Global Dyes and Textile Chemical industry is no moreinsulated from the Global Financial turmoil which was originated in the bankingand insurance sector in US and affected its Chemicals Industry initially. Inthe mid of September, The fourth largest investment bank in US, the LehmanBrothers filled for bankruptcy protection, which caused a dramatic fall in thestock market; round the globe.
Although, before the financial meltdowntriggered by the Lehman Brothers announcement, Europeans chemicals industrywas preparing for a further down fall in demand and was worried about the expectedrecession. In its latest trends report, the European Chemical Industry Council(Cefic) has disclosed a turn down in chemicals output since March of this year;however sales have been rising due to an increase in selling prices. TheEconomy of Germany, so far the biggest chemicals sector in Europe, is predictedby the commission about recession after showing strong growth in the beginningin the year. Industry sources say that the year 2009 could be worse for the Dyesand Chemicals industry as compared with 2008.
India, the second largest producer of Dyes andTextile Chemicals in the world is facing problems due to global melt down. Thiswould be simulating the devaluation of its currency which directly affects itsexport. However, USA the major consumer of Dyes and Chemicals, have startedoutsourcing fabrics and other cotton goods where the dyes and chemical are usedin large volumes. At the same time, the financial turmoil has spread in such away that resulted in a decrease in the exports of Korea which could be thebiggest challenge for Korea. At the same time, the biggest challenge facing Korea is export slowdown. The petrochemical industry is very sensitive to economic conditionsand Korea mostly produces petrochemical products in China and exports todeveloped economies hence Chinas economic situation will certainly create aserious blow to Korean Petrochemical Companies.
Although Asian governments have taken several actions tocontrol the global credit crisis, dyes and chemicals producers remain uncertainabout the possibility of a recession. It is believed that the decreasing priceof crude oil is a key factor which is leading to a decline in buying, which isplacing additional downward pressure on prices.
Price of Caustic Soda Reaches Historical Heights:
Price of Caustic soda, a key chemical used in the textileindustry is affected heavily due to the global melt down and has beenincreasing since May 2008. World total production of caustic soda is about 45millions tones and is growing at the rate of 3 % per annum. US is the largest producer of Caustic Soda manufacturing almost 14 million tones per year. A shutdown at major manufacturer 'DowChemicals' plant in Texas after the hurricane has added to the price pressure. Caustic soda price has risen to $US 950 - $US 960 / tonne, from about $US 600 - $US 650/ tonne in July which was about $US 490 - $US 500/ tonne in the mid of May 2008. Priceof Caustic soda in mid august was about $US 600 - $US 620 / tonne. Industryanalysts believe that this is the highest in the past 17 years, and further predict an increase in 2009 reaching more than - $US 1000.
Price Trends of Caustic soda duringMay-Sep, 2008
| Year 2008 | Price- $US /Tonne |
| May | 490 - 500 |
| June | 500 - 560 |
| July | 600 - 650 |
| August | 600 - 650 |
| September | 950 - 960 |
The near-term outlook for caustic soda is unpredictable due to uncertain manufacturing outlook. It is a rough session for the global dyes and chemical industry today with more and more downgrades coming from the world over. More crackdowns are being predicted by experts in the dyes and chemicals industry. Despite all the recession fears, the industry is trying to be ebullient, and face a downturn. Chemical industry is always cyclical, and manufacturers optimistically expect growth back in the industry.
References:
- http://www.mindbranch.com/
- http://www.chemicalprocessing.com
- http://www.rsc.org/
- http://www.purchasing.com
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