China regulatory-enforcement pressure easing amid trade war

Boston, Massachusetts – The environmental regulatory clampdown by the Chinese government on chemical plants has seemingly subsided in 2019, according to Cabot Corp.’s CEO and president Sean Keohane.

“I would say there was no change in the regulations, but the level of enforcement seems to have backed off a little bit,” said Koehane in a 5 Nov earnings call.

The reason for that, Keohane believes, was because China was "trying to find its footing" as the global trade disputes with the US intensified. 

“That being said they continue to do regular inspections and we have plenty of evidence of that,” the Cabot boss added.

The requirement for China to grow, while becoming a better environmental steward still remains, he stressed.

However, with the enforcement being “a little bit choppy”, fewer non-performing sites were curtailed this year, leading to more competitive intensity.

The Cabot official anticipates the curtailment story for 2020 to be similar to that of 2019, although economic issues will play a key part.

If China begins to strengthen economically, Keohane anticipates "a corresponding ratcheting of enforcement" in the country.

"I think the long-term picture here is unchanged. It's just a question of short term: a bit of choppiness,” Keohane added.