Archive | February, 2012

China PE imports Feb12.png

US exports to China fall, as cost advantage grows

US petchem producers are planning a major boost to ethylene capacity. They now have the 2nd cheapest feedstock in the world, due to ethane from shale gas. The only question is, where will they sell their product? Ethylene, of course, is very expensive to export. So derivatives such as polyethylene (PE) are the main way […]

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China focuses on wage increases, social stability

China’s bank lending fell 7% in 2011, following a 17% decline in 2010. As the chart shows (red column), the government is clearly trying to stabilise the position, after the panic increase in lending in 2008/2009. (January lending, impacted by Lunar New Year, was down 29% vs 2011). Electricity consumption growth (blue line) also seems […]

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IEA forecasts show high oil prices destroy demand

Over the past 18 months, the main investment analysts have argued that high oil prices would have no impact on the global economy. Now, new forecasts suggest their optimism has been misplaced. The chart above gives the International Energy Agency’s latest forecast of likely oil demand growth this year: • It has been reduced by […]

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Mahathir says Europe “must face up to new reality”

Mahathir Mohamad is one of the Grand Old Men of the Asian political establishment. He was Malaysian premier from 1981 – 2003, and led its rapid modernisation and economic growth. Over the period, which included the Asian financial crisis, the former colony’s economy grew four-fold in real terms, and it is now the 37th largest […]

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Russia’s chemical production continues to grow

Russia has been the great exception in regional chemical markets. Normally, production growth starts at a high level, often 15% a year or more, and then slows as markets become more mature. But in Russia, output collapsed with the Berlin Wall after 1989, and growth was actually negative until the mid-2000s. Since then, there has […]

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Paraxylene starts to dominate the polyester chain

Last April, China’s polyester market provided an early warning signal that the current downturn was about to start. Now, it is flagging an important change in relative positions within the value chain. 9 months ago, the divergence between crude oil prices and those for the C8 chain highlighted slowing end-user demand. The chart above updates […]

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Growth in US jobs and disposable income no longer following historical trends

Short-term pressures have come to dominate financial markets in recent years. In turn, they have become dominated by high-frequency trading, which frequently accounts for over 60% of all market action. Their trading is not based on careful analysis, but on extremely fast ‘black box’ computing, which generates ‘trading opportunities’ in micro-seconds. Their power is enormous, […]

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Financial markets jump, but petchems remain slow

Dow Chemical is usually optimistic. 6 months ago, for example, it reported that “our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is now performing at a new level.” Last week, however, Dow reported that Q4 operating rates were down from 81% in 2010 to 72%, and warned it faced “headwinds” in all segments […]

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Boom/Gloom Index and S&P 500 disconnect

The blog, like many readers, has become rather fond of the IeC Boom/Gloom Index since it was launched in June 2009. The aim to was to track market sentiment, and it continues to perform this task. It also throws up intriguing parallels, and sometimes disconnects, with financial markets. As the chart shows, this month is […]

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US housing discovers New Normal opportunities

The US housing market was the original cause of the current financial crisis. It has gone quiet recently, but this does not mean that the problems are resolved. Quite the opposite, in fact. True, foreclosures have slowed recently, due to legal issues. This is helping to boost consumer spending temporarily, as people stop paying their […]

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