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19
2023
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07
China will help the recovery of the global chemical market
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For the chemical industry, 2023 is destined to be a difficult year. Profitability of chemical companies fell short of expectations amid weakening demand and overcapacity. German chemical giant BASF (BASF) recently announced preliminary data for its second-quarter performance, significantly lowering its performance expectations for this year, and blaming it on sluggish global industrial output and declining demand for consumer goods.
BASF expects sales in 2023 to be between 73 billion euros and 76 billion euros, less than analysts' consensus forecast of 79.81 billion euros and far below 2022 sales of 87.327 billion euros. The company also lowered its full-year profit forecast. It is expected that the profit in 2023 will be between 4 billion euros and 4.4 billion euros, which is also less than the 4.883 billion euros that analysts generally expect, and significantly lower than the 6.878 billion euros in 2022.
The shadow of declining sales and profits is hanging over the entire chemical industry. American chemical and specialty materials company Dow’s financial report shows that due to the continued downturn in the global economy and oversupply in the industry, the company’s net sales in all operating segments and regions have declined in the first quarter; German specialty chemicals company LANXESS’s profit in the second quarter is expected to be about 100 million euros, far lower than the previously expected 189 million euros. Cabot, LyondellBasell and many other chemical companies have also issued early warnings, saying that their profits in 2023 will be lower than previously expected. Lanxess CEO Chang Mutian said: "Almost all markets have been affected by weak demand and destocking, even those that are usually very stable. Compared with the ravages of the new crown epidemic, the decline in sales volume is larger and lasts longer."
China is currently the world's largest chemical market, accounting for 40% of all global chemical sales, and is expected to account for nearly half of it by 2030. Faced with weak demand and uncertain development prospects, foreign-funded chemical companies have turned their attention to China, and regard the Chinese market as a support point for future business. Taking BASF as an example, it has significantly increased investment in China and accelerated cooperation with Chinese companies.
On June 28 this year, the third phase of BASF's Shanghai Innovation Park project was officially completed. Relying on the Shanghai Innovation Park project, BASF can respond more quickly to the needs of China and even the Asia-Pacific market. Qian Mingcheng, president of Lanxess Asia Pacific, also said that with the recovery of China's economy, it is expected that the company's performance in China will rebound in the second half of this year, and the revenue is expected to rebound significantly. China will provide assistance to the recovery of the global chemical market.
Regarding the trend of the chemical industry in the second half of 2023, BASF expects that the weak global demand will ease as the inventory of chemical raw materials in downstream industries has been greatly reduced.
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