Canton Trade Fair Disappoints

 

By John Richardson

THE total value of export orders at the latest Canton Trade Fair, which finished this weekend, declined by 4.8% compared with the previous event in October last year.

This is the first decline in the value of orders at the bi-annual fair since May 2009, when the world was in the midst of the global financial crisis.

Orders from Europe and the US were down, although more transactions took place with buyers from India, Brazil and North Africa.

The export environment is clearly doing China no favours as it struggles with a major domestic economic adjustment.

European demand for China’s exports looks likely to weaken even further as a result of the worsening Eurozone crisis.

Disappointing US jobs-growth numbers also suggest that America’s recovery is, at best, anaemic. As Janet Yellen , vice chair of the US Federal Reserve, pointed out in a recent speech, job vacancy rates are worse than during the 1970s and 1980s downturns. Does this sound like an economy returning to good health?

Not surprisingly, therefore, there were few signs last week of the expected recovery in petrochemicals markets.

The story is very similar, no matter what product you examine.

For instance, in acrylonitrile butadiene styrene (ABS), ICIS pricing reported last Friday that “end-users are hesitant to commit to large volumes as they expect prices to slip further.

“The weak economic conditions in the US and eurozone and the slowdown in the Chinese economy dampened sellers’ sentiment further.”

As the chart below shows, pricing has declined this year.

 

ABSpricingMay2012.pngThe second half of the year is going to be very difficult for the petrochemicals industry in all regions.

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