Where does the petrochemical sector run?

As we have reached the end of the unsustainable economic development and consumption model , a question that concerns our sector is the petrochemical sector?nun is a perspective for the next two years.

In order to understand this perspective well, we need to evaluate the situation we are currently in.

- How do you see this crisis ?

There is an unprecedented economic crisis in the world. In order to get out of this crisis , governments are announcing a package and pumping money into the market.

But the key to all this is the consumer spending money again . Of course, when we say `consumers`, the first thing we need to think about is `American economy` or `consumer`.Because 12% of the world's GDP is the American economy. I think it would be enough to explain the American influence to say that Japan remains 4.9 percent in the second row.

The American economy will not be able to recover from this crisis until it recovers.Consumers have not started to consume again ; this process will not start easily because of their old debts and the constant bad news.

- How will it affect the petrochemical sector?

With the impact of the crisis, petrochemical consumption has declined surprisingly. As a result of this decrease , capacity surplus in petrochemical plants has been formed. Even worse , the profitability of the petrochemical sector, which has developed in the 7-year cycle, has climbed in recent years and many companies have gone to new capacity investments at the point where profitability is high. Most of these new capacities are based on cheap sources in the Middle East and cost is low. When we put all this together, a huge capacity surplus awaits us. And a significant part of this capacity is at very cheap costs. As a result, it is inevitable that many plants in the region, such as North America, which produces high cost, will close down.

-What is the situation in emerging economies like China and India?

In this crisis environment, countries such as China and India, whose economy is in a state of ehven-I şer, are left behind. These countries were affected by the crisis. They had a decline in growth rates . In China, the government has launched the largest rescue package since the United States. This package works surprisingly well now.

There is also support given for the establishment of new chemical facilities in the Chinese package. In other words ,China also participates in this capacity-building madness. India?also-the end of China - there are new investments.

Through these investments, China will provide some of its demand from the domestic market. The missing part will be imported; that is, we face the problem of capacity again.

-What is the meaning of this for Turkish plastic manufacturers?

 In this case, the Middle East producers will have to export their goods to new markets such as Turkey and Europe. This means affordable raw material for us. India also has to be an exporter until it creates domestic consumption to consume its newly created capacities.

As a result, we are entering the period of price negotiations made by buyers and not sellers.

We are at a time when prices are always in serious danger of falling. But at the same time , petrochemical companies go to mergers to survive ,sometimes even sell shares , even stop their plants, and even shut down worse. These close ups form short-term upward oscillations in the markets. The end of 2009 and 2010 will be the year of mergers, acquisitions and closures.

-What do you think will be the right strategy for plastic companies in these conditions?

 The safe strategy of those who are not very professional and do not want to take intensive risk in this period ,with short and short-term stocks , and back to perform back to back transactions and `wait ' put on?applying I will be most appropriate. The recovery in the economy, which I'm saying, is the American economy?I say "improvement", the signal is an increase in housing prices and new employment rates for several months in a row. It is most reasonable to change the strategy when there is a one-to-several month rise in the follow-up of these figures. Price movements will be a good indicator of the launch of the Middle East capacity , and the state of the American economy and plant closures.

Source: Yavuz Eroğlu World Newspaper Interview Dated 16.06.2009