demand expected to fall again. Indeed, it will take many quarters for consumers to have the means and the confidence to buy higher-priced and petrochemicals-intensive durable goods. “Everyone is wondering for how long people can take the shock therapy. If the changes implemented by Milei bear fruit, Argentina could be a completely different, and perhaps better country,” said in July a source at a distributor in the country. “But will he achieve what he is proposing? I am not that certain.” MADURO DRAGS ONVenezuela may also end up being studied in business schools’ textbooks, having gone in just three decades from powerful oil exporter to poor nation, plagued by insecurity, with a third of its population gone abroad since 2015, and with a president who is a dictator in all but name. The country’s demise started in the 1990s and worsened after the socialist PSUV party took over in 2001, first under Hugo Chavez and later under Nicolas Maduro. On 28 July, the country held an election with hopes it could be free, unlike the 2018 election which gave the PSUV got more than 95% of seats in parliament and which ultimately made Venezuela a pariah country. Several analysts and even opposition figures in Venezuela hinted that, if Maduro lost the election, he could be given the option to leave for exile in some of the few allies he has – Cuba and Russia recurrently mentioned – allowing Venezuela to start afresh. Opinion polls consistently showed Maduro was on course for a defeat. Turnout on 28 July was high, and long queues of Venezuelans at the polling stations drew a picture of thirst for change. However, when the official results came in, most Venezuelans realized the election had just been yet another farce. The government said Maduro had renewed its mandate with 51.2% of the votes, with the main opposition candidate at 44%. Few countries have recognized Venezuela’s result yet, apart from some of Maduro’s allies, some of them global pariahs themselves. Even China, tired of lending Venezuela large sums which it fears it will never get back, has not been unfriendly to opposition leaders. The US, the EU, and traditional allies in Latin America such as Colombia’s Gustavo Petro, Brazil’s Lula, or Chile’s Gabriel Boric had also said a recount should take place again with full transparency; the very demand coming from the opposition since the official results were announced. The coming days and weeks are crucial. However, after years of demise, Maduro’s exile, if it happens, would only represent for most Venezuelans a small glimmer of a very distant light at the end of a very dark tunnel. Front page picture: Brazilian President Lula (right) meets chemicals industry representatives in Brasilia in May, including Abiquim’s director general Andre Passos (right, behind Lula) Picture source: Abiquim Insight by Jonathan Lopez

UK government announced a budget boost of more than £500m for the sixth CfD auction round, raising the budget to over £1.5bn This means offshore wind funding has increased from £800m to £1.1bn, the largest budget ever Despite this vast increase, the budget will not be enough to procure the capacity needed to meet UK’s 2030 offshore wind target LONDON (ICIS)–Modelling by ICIS Analytics indicates that the UK government’s latest £530m funding increase to its Contracts for Difference (CfD) scheme is too low to procure the capacity required to meet its 2030 offshore wind target. The UK aims to quadruple offshore wind capacity by 2030, a target the Labour government first announced before being elected. The budget boost was announced on 31 July, ahead of the sixth auction round of the Contracts for Difference (CfD) scheme this summer, and raises the overall budget to over £1.5bn. The pot for offshore wind has now increased from £800m to £1.1bn, the largest ever budget. But to meet the UK target, nearly £3.2bn would be needed – if the auction cleared at a base case scenario strike price of £60/MWh, ICIS analysis shows. Furthermore, there are too few auction entrants to procure the 16.6GW of offshore wind capacity needed in the first place. This is because only 10.6GW in projects have the required development consent to proceed to auction. “Last year’s auction round was a catastrophe, with zero offshore wind secured,” energy secretary Ed Miliband said in a statement, adding that the new budget would support construction work for the sector. The unsuccessful 2023 fifth auction round saw no offshore wind bids mainly due to a low strike price in the wake of increasing supply chain costs. The previous government had set the maximum strike price for offshore wind in the sixth auction at £73/MWh, allocated offshore wind its own funding pot and set a budget of £800m. The new government’s aim to quadruple offshore wind capacity is also an increase on the UK’s previous target. OFFSHORE WIND ANALYSIS To interpret targetted 2030 capacity, ICIS quadrupled its forecast for installed capacity by the end of 2024, resulting in 61.08GW by 2030. Actual intended capacity may vary, and the government did not address enquiries that could help specify the exact date from which it intended to quadruple capacity. ICIS Analytics calculated that, in auction rounds six and seven, offshore wind capacity needs to average 16.60GW per auction to obtain the capacity needed to reach the 2030 target. Calculations show that if the auction cleared at a strike price of £60/MWh, the £1.1bn budget could finance 5.8GW of capacity. Similarly, if the auction cleared at its maximum strike price of £73/MWh, the budget would only be able to fund 4.3GW. Given that only 10.6GW of offshore projects have development consent to proceed to auction, this puts increased pressure to secure further capacity on the seventh auction in 2025. For now, ICIS Analytics forecasts only 39GW of offshore wind capacity will be built by 2030, under a base case scenario. BOOST FOR ONSHORE WIND The overall budget the CfD scheme is divided into three pots (see infographic) depending on the technology it supports. The budget for pot one, for established technologies like onshore wind, was increased from £120m to £185m as a result of the latest £530m injection.     The government has also removed a de-facto ban on onshore wind in England this month. Additional policy tests previously meant that wind power planning applications had to go though additional hurdles compared to many other types of energy development proposals. The government also plans to consult on bringing onshore wind back into the nationally significant infrastructure projects regime, meaning decisions on large onshore wind projects would be made by the Secretary of State instead of local planning authorities. This could further speed up permitting. ICIS analyst Robbie Jackson-Stroud previously stated that onshore wind is cheaper and quicker to build but has a thin pipeline of projects due to previous red tape. “While there is more opportunity for the technology, it may take until the seventh auction round for onshore projects to be ready to bid in the CfD,” Jackson-Stroud said. FLOATING OFFSHORE WIND Pot two, which is for emerging technologies such as floating offshore wind, saw a funding increase from £105m to £270m. This should help the UK move closer to its target to deploy up to 5GW of floating offshore wind capacity by 2030, despite £15m being ringfenced support for tidal stream projects. ICIS previously reported that the increase in maximum strike price to £176/MWh and budget of £105m for the sixth auction could make the round more attractive to developers and could procure more floating offshore wind capacity. In the fifth auction, there were no bids for floating offshore wind amid a low strike price of £116/MWh and a budget of only £37m for the pot.

