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Time to check Downturn contingency plans

D'turn 13May11.pngTwo years ago, the blog began to survey global stock markets on what turned out to be the day they began their major rally.

Its end-April launch of Downturn Alert may prove similarly fortuitous. Since then (shaded area), Brent crude oil is down 8%. Similarly naphtha is down 11%, benzene down 2%, HDPE 6% and PTA down 9%.

The chart shows prices since 1 January:

• Chinese PTA prices (blue line) are now 5% below January levels, after what ICIS pricing described as "panic selling" on Thursday.
• Brent (red dotted line) and HDPE USG (purple) are falling together, having risen together.
• In Europe, ICIS pricing reports on benzene that with "cheaper feedstock available, reformers are being run harder, which means that there is more material available".

Clearly buyers will no longer be rushing to secure supplies, with these price movements taking place.

It is still too early to be quite certain, but the blog's feared downturn is probably now getting underway. If it was still running a major chemical business, it would be asking the management team to check that the contingency plan is as robust as possible.

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This page contains a single entry from the blog posted on May 16, 2011 6:33 AM.

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