Chemical companies responded with capex cuts
Chemical companies responded with capex cuts
As Q1 income fell, chemical companies rapidly adjusted by minimising operating expenses and substantially decreasing 2020 capital expenses.
Stopped projects and partnerships can be a feature more risk-averse strategies
Capex cuts, reduced operating expenses and declining global interest in chemical derivatives will affect many approaching petrochemical projects. We' re seeing postponed start-up dates, revised believed project costs and delayed final investment decisions (FIDs).
Enterprise, for instance, is delaying the beginning-up date of the 750 ktpa PDH2 in Texas from Q1 2023 to Q2 2023. BP and SOCAR have postponed construction and FID around the Mercury Complex in Poultry. As well as in China, Sinochem Quanzhou' s 1000 ktpa cracker, Heilongjiang Longyou' s 400 ktpa cracker, and Ningbo Huatai Shengfu' s 600 ktpa cracker have announced delays.
Some chemical information mill tackling uncertainty by leaning into partnerships and partnership (JV) activities. LyondellBasell and Bora have signed definitive contracts to create a JV with an ethylene cracker project in China, for instance. More lately, CNOOC and Covering signed a cooperation agreement to grow their existing JV in Guangdong province.
Does much deeper degeneration lie ahead?
Companies across all chemical value chains are modifying towards the impact of coronavirus on balance sheets and processes. Even though the worst from the pandemic might be behind us, the entire extent from the harm to the remains seen. We all do anticipate seeing a much deeper degeneration in Q2 earnings because of muted demand.
How can chemical companies respond when the challenge intensifies? What strategies might come up? And do you know the challenges - and possibilities - for investors and creditors? Our experts will help you stand above a quickly-altering industry. Go to the store to browse our latest chemicals industry reports.
