Greece economic crisis a worry for chemical producers

The news that the International Monetary Fund is standing by to bail out Greece must be a worry to chemical producers regionally. So far we've had no reports of a negative impact on demand for chemicals at ICIS. But financial instability is bound to affect the buying habits of consumers and a negative impact on GDP growth.

Greece's problems have hit the Euro, which has fallen sharply against major currencies. This could be an unexpected benefit for Eurozone chemical producers who will benefit from cheaper exports and more expensive imports.

Let's hope the newly-elected government there can act swiftly to resolve a deficit worth 12.7% of GDP. According to The Independent "Earlier [last] week, investors showed unexpected appetite for Greek debt when the market responded with €25bn-worth of demand for its issue of €5bn-worth of five-year bonds, allowing the government to raise the issue to €8bn."

Image source http://www.sxc.hu/browse.phtml?f=download&id=1233814

Turkey in the doldrums

According to today's Wall Street Journal, Turkey's economy shrank by 13.8% in the first quarter of 2009 compared to last year. This is an astonishing performance and is bound to have had a negative impact on demand for chemical products.

Turkey has, historically, had a large polymer deficit and relies heavily on imports. With the long-delayed privatisation of the country's largest company, Petkim, now complete a large investment programme is underway. Will this be put on hold?

In May, ICIS reported that Turkey should expect its largest petrochemical company Petkim to meet 40% of domestic petrochemical demand by 2015 compared to the current 25%. Capacity is scheduled to double to 6.3m tonnes/year from 3.2m tonnes/year within six years.

51% of Petkim is owned by the State Oil Company of Azerbaijan (Socar), Turkey's Turcas Petroleum and Saudi Arabia-based developer Injaz Projects.