China PTA market leads Downturn Alert lower

D'turn 6May11.pngThe blog launched its Downturn Alert last week, since when we have seen dramatic moves in oil markets.

These may well lead to a slowdown in chemical orders, as buyers now have no need to secure supplies ahead of price increases, and may instead start reducing inventories to more ‘normal’ levels.

• Brent (dotted red line) is now up 24% since 1 January, versus 32% a week ago
• Benzene NWE (yellow) is up 14% versus 13%
• HDPE USG (purple) is up 25% versus 31%
• PTA China is back at 1 January levels, versus up 4%

The PTA move since the end of March is highlighted on the chart, as it may turn out to be a leading indicator for other products.

ICIS news also reported the following comments from a European PE trader on the new mood in the market:

Suddenly there is much more availability in the market. Although producers might not be under so much pressure to sell, resellers are pushing volumes and cutting their losses. Buyers sense it, and so they wait. We offer reductions of €30-50/tonne to consumers, and they still want to wait for another few days before they buy”.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. Paul is also an invited member of the World Economic Forum’s Global Agenda Council. 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 as 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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