Chemical Economy Slows

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 earlier expectations for annual global chemical production growth between 2015 and 2020 to 3.9% from 4.0%. Expected growth in industrial production is down 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 and other stock prices and “product prices all continue to suffer, signaling a likely slowdown in broader economic activity.” Separately, Huntsman Corp. warned investors that 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.