12 May 2010 05:07 [Source: ICIS news]
By John Richardson
SINGAPORE (ICIS news)--The recovery of the chemicals industry in Asia has been nervous and edgy, with many complications in play and the ever-present danger that it could all go drastically wrong, market players said on Wednesday.
The 2010 Asia Petrochemical Industry Conference (APIC), which takes place in Mumbai, India, on 13-14 May, would be a good test of constantly shifting confidence levels, they said.
“If you had said 18 months ago that we would be where are today, in terms of the strength of the rebound in growth in ?xml:namespace>
“I think we could be over the worst,” the producer added.
However, the nervousness and edginess comes from the unpredictable, such as the recent collapse in global stock markets on fears of Greek debt-contagion and the exact impact of reduced liquidity in
In the end it all seems to come back to
The immediate threat that the Greek crisis would escalate and result in paralysis of the global financial system appears to be over, but this or some other global macro-economic crisis could still undermine the confidence in recovery, industry players say.
Monetary tightening in
Consumer price inflation rose 2.8% in April from 2.4% the month before, according to media reports, the highest level in 18 months. House prices rose by 12.8% in April from a year earlier – the fastest rate of increase in the past five years.
Bank lending fell by 43% in the first quarter of this year compared with the same period in 2009, according to the People’s Bank of China.
Still, though, imports of linear low density polyethylene (LLDPE), low density polyethylene (LDPE) and monoethylene glycol (MEG) reached record highs in March, according to the New York-based chemicals and data and analysis service, International Trader Inc.
The half-empty approach is to interpret the March data as a reflection of greater confidence in the near-term prospects for
“This was before all the recent monetary-tightening measures, which have included cuts in loans, higher reserve requirements for banks and tougher conditions for getting a mortgage,” said a Singapore-based polyolefin trader.
Another concern is that excess liquidity in the Chinese economy points to the failure of government steps to cool the economy down.
Demand growth could, as a result, remain close to last year’s levels for a range of chemicals and polymers as property and other asset bubbles keep on inflating.
The obvious danger is that the longer asset bubbles inflate, the more painful the correction when it eventually arrives.
Or let us look at the glass as if it were half-full: the good March numbers show
“I subscribe to this view and am very confident about
The other part of the equation is global supply growth.
Around 29m tonnes/year of ethylene capacity is due on stream in the 2008-2012 period, estimates the ICIS pricing Worldwide Ethylene Plant Report. In March 2010, however, only around 45% of this had come on stream.
Increased low-cost Middle East production and greater
But compared with last May, when the last APIC took place in Seoul, South Korea, Asia’s petrochemicals industry seems to be in a lot better frame of mind.
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