Chemical Economy Shows Early Signs Of A Slowdown

Signs are mounting that the chemical economy is slowing.

Speaking at a recent investors meeting, BASF Chairman Kurt Bock said low oil prices and geopolitical developments have led BASF to revise downward its 2011 expectations for annual global chemical production growth between 2015 and 2020 to 3.9% from 4.0%. Growth in industrial production will slip to 3.5% from the firm’s earlier 3.7% prediction, Bock also said.

More immediate signs of a slowdown come from the American Chemistry Council and Huntsman Corp. ACC reports that its Chemical Activity Barometer, a leading indicator of U.S. chemical business activity, dropped 0.4% in September after a 0.2% decline in August. Kevin Swift, ACC’s chief economist, says that “chemical, other equity, and product prices all continue to suffer, signaling a likely slowdown in broader economic activity.”

Separately, Huntsman Corp. warned investors that certain trends would hurt third-quarter earnings when it reports them to shareholders in a few weeks. Among those trends are “headwinds” from a strong U.S. dollar, soft demand in Asia, and lower margins on certain commodity products because of lower oil prices.