Hurricanes Ike and Gustav have disrupted the ebb and flow of hydrocarbons out of the US gulf coast. Lots of plant shut downs and supply chain interruptions for those in the petrochemical supply chain. It really plays havoc with just-in-time delivery of raw materials. The jabbering masses whining about gasoline prices are insulated from the real magnitude of what a hurricane and a banking catastrophy can do to their supply of hydrocarbyl necessities.  It’s like the food web, only you can’t eat it. It’s the petroleum web of commerce.

The banking fiasco is unlikely to directly harm the chemical industry other than spot problems due to the unavailability of cash to borrow for big projects. The bigger problem for the chemical industry lies on the demand side. If money isn’t available for consumers to borrow to energize the construction, automotive, machinery, and durable goods industries, the polymers and coatings supply chain will see a slow down. This will affect the specialty value-added companies as well as basic feedstock suppliers.

Pharma could be hurt if there is a big uptick in people who lose their insurance benefits to pay for the expensive namebrand pills. On the other hand, the generic drug business could gain from the slow down, based on the assumption that people will still demand drugs from someone.

In the end, the Wal-Mart to China cash conveyer will do just fine as shoppers downrate their expectations for the good life. So, what are lipstick sales looking like?

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