Talents are in high demand or ....

Stocks surged today world-wide after the White House formally unveiled its plan to clean banks' balance sheets, with an emphasis on luring private investors to buy up to $1 trillion in toxic assets that are choking the flow of credit. Even though the initial economic problem was centered on bloated housing inventories that remain unsold, and the gains in new residential construction may prove to be short-lived. Rail shipments of chemicals, considered a key indicator of demand for products such as fertilizer and plastics, dropped by 23.6% last week compared with a year earlier. Car loadings in the U.S. were 36,900 for the week ending March 14, compared with 48,309 a year earlier, and year-to-date rail-car chemical loadings were down 19.3% compared with the same period last year, according to the Association of American Railroads (Reuters). Industrial production and capacity utilization continued to slip in 2009, but the declines were the slowest in the past four months suggesting that we may be starting to approach the bottom of the recession. USA based Chemical production remained steady as strong growth in bulk petrochemicals and organic intermediates and more modest gains in inorganic chemicals and synthetic materials.

Commodity chemicals: Feedstock markets may experience low-cost olefins production in the Middle East, in addition to an increase in refinery capabilities in Asia, the Middle East and the U.S. Steam cracker operators can expect ethylene capacity in the Middle East to more than double; propylene capacity also will increase. Therefore, basic chemical producers (not necessarily specialty chemical) will likely experience very difficult next few years. Overcapacity and weak demand will represent formidable challenges. Closure of unwanted plants is likely to come slowly, due to high exit costs and political barriers. Experts believe that achieving the genuinely low-cost position that will be essential for surviving the next few years.

Specialty Chemicals: While most specialty companies’ top line were far weaker than expected, the margin data which might be a bit tougher to interpret. Many specialty chemical companies may see temporary improvement in gross margins because: 1) raw materials or feedstock chemicals falling faster than pricing and 2) significant cost reduction efforts … primarily layoffs. The question is, will the specialty chemical manufacturer remain “special” after is cycle? The general public perception of chemical industry, "boring" captures the essence of the lackluster image ... the industry is vulnerable to further “talent drain” during this downturn. The reality is that specialty chemical companies need good managers with leadership skills, deep domain knowledge to bring innovation and solutions to our needs. Therefore, good talents continue to be in high demand.