China’s Dalian volumes drop 74%

Dalian May10.pngA year ago, China’s Dalian futures exchange was hitting its peak, in terms of polymer volume. The Linear Low Density Polyethylene (LLDPE) contract saw 80 million tonnes (blue line) traded in April. This was more than 3 times total annual world production.

But as the chart above shows, volume last month was ‘only’ 21MT – still high, but down 74% from the peak. A number of other signs also show that the ‘China story’, which has supported chemical, commodity and financial markets for the past year, may be coming to an end:

• LLDPE prices (red line) are down 4% versus the end-February peak, even though crude oil prices have risen 8% over the period
• Prices on the Shanghai stock market are down 6% over the same period

Plus, of course, the government is now scaling down its massive lending programme – the underlying support for all these markets.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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