Last week, German specialty chemical maker Lanxess AG warned recent declines in sales volumes were more severe than during the 2008/2009 recession. To bludgeon home his point, Chief Executive Officer Matthias Zachert added: “This feels like Lehman II.” Gulp.Lanxess’s European and US chemical peers, plus a host of companies in other cyclical sectors, face similar problems as elevated customer inventories meet the most rapid interest rate hiking cycle in decades, as well as a stuttering Chinese economy.Whether you call it the “Great Destocking,” an “inventory recession,” or just a plain old recession, it looks increasingly like the materials and industrial world is either in, or heading for one – an impression reinforced by last week’s bleak US and European manufacturing purchasing managers’ data.
I have no idea what the economy is going to do, but I feel like this bears watching, as the chemical industry often is a leading indicator of where the broader economy is going...
For the benefit of us n00bs, what was Lehman I?
ReplyDeleteGreat question! They are referring to the collapse of Lehman Brothers, a bank that failed and ~kicked off the stock crash part of the Great Recession: https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
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