Asian Chemical Connections

If the refining industry is the tail that certainly does not wag the dog of oil exploration, where does that leave aromatics? Quite probably, the flea on the coat of the dog.

And it gets ever-more complicated and the risks keep multiplying for the industry

What would be the effect on aromatics if the Goldman Sachs prediction of $200/bbl crude over the next two years becomes true?

Benzene could face the twin squeeze of even higher feedstock costs and a big slug of new capacity.

The waning interest in biodiesel in Europe and ethanol in the US could also have implications for aromatics supply.

Perhaps in the case of the US, mixed xylenes and toluene supply won't end up being as long as had been predicted if there is a retreat from ambitious targets to boost ethanol production.

These are the kind of issues that will be examined during the DeWitt Asian Aromatics Conference in Singapore on 25-26 May.

Operational Note:

This blog will disappear for three hours on Saturday 17 May 2007 between 9am and 12 noon (UK summer time) for server maintenance. It will then magically re-appear.

An overused word - tragedy - but the events of the last week justify the description.

But what a relief that the Chinese government has reacted so promptly and so efficiently, in complete contrast the callous incompetence of the thugs who run Myanmar.

Worth clicking through to ICIS connect - our chemicals industry community forum - for discussion about the disaster and what the chemicals industry can do to help.

Click here also for the latest from ICIS news on the earthquake.

I am beginning to come to the view that something has to give in the medium-term. There is no way that the global economy can support crude prices at current levels, and you can argue, as Lehman Bros does, that speculation is behind a fair slice of the recent rallies.

They also make the case (read more on ICIS news next week) that the supply outlook is not as bad as the bulls on crude pricing - who make up the majority - are making out.

But the problem is that every bit of bad news on crude gets played up by the media, and ends up inflating the crude price, because the majority opinion is that prices have much further to rise.

The Lehman analysis doesn't add the very obvious point that chemical producers and industries all the way down to finished goods will be cutting back production on high oil prices. This will, in itself, serve as a correcting mechanism.

Governments in Asia are also cutting back on fuel subsidies which could moderate consumption growth in emerging markets - the main factor behind the demand surge.