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The Great De-Stocking

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News and Analysis

The Great De-Stocking

Josh Latham's avatar
Laura Thompson's avatar
  1. Josh Latham
  2. +Laura Thompson
•7 min read

ā€œThis feels like Lehman 2.0,ā€Ā saidĀ Lanxess AG’sĀ CEO, Matthias Zachert, on an ad hoc investor call in June.Ā 

He was referring to demand destruction and de-stocking in the chemicals industry. The systematic shock has also been felt in theĀ packagingĀ andĀ pulp & paperĀ industry, and further down the supply chain, with shipping businesses warning of lower volumes over theĀ past few months.Ā 

ā€œWe’d hoped that the end of 2022 was the trough for this, but the situation has only gotten worse,ā€ one chemicals analyst toldĀ 9fin. ā€œWe’re very actively managing our chemical exposure at the moment and turning down way more of the opportunities we’ve seen in primary and secondary.ā€

Some caution that demand could also be a crucial underlying issue. After all, the chemicals industry is usually one of the first to feel any fluctuations in demand from end-markets.

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