Brazilian Chemical Entrepreneur: Global Petrochemical Industry Recovery May Be Delayed
2023/5/30
Noronha, following Unigel's announcement of sales and profit data for the first quarter of 2023, expressed that the company anticipates the second quarter to be equally challenging as the first quarter, but there should be some signs of recovery in the second half of the year. Unigel stated that its chemical and fertilizer divisions had a difficult quarter in Q1, as the selling prices of most products declined, but the decrease in raw material costs was not as significant. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q1 were 104 million Brazilian reais, a year-on-year decline of over 80%.
Regarding the global petrochemical industry, Noronha stated that the robust economic recovery capable of supporting the global economy has not materialized. Furthermore, as central banks in Europe and the United States engage in the largest anti-inflation actions in decades, the oil and chemical companies have also been impacted by rising interest rates. Both businesses and consumers are affected by the increase in borrowing costs. Companies are delaying capital investments until borrowing costs decrease, and consumers, for the same reason, are postponing the purchase of large items such as cars or appliances.
Noronha said, "The economic recovery in China is taking longer than expected, and its stimulating effect on demand for petrochemical products is not as good as many people anticipated. Interest rates continue to rise across the board, but it is expected that the rate hikes will stop in June, paving the way for a healthier economy in the second half of the year. Overall, the global petrochemical industry will not fully recover until 2024."
Similarly to Unigel, Braskem, the largest polymer producer in Latin America, and Unipar, a producer of chlorine, caustic soda, and their derivatives, have also experienced high production costs due to declining selling prices, leading to a significant decline in profits in the first quarter.
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