LONDON (ICIS)–Eurozone inflation in July is expected to rise from 2.5% to 2.6%, above market expectations, with services being the driving component, according to data from European Commission statistics body Eurostat. Looking at the main components, services are expected to see the highest annual rate in July (4.0%, falling from 4.1% in June), followed by food, alcohol and tobacco (2.3%, also falling from 2.4% in June) and non-energy industrial goods (0.8%, compared with 0.7% in June) Energy holds the position of highest growth, growing to 1.3% from 0.2% in June. Despite the higher than expected rate of inflation, the downward overall downward trajectory remains intact, according to analysts at banking group ING, but may not be at a pace to allow for further rate cuts in the immediate future. “Survey data still suggests that the downward trend in inflation is likely to continue. And keep in mind that, at the current level, interest rates still imply restrictive monetary policy,” said ING chief economist for the eurozone Peter Vanden Houte. The debate on whether The European Central Bank should or should not introduce a cut in September will only be finalised once another six weeks of remaining economic data is reviewed. The central bank’s monetary policy committee convenes on 12 September. The eurozone inflation flash estimate is issued at the end of each reference month. The final figures for July are schedules to be released for 20th August 2024.

SINGAPORE (ICIS)–Ethane is gaining favor as the feedstock for steam crackers in China, as its competitive prices make ethane-cracking the most profitable route for ethylene production compared to other options. Join ICIS LPG analysts Lillian Ren and Yan Wang as they discuss how Chinese steam crackers are eyeing ethane as a cracking feedstock. Several steam cracker operators in China plan to revamp and switch to cracking more or only ethane instead of propane. Propane/butane still takes a larger share than ethane in steam cracker feedstock slates. The cost advantage of ethane will narrow with increasing demand and a single global source.

HOUSTON (ICIS)—Chemical company Clariant Catalysts has announced the expansion of its strategic cooperation with global engineering firm KBR regarding ammonia production. Clariant said the partners will continue collaborating on traditional ammonia projects while significantly increasing their focus on low-carbon and carbon-free green ammonia applications. It further said the solutions will combine Clariant’s outstanding AmoMax ammonia synthesis catalysts with KBR’s K-GreeN ammonia technologies to maximize the economics and energy efficiency of ammonia production. For the production of carbon-free green ammonia, KBR’s technology is combined with Clariant’s catalyst to convert green hydrogen with nitrogen from an air separation unit. Clariant said the partners’ complete green ammonia solution has already been selected for 10 prestigious green ammonia projects around the world. “We are proud of our long and successful history as partners and are delighted to strengthen our cooperation with KBR. By extending our collaboration towards sustainable ammonia solutions, we generate synergies for innovations supporting fertilizer production and the energy transition,” said Georg Anfang, Clariant Catalysts, vice president syngas and fuels. “Our state-of-the-art catalysts optimally complement KBR’s advanced process technologies to enable economical and reliable large-scale production of low-carbon and green ammonia.” KBR has licensed and designed over 250 grassroot ammonia plants worldwide with Clariant providing catalysts best suited for the optimum performance of KBR-licensed ammonia plants.

