ICIS Publishes Top 100 Companies For 2009

ICIS has recently published its regular Top 100 Chemical Companies feature, together with an excellent analysis of the events of the last year.

The Top 5, ranked in terms of sales, are BASF, Dow Chemical, ExxonMobil, Sinopec and Lyondell Basell. Of these, Sinopec is new to the top 5, having been ranked 8th last year.

Looking back over the last year, it is really quite remarkable that the major chemical companies have fared so well in adapting to an economic crisis that saw an oil price crash from a peak of $147 per barrel down to $32 per barrel and a virtual collapse in markets such as construction and automotive.

Clearly survival required significant cost reduction across the board. Reduced working capital, operating and maintenance cost reductions and reduced capital expenditure were commonplace, the only difference being the depth of cuts from one company to the next.

This blog has talked much about a new normal in the post recession period. The challenge remains a difficult one for all chemicals producers as we move forward. It will be necessary to deal with the economic conditions that this new normal will bring, whilst also adopting strategies to address the impacts of the recent cost cuts in areas such as capital expenditure.

However, in having survived so far, companies have clearly demonstrated that they have the management capabilities and willingness to adapt.

Weekly News Round Up

This week's round-up of news and updates on previous stories

• Numerous reports suggest that Reliance Industries is moving quickly in its efforts to aquire LyondellBasell , with executives from the two companies meeting recently in Houston. Reliance is believed to be preparing to make a binding offer for LyondellBasell.

• The Chemical Engineer reports that the European Union has approved a substantial amount of funding for a number of green energy-related projects. The EU had previously set aside €4 billion for green energy projects and has now allocated €1.6 billion for carbon capture and storage projects and €0.6 billion for offshore wind energy projects.

• Shell has opened a state-of-the-art mono-ethylene glycol (MEG) plant in Singapore. The plant uses Shell's OMEGA process, which is claimed to have lower construction and operating costs and maximises the yield of MEG (producing less di and tri-ethylene glycols), when compared with other processes.

• BASF chairman Juergen Hambrecht has spoken positively about his company's fourth quarter results, which were above expectations. 2010 is expected to be 'difficult' given the volatility of global recovery and the fact that central bank interest rates are expected to rise.

• Ineos Bio, together with its partner New Planet Energy, has been selected for a $50M grant for its advanced bioenergy facility in Florida, USA. The facility to use INEOS Bio’s advanced BioEnergy technology to produce bioethanol and power from a range of feedstocks, including forestry waste, agricultural waste, sustainable energy crops, construction waste and municipal solid waste.

Mixed News as Companies Report on Q3

Mixed news for the chemical and process industries as companies reported Q3 results

• BASF reported third quarter profits down 69% year on year to €237M. BASF expects a long slow climb out of recession. BASF expects some employees will remain on short-time working into 2010. Whilst business has stabilised the climb out from the trough will be slow.
• Shell reported a collapse in Q3 profits from $10.9 billion in 2008 last year down to $3 billion. As a result of this poor performance, Shell will axe some 5000 jobs worldwide in its 'Transition 2009' programme
• BP's results were some 50% better than city analyst's expectations, with replacement cost profit of $4.98 billion. BP has already cut costs following reorganisation and efficiency improvements and aims to do even more this year. BP noted that they had achieved a 7% increase in production as well as a number of new developments in the Gulf of Mexico, Iraq and China, amongst others.
• GSK showed that the pharma sector is still reasonably strong. Profits were up 12% at $2.4 billion. Demand for the H1N1 vaccine has help bolster GSK

Overall, things remain tough for commodity sector, and particularly for those who rely on housing starts and the automotive sector for a major proportion of their demand. The end to the various stimulus packages will also create issues as volumes drop back to the 'new normal'.

Some sectors are clearly much less affected, such as pharma, although cost cutting and a move to generics will make things tougher.

For manufacturers, we can anticipate another tough year, chartacterised by reorganisations, reduced capital expenditure and some site closures as we slowly start to pull out of recession.

Friday News Round Up

Friday once again, so a time to update on various past stories and news items

• ICIS has analysed the various chemical companies job loss related annoucements reported to them since the start of the financial crisis in September 2008. The figures show that chemical companies have cut over 77,000 jobs since the crisis began.

• In the UK, NEPIC, the North East Chemical Industry Cluster, will investigate the commercial feasibility of chemical production from biomass. The 30-month project is being carried out on behalf of the UK Government department DEFRA

•  BASF has announced that it will close its maleic anhydride plant at Feluy, Belgium by the end of this year, with the loss of 133 jobs

• As Copenhagen approaches, UK Prime Minister, Gordon Brown expressed his views on climate change. He warned delegates at the Major Economies Forum in London (representing 17 of the world's biggest greenhouse gas-emitting countries) there was "no plan B" regarding climate change and that negotiators had "50 days to save the world from global warming".
  
  
• Paul Hodges sets out his views on what's to come for 2010 in his analysis 'Budgeting for a New Normal'. In his summary, he states "2010 to be a transition year. Full economic recovery is unlikely to take place much before the 2011/13 timeframe. But the return of economic growth will offer companies the opportunity to identify likely future market needs. Those that focus on this new reality, rather than simply hoping for a quick return to the Boom years, will position themselves for future success."