WIESBADEN, Germany, Sept 21 Bayer's
plastics division does not expect its industrial customers to
start piling up stock from low levels after the downturn, as
they used to following previous slumps in the business cycle.
Bayer's MaterialScience unit, which is the world's largest
maker of chemicals for insulation foam and of plastics in DVDs
and car lights, is bracing for its industrial customers to
permanently keep stock levels low, the unit's head said on
"Everybody is living off very low levels of stock. It's a
new way of running the business that people have learnt through
the previous crisis," the head of Bayer's MaterialScience unit,
Patrick Thomas, told Reuters on the sidelines of an industry
The unit, which makes transparent plastics for the panoramic
roof in Daimler's Mercedes SLK convertible, saw
adjusted core earnings edge 3.5 percent higher in the second
quarter, and Bayer has predicted that third quarter earnings at
MaterialScience would remain flat from the previous three
months, when adjusted for currency swings.
While a slump like in the previous economic crisis in 2009
was not on the cards, global demand presented a mixed picture
and uncertainty prevailed, Thomas said.
U.S. furniture makers, which use padding foams based on
Bayer products, provided lot of stimulus for example, while
demand from the Asian electronics sector, another key client
group, was unusually subdued, he added.
"It's like driving on a motorway and you see a sign
'construction works ahead'. It's really difficult to get a
forward view and as a driver you should be slowing down. That's
how it feels like at the moment," Thomas said.
While Bayer's transparent-plastics business is slowly
recovering from the effects of new production capacity brought
to market by Middle Eastern rivals, its padding and insulation
foams business is getting an unexpected boost from competitors'
production outages, he added.
"Some of our competitors have had serious technical
problems, so the market has been surprisingly tight throughout
the whole of quarter two and quarter three. That actually
outweighs a lot of the economic effects."
(Reporting by Ludwig Burger)