HOUSTON (ICIS)–Although net income and sales fell year on year, US fertilizer producer CVR said it had a solid result for Q2 2024, which was driven in part by a combined ammonia production rate of 102%. The producer of ammonia and urea ammonium nitrate (UAN) announced during the period it had a net income of $26 million and net sales of $133 million for Q2 compared to net income of $60 million and net sales of $183 million for the second quarter of 2023. CVR said its facilities remained consistent compared to this quarter in 2023 as they produced 221,000 short tons of ammonia, of which 69,000 net tons were available for sale. The remaining balance was upgraded to other products, including 337,000 short tons of urea ammonia nitrate (UAN). In Q2 2023, those levels were at 219,000 tons of ammonia, with 70,000 net tons available to sale with the remainder upgraded, including 339,000 short tons of UAN. The average realized gate prices for UAN has also decreased with it down by 15% to $268/short ton, while ammonia dropped 26% to $520/short ton year-on-year. During this period in 2023 the average realized gate prices for UAN and ammonia were at $316/short ton and $707/short ton respectively. “CVR Partners reported solid operating results for the second quarter of 2024 driven by safe, reliable operations and a combined ammonia production rate of 102%,” said Mark Pytosh, CVR Partners CEO. “The spring planting season experienced some weather interruptions, however, planted acreage was higher than expected and demand for nitrogen fertilizer was strong.” Pytosh added that they expect to see good demand for nitrogen fertilizer remaining throughout 2024 even with prices being higher than experienced in 2023. “Our focus for the remainder of the year will continue to be on safe, reliable operations and maximizing our free cash flow generation,” Pytosh said.

Spanish renewable capacity is set to rise drastically between 2024 to 2050 In times of surplus supply and low demand frequent negative prices have occurred, raising investor concerns Spain is investing €160 million in energy storage to stabilize and sustain renewable growth LONDON (ICIS)–Spain should prioritize investing in energy storage to prevent market volatility and balance surplus supply. With low Spanish demand levels for power and ample renewable power production, there needs to be more storage capacity to ensure negative prices are managed. RENEWABLES BOOM The country aims to achieve national climate neutrality by 2050, targeting 100% renewable energy in the electricity mix, the International Energy Agency shows. In the Spanish national recovery and resilience plan the country dedicates 39.7% of its goals to the ‘green transition,’ funded partly by €58 million from the Brexit adjustment reserve. The EU’s long-term strategy also supports this regional goal of achieving net-zero emissions by 2050. Renewable capacity in Spain is forecast to grow from 98.3GW in 2024 to 209.2GW by 2050 according to ICIS Analytics. MARKET VOLATILITY Demand is not expected to keep in pace with the growth in Spanish renewable supply, according to ICIS Analytics. If supply of electricity is to continue to exceed demand levels in coming years, the likelihood of negative prices occurring could remain. A trader active within the Spanish power market told ICIS that so far in 2024 there have been 671 hours of null or negative prices, of which a third are negative with minimums reaching -€2.00/MWh in June. In comparison to 2022, where the market only had 3 hours of negative or null prices. Balancing mechanisms such as storage will play a key role in managing this imbalance. ICIS Analytics shows that Spanish battery storage capacity is expected to rise from 1.2GW in 2024 to 9.8GW in 2050. FUTURE FOCUS Investors are increasingly concerned about market volatility, as negative prices deter further investments in renewable projects. To address these challenges, the Spanish government is investing €160 million in grants for energy storage projects, aiming to bring 600MW of storage online by 2026. ICIS Analytics predicts that batteries will begin to make a small presence in Spanish capacity from 2024 with 1.9GW, however total supply is expected to continue to overpower demand through till 2050. Spanish interconnector capacity is set to begin to grow steadily from 2028 onwards, according to ICIS Analytics. In 2024, there is an upcoming project on the connection between Spain and Portugal, to update capacity to 5GW. Following this, in 2033 a 1.8GW interconnection will be join Spain with UK. Both projects will enable surplus energy to be sent to neighbouring regions. A suggested solution is electrification with the Sanchez government setting a target of making 34% of the economy reliant on electricity by 2030 to increase demand. However, concerns continue to rise due to fear that the pace of electrification and energy consumption may not keep up with the growth in renewable energy generation.

