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|Atradius reports positive outlook for global chemicals sector|
|Thursday, 04 August 2016|
Trade credit insurer Atradius has published its annual analysis of the global chemical sector.
The Chemicals Market Monitor focuses on the performance and outlook of the industry. It reports that, overall, the global chemicals sector is performing reasonably well with generally robust business financials, good payment performance and low insolvency rates compared to other industries.
However, Atradius warns that chemicals is a cyclical business, highly dependent on changes in the global economy and reliant on basic commodity costs, especially oil and gas. The sector is also dependent on the health of other manufacturing industries, mainly construction, automotive and electronics.
The Market Monitor identifies four key developments that shape the current environment:
China’s economic slowdown and reduced demand from other main emerging markets has negatively affected international chemicals exporters.
Oil prices have remained at low levels far longer than expected, and continued global oil production discourages any significant increase in crude oil prices. This impacts chemicals companies both positively and negatively, depending on the segment.
The impact of the strong US dollar differs substantially geographically; benefitting large diversified European chemicals companies, but hurting US chemicals exports.
Many chemicals companies are aggressively re-evaluating their portfolios and divesting non-core assets, resulting in an industry-wide uptick in acquisitions.
The Market Monitor reviews the chemicals sector in 11 international economies to give British firms an insight into the trading backdrop as well as any potential risks and opportunities when doing business overseas.
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