Moody, a rating agency, predicted in a recent report that the demand of chemicals in 2019 will grow slower than that in 2018, especially in Europe. The situation is also suitable in China, especially for bulk chemicals. The demand for cars may have reached a peak, but the growth in construction and industry will grow moderately.

Although the growth of the demand of the chemical industry slows down in 2019, the credit quality of the industry will still be the same as that of 2018, and the EBITDA will increase by an average of 3% to 4%. The agency further noted that margins in the specialty chemicals sector would expand as commodity prices fell. Margins on bulk chemicals are likely to be challenged and the end-market demand is expected to remain weak.

For bulk chemicals, margins of ethylene manufacturers are expected to fall as new capacity comes on stream, but the propylene market is different and supply will remain tight through 2020. The European chlor-alkali market is also expected to soften as new installations are put into production, increasing supply capacity.The demand in the U.S. is likely to grow modestly, while other markets are likely to be mixed, most of them may be weakened. The titanium dioxide market may continue to fall. In addition, the new capacity in Asia will make the supply of butadiene market relatively loose, and the new capacity of epoxy resin will cause a falling price.

The demand for specialty chemicals is also expected to slow, particularly in the end-market sector.John Rogers, moody's vice-president, said that the drop in oil prices was good news for the specialty chemicals industry. For bulk chemicals, the key is the place where the business is built and the ingredients used. This may be bad for olefin producers, but it is certainly good for some energy-intensive companies.