IN SEARCH OF ADVANTAGE - Emergence of a Dipolar Investment Pattern
by: Paul Bjacek
The petrochemical industry has prepared itself for recovery over the past few years by rationalizing capacity and reducing fixed costs. Poised for demand growth in early 2001, the industry experienced the beginnings of recovery in the second half of that year. However, it was a false start, with demand showing only weak growth based on the poor performance of the global economy, mainly due to the anxiety building up to the Iraq conflict.
A lesson learned from the 1997-2002 chemical industry recession is the need to invest in areas with only with the highest possible returns on investment for the long term. The situation of high natural gas prices in North America, high oil prices, political/economic problems in Latin America and mediocre demand growth in late 2002, and at least the first half of 2003, compounded the reasons for companies to scrupulously narrow their investment plans to areas with supreme advantage in terms of products and regions.
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