By John Richardson The distance from end-use markets didn’t matter for chemicals and polymers producers during the 2008-2013 credit surge in China because, as we said yesterday, demand was so good that few people were willing to ask too many awkward questions. But now the questions need to be asked. One of the questions we […]
Asian Chemical Connections
What Yuan Depreciation Means
By John Richardson THE truth is that nobody has ever entirely understood the nature of China’s chemicals and polymers demand. During the good times, at the height of China’s credit Ponzi scheme, if you were a sales manager, why ask too many questions? Sales were sales and if mono-ethylene glycol (MEG) ended up stuck in […]
China MEG Market Points To Risks Ahead
By John Richardson SOMETHING very disturbing is going on in China’s mono-ethylene glycol markets (MEG), which, we, think, reflects the following: Failure to read the economic tea leaves. A sharp contraction in credit growth threatens to leave 2014 GDP growth a lot lower than many chemicals companies have forecast. The possible use of MEG as […]
Spotting China’s Main Event
By John Richardson WE will get round to writing about the impact of US propane pricing on the operating rates of new Chinese propane dehydrogenation (PDH) –to-polypropylene (PP) investments, as we promised yesterday. Honestly, we will – trust us – and we will also eventually talk about how China’s methanol-to-olefins (MTO) start-ups might be a lot less than […]
China: “Just When I Thought I Was Out….”
By John Richardson THE BLOG woke up this morning determined to write about something else, but, as Michael Corleone said in Godfather III, “just when I thought I was out, they pull me back in”. What stopped us writing about US propane prices and what this might mean for Chinese propane dehydrogenation-polypropylene (PP) start-ups this […]
Central Banks Chase The Inflation Illusion
By John Richardson IT was Milton Friedman who famously said “inflation is always and everywhere a monetary problem”. This widely accepted economic wisdom is based on the following premise: Excessive expansion of the money supply is inherently inflationary. And so one can still argue that all that central banks have to do is to keep […]
China Markets And Commentators In Denial
By John Richardson SOME chemical market players remain in denial or have yet to grasp the real problem in China, as is the case with quite a few financial journalists. Here is why: A widely-held assumption is that we cannot read too much into the few sets of data that have been released so far […]
China’s Capital Flight Challenge
By John Richardson CHINA’s economic statistics continue to take your breath away. For example, in 1993, the country’s nominal GDP totalled around $613bn compared with estimates of around $9 trillion for 2013. But who owns most of this new-found wealth? “Using various surveys and methodologies, the general consensus is that the wealthiest 1% of urban […]
China’s January Credit Growth: The Real Story
By John Richardson QUITE a lot has been made of the announcement on Sunday that China’s total social financing (TSF) in January was 2.58 trillion Yuan, which was double December’s level on an anticipated month-on-month surge in official bank loans. TSF is the measure of credit issued via the shadow-lending system and the state-owned banks. […]
BBC: “How China Fooled The World”
By John Richardson FOR the last three years, the blog has been asking people to challenge the consensus view of China. We have often been accused of being pessimistic for the sake of pessimism. This misses the point. Our point has always been that every chemicals company – our customers – need to build in […]
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