Fitch Ratings is saying that things are tough for the chemical industry globally. They expect weak demand and too much supply, which means companies won’t be selling a lot, and their profits will stay low in 2024. Even though 2023 was the worst, they don’t see much improvement coming.
Companies in Asia, North America, and the Middle East have an advantage. They can sell their stuff to Europe and Latin America because it’s cheaper for them to make things. This is causing differences in how well companies in different regions are doing.
Fitch thinks that even though demand is generally low in North America, certain companies might do better. If a company is into making things like packaging, or stuff for healthcare, it might not be as affected. But companies linked to commodities or non-residential construction might not be doing so well.
In Europe, it’s tough for chemical producers because energy costs are high. Even though they’ve come down a bit since 2022, it’s still a problem.
Companies in the Middle East and North Africa have a better time because they have access to cheap natural gas. This helps them deal with the tough market.
Fitch expects that many companies won’t be using their factories much in 2024, especially those making basic things. They might even close down some factories temporarily or permanently, especially in Europe.
Latin American companies are struggling because China is making more of its own chemicals, affecting the prices and sales for Latin American companies.
China is expected to buy more chemicals as they finish using up what they already have. However, China’s economy is slowing down, which might make things a bit difficult.
Companies might do well in Bharat and Indonesia because those countries are growing, and people there might buy more chemicals.
Australia might have a dry summer, which could affect the demand for certain chemicals used in protecting crops. However, the winter crops might be okay because it’s been raining a bit late.
The chemical industry is in a tricky situation with different challenges in different places. How well a company does depends on what they make, where they are, and how much it costs them to produce things.
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