There are increasing signs that China's economic growth is slowing. Local gasoline and diesel prices are now (as in Europe) at record levels. Gasoline is Rmb 8.2/litre, the equivalent of $1.20/l, or $4.40/US gal.
Unsurprisingly, this leaves people with very little spare cash, especially with food price inflation still at 6.2%. Equally, with rumours of coups in Beijing following Bo Xilai's purge, the communist party clearly has other things to worry about than a further economic stimulus package.
Polyethylene has been a good indicator of the slowdown as it has developed over the past year. The above chart, using GTIS trade data (Global Trade Information Services), shows combined January/February volumes (red column) compared to 2011 (green) and 2010 (blue):
• Total demand is up only 12% versus 2010, well below GDP growth
• Local production is up 28%, despite last month's slowdown
• Overall imports are down 1%, whilst exports are up 160%
• Middle East and South East Asian net imports have grown rapidly
• North East Asian, NAFTA and EU net imports have fallen sharply
Unsurprisingly, as the blog noted on Monday, this slow growth is now causing Asian/Middle East producers to target other markets, particularly Latin America. They have to sell their product, or shutdown plants.