Chemicals gloom as demand slumps

The worldwide chemicals business had a rough ride in 2008 – but 2009 could prove to be worse, Martin Quinlan writes

THE FOUR-year boom in the chemicals sector ran out of steam in the first half of last year and things have been growing worse steadily since then. The main themes have been rising raw-materials prices, falling demand and downward pressure on selling prices. Looming in the background is a sharp increase in world ethylene capacity from facilities under construction in the Middle East, which will depress utilisation rates elsewhere. Last year opened with the chemicals business on a high, feeding a seemingly insatiable demand for polymers and heavy petrochemicals in Asia. But rising prices for raw materials – particularly naphtha feedstock, but also other commodities – cut into margins over the