14 June 2010 17:04 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS news)--Talk in the UK of a possible ‘Black Monday’- like correction in share prices highlights current market nervousness and increasing uncertainty.
To put it into perspective, the relevant ratio of investors on the
There are deepening concerns in the
Physical market nervousness is widely apparent, supplemented in chemicals by expected supply-side corrections.
Market tightness in European polyolefins, for instance, has been driven by supply-side constraints and a lack of stock. The market has yet to feel the impact of new
At the big Asia Petrochemical Industry Conference (APIC) in Mumbai last month, players publicly were talking of an expected supply-side driven downward correction. Privately, however, they reckoned that delays in bringing plants on-stream would work considerably to their advantage.
The premise was, and is, however, that strong demand growth can continue.
Paper and physical polyethylene prices appeared to be pointing, however, in the other direction.
As reported in the ICIS Asian Chemical Connections blog on Friday, some producers in China don’t expect the domestic China market to pick up for at least a couple of months given a weak construction sector and high automobile inventories.
Asia producers are also expecting higher export volumes of polyethylene out of the
In some European chemical markets, it is clear that producers are not pushing as hard as they might for price increases as buyers react to the recent downward pitch of the oil price and, particularly, demand growth uncertainty.
Securing business now is more important than pushing for increases that ultimately will not be achievable at decent volumes.
Chemicals producers have been buoyed more than expected by demand for most of the first half but the easing off is much more widely apparent than it was even just a few weeks ago. There is deepening uncertainty regarding the progress of demand growth in the second half.
Ultimately, it is the consumer that drives chemicals. In the
That is why the disappointing May retails sales report noted by the American Chemistry Council in its weekly economic bulletin is worrying. The ACC called it “a disappointment”. It may reflect “turbulence in equity markets and heightened uncertainty among consumers”.
That uncertainty is not confined to the important US consumer but also to buyers of many types of goods in
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