LONDON (ICIS)–Germany’s chemical-pharmaceutical industry is operating at unsustainably low capacity utilization as it continues to face severe challenges, raising doubts over the sector’s long-term prospects, industry officials said at a webinar hosted by the chemical producers’ trade group. Operating rates remain below profitability threshold Bureaucracy and other challenges discourage production and investment Domestic demand weak as Europe’s growth engine has stalled In the second quarter, the operating rate was only 75.1%, down from 78.1% in the first, according to the latest industry data. It was the 11th consecutive quarter when the rate was below the long-term average of around 82%, which the industry needs to operate its assets profitably. (Blue bars: capacity utilization; orange line: profitability threshold; source: VCI) The low operating rates reflect the challenges the industry faces in producing in Germany and call into question the country’s long-term outlook for chemical production and investments. So said Christiane Kellermann, an economist at the German Chemicals Industry Association (VCI). More capacity may need to be removed from the market as it does not make economic sense to run plants unprofitably in the long term, she said. Meanwhile, companies are holding back on new domestic investments while shifting more investments abroad, she noted. BUREAUCRACY The burden from bureaucracy is the top challenge for chemical production in Germany, according to a recent survey of VCI member companies. Bureaucracy is not an abstract concept, but rather a significant cost factor for companies, Kellermann said. According to the survey, chemical companies estimate that the cost linked to bureaucracy, as a share of sales, comes to about 5% on average. Other challenges are high energy and raw materials costs, a lack of qualified labor and geopolitical uncertainties, according to the survey. Energy and material costs are down from 2022-2023 peak levels but remain high, with no significant further relief expected, Kellermann said. WEAK DOMESTIC DEMAND While chemical export demand has stabilized, domestic demand is weak. Most of the major domestic customer industries, with the exception of food and paper, saw year-on-year sales declines in the first five months of 2024. Germany’s GDP is expected to grow only marginally this year, said Jupp Zenzen, economist at the German Chamber of commerce, who also presented at the webinar. Since early 2022, the country has been in a stagnation phase, which continues in 2024, Zenzen said, adding: “We won’t have growth this year.” 2024 GDP FORECASTS: Government +0.3% Bundesbank +0.3% Government export council +0.2% Joint forecast by leading institutes +0.1% Chamber of Commerce flat (Compiled by the Chamber of Commerce) For the second quarter, GDP fell by 0.1% from the first quarter, following a 0.2% quarter-on-quarter increase in the first quarter, according to data from the country’s federal statistics office on Tuesday. Overall industrial production remains below pre-COVID levels and the chamber currently does not see an upward trend, Zenzen said. Domestic new orders are trending down as demand is weak, he said. Export demand seems to have stabilized as “the world economy is robust”, but this has yet to be reflected in the orderbooks of German industrial producers, he said. Most of the big domestic industrial sectors are pessimistic about their business expectations, and their plans for domestic investments are largely “negative”, which is dimming the prospects for growth, he said. CHEMICAL PRODUCTION In contrast to overall industrial production, Germany’s chemical production recovered at the start of the year but since then has moved sideways, said Kellermann. The trade group expects the country’s chemical production (excluding pharmaceuticals) to rise by 5.0% in 2024, which, if realized, would come after a 10.4% decline in 2023. While at first glance a 5% increase may seem strong, production remains far from levels during 2010-2021, she said, and pointed to the following chart showing Germany’s chemical production (excluding pharma) since 2008: Whereas chemical production recovered quickly after the 2008-2009 global financial crisis and after the pandemic, it has yet to recover from its collapse in 2022 in the wake of the Ukraine war, she said. Currently, production is “incredibly” low, meaning that the expected 2024 growth would not mark a return to past production levels, she said. Customer inventories may often be so low that even if customers produce only a little, they will have to order some chemicals and other materials – but this can hardly be described as a recovery, she noted. Compared with weak sales in 2023, chemical producers expect an improvement in sales this year but are pessimistic about profits because of their high costs, according to the VCI survey. Companies now expect that demand and chemical production could begin to recover in 2025-2026, according to the survey. Their previous expectation was for a recovery to get underway in the second half of 2024. Thumbnail photo source: VCI Focus article by Stefan Baumgarten Please also visit Macroeconomics: Impact on Chemicals

BARCELONA (ICIS)–Collapsing second quarter financial results show that the industry may face permanently low growth, driving the need for radical business model transformation. Q2 financial results show persistent downturn in sales, profitability Europe chemicals still plagued by China-driven global overcapacity, higher production costs, poor downstream demand BASF reports double-digit fall in net income, weighed by lower prices. Warns of second half risks from stronger price reduction, lower volume growth Dow CFO says consumer durables, building and construction will likely remain weak through the rest of the year Need for widespread closures to balance supply and demand Chemical companies need to adopt radical new business models End of China’s economic miracle means there will be no return to strong demand growth globally In this Think Tank podcast, Will Beacham interviews ICIS business solution specialist Nigel Davis, ICIS market development director John Richardson and Paul Hodges, chairman of New Normal Consulting. Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS. ICIS is organising regular updates to help the industry understand current market trends. Register here . Read the latest issue of ICIS Chemical Business. Read Paul Hodges and John Richardson’s ICIS blogs.