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Chemicals and the Economy

China’s demand growth remains weak

China’s demand growth continues to be weak down the main value chains. Auto sales are the most obvious example. As the chart shows, they have recovered from the very slow period over the Lunar New Year holiday, but are still only up 2% (red diamond) versus 2011 levels (green line). Even this growth has only […]

The Eurozone train crash heads for the buffers

For 25 years, Western policymakers coasted to electoral success on the back of an economic Supercycle. The BabyBoomers’ arrival in the Wealth Creator 25 – 54 age group meant there was just 16 months of recession between 1982-2007. Politics and policy thus hugged the middle ground. Political debate became based on focus groups, rather than […]

A China ‘hard landing’ gets closer

China’s leadership remain preoccupied with the transition to a new politburo in October, and the continuing fallout from the Bo Xilai affair. Equally, April’s 7% rise in food price inflation remains a major issue for a country where 96% of the population earn less than $20/day. Data for April bank lending and electricity consumption highlights […]

Buyers disappear as oil prices fall

Petchem markets continue to fulfill their role as leading indicators for the global economy. The chart shows the benchmark products in the IeC Downturn Monitor since January 2011: • PTA prices in Asia (red line) have remained weak throughout, clearly signaling the major slowdown that is now underway • US polyethylene export (purple) prices managed […]

Companies have mixed views on the outlook

The blog’s quarterly look at company results raises more questions than answers about the outlook. This is very typical of turning points. Back in May 2010, for example, companies also expressed mixed feelings, as the blog noted: “Q1 has seen the forecast seasonal boost. But Asia, particularly China, remains the real focus of growth. PetroChina, […]

EU olefin operating rates slip back to 81%

The latest EU olefin operating rates (OR%) were very disappointing, even though they were not a surprise. As the chart shows, ethylene rates were just 81% (based on APPE data). They were far below the 90%+ rates that were normal before the crisis began. These rates would normally have left the industry in crisis mode […]

Saudi warns, again, that oil prices are “too high”

Brent oil prices are still within the triangle formed by movements over the past 4 years. As the chart shows, they tried to break-out on the upside last month, based on Iran supply worries. But since then, they have retreated again. Interestingly, there are now signs that fundamentals rather than sentiment are starting to drive […]

US job news shows demographics slowing demand

Friday’s weak US jobs report seemed to surprise most of those Wall Street analysts who are supposed to understand this key subject. The reason is that they ignore the major demographic changes now underway. The chart above shows official US employment numbers since 1939 (blue column) and per capita disposable income since 1969 (red line), […]

Cash-flow fears rise as the ‘storm’ gets nearer

The blog fears the storm discussed last month is getting closer. Oil prices have weakened, with Brent falling $7/bbl last week to $113/bbl as Iran worries reduced. Attention is thus refocusing on the fundamentals, where US oil inventories are now at 21-year highs. We may therefore be about to discover that high oil prices have […]

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