Moody's expects: chemical demand growth will slow down next year

Rating agency Moody's Investors Service reported in its recent report that chemical demand growth in 2019 will be less than 2018, especially in Europe. China's chemical demand growth will also weaken, especially for bulk chemicals. Demand in the automotive market may have peaked, but the construction and industrial markets will maintain modest growth.

Although demand growth in the chemical industry has slowed down in 2019, the industry credit quality will still be comparable to 2018, and the industry-wide EBITDA will increase by an average of 3% to 4%. The company further pointed out that as commodity prices fall, the profitability of the specialty chemicals industry will expand. The profit margins of bulk chemicals may be tested and end market demand is expected to remain weak.

For bulk chemicals, ethylene producers' profit margins are expected to decline as new capacity is added, but the propylene market will be different and supply will remain tight by 2020. The European chlor-alkali market is also expected to weaken as new equipment is put into production to increase supply capacity. Demand in the US market may grow moderately, and performance in other markets will be mixed, with most markets likely to be weak. The titanium dioxide market may continue to fall. In addition, the new capacity in Asia will make the supply of butadiene market relatively loose, and the new capacity of epoxy resin will cause the price to fall.

In the specialty chemicals industry, demand is also expected to slow, especially in the end-market industry. Moody's vice president John Rogers said that the drop in oil prices is good news for the specialty chemicals industry; for bulk chemicals, the key is where the company is built and what raw materials are used; for olefin producers It may be unfavorable, but it is certainly beneficial for some companies with large energy consumption.