October 09, 2017 | Chemicals Blogs
Apart from the usual volatility concerns plaguing the chemical industry every now and then, Q3 2017 witnessed one of the deadliest hurricanes in U.S. history. Not only did this paralyze normal life but also impacted the chemical industry to a large extent. The short-term damage looks massive and this will affect both the domestic and global markets.
In the U.S., many commodities will remain short in the near term. Ethylene and propylene, the basic building blocks for a number of chemicals along the value chain, will be severely strained during September and early October, and the impact of this will be felt on both downstream products as well as the upstream. While a shortage will be witnessed for the derivatives, a massive increase in inventory will be seen for ethane and butane in the weeks to come.
In another update, DowDuPont have announced changes to the post-merger plans. Business segments with over $8 billion in sales are expected to be moved from its Material Science wing to the Specialty Chemicals division; basically, the entity is confident of growth potential post these readjustments. It is evident that portfolio adjustments are being looked at as a strategic tool by firms to enhance competitive advantage, value creation and organic growth.
Overall, Q3 has been a topsy-turvy quarter for the chemicals industry. Just when the usual suspects were stabilizing – due to an oversupply and the surprisingly steady oil market – the hurricane looks to have changed the equation completely. Well, if it’s a stable market, then it wouldn’t be right to call them the chemicals industry, would it? Chemicals and volatility will continue to remain synonymous in the years to come, as they always have!
In this edition, we have focused on titanium dioxide, sulfuric acid, and hydrochloric acid – three commodities that will have structural shortness in the short term and would give readers some interesting perspectives.
We have explored each of these topics in our quarterly category bulletins, which can be yours for free for a limited time. Please reach out to Anup.Shetty@gep.com to grab your copy.