Improved Q2 earnings by Asian petrochem makers may be the high point for 2009

Q2 earnings have improved for Asian petrochemical makers, but the unclear outlook for global economic recovery as well as increased capacities coming on stream in China and Middle East in H2-09 makes it difficult for the companies to persist with healthy sales and profits. As per ICIS, the high levels of profits attained in Q2-09 could be the peak levels for the year. Increased crude values and delays in start-ups of plants in China and the Middle East pushed chemical prices higher, helping earnings in the April-to-June period. Demand was much stronger than expected due to China’s stimulus package and the weakening of the Korean Won that made its exports more competitive. A supply glut in the region coupled with weak demand may render it difficult for companies to improve performance as compared to this quarter. H2 outlook for petrochemical businesses [could] slow down on lower petrochemical prices and a narrower margin spread due to new supplies in the region.
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