By John Richardson
THE above slide shows how bad the polyethylene (PE) market has been in 2012.
Based on data from the ICIS pricing Asian PE Margin Report, it shows how Northeast Asian high-density (HDPE) integrated variable cost margins have fallen to their lowest level since 2000.
This was supposed to be a good year, part of a gradual improvement in margins until the next industry peak in 2015-2016. We think the timing of this peak has to now be in serious doubt.
More immediately, we are struggling to find reasons why 2013 will be any better than this year.
China's problems will take years to be resolved, assuming that they can be resolved.
The "fiscal cliff" remains a threat in the US, and the Eurozone crisis is hardly going to disappear.
Middle East PE producers did fine in 2012 because of their feedstock advantage: Their exports to China were up by 44% in January-September 2012 compared with the same periods in 2010 and 2011, according to Global Trade Information Services.
Next year, the US might also gain market share in China at the expense of the higher-cost Asian naphtha-based producers.
This prospect has edged a little closer with the fall of US ethylene prices on weaker demand and increased production.