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 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.

Author Archive | Paul Hodges

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Propylene/Ethylene ratio drops

Propylene prices have been relatively strong in recent years, compared to ethylene. As the chart shows, they averaged 90% of the ethylene price between 2003-8. Now, however, they have returned to the historical 70% – 85% range. Propylene’s recent strength was well founded: • Benzene prices rose in 2004, making PP more attractive versus PS […]

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Stock markets continue to weaken

The chart above represents a sad story, with all major stock markets now down at least 48% since their peaks in 2007/8. When the blog last reviewed performance in September, Shanghai had been the worst performer, down 69% from its October 2007 peak. Since then, it seems to have stabilised, with the market down 64% […]

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Auto suppliers face difficult time as bankruptcies rise

The decline in auto sales is now threatening many industry suppliers around the world: • Today, the main Japanese car parts group has warned that “Toyota’s production cuts will cause bankruptcies among suppliers if the government restricts aid to large manufacturers”. • Last month, the main US associations requested $18.5bn in support from the Obama […]

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US auto sales remain depressed

February brought no relief for the troubled US auto industry, so critical to chemical sales. Sales were down 41% versus 2008. Even more worryingly, sales over the past quarter, and last 6 months, averaged under 10 million/year. Chrysler’s results also show the severe cost of gaining market share. It gained 1.4% in the retail market, […]

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Credit crunch jokes – an update

Q. How do you know your bank is in trouble? A. When its share price is less than the cost of taking money out of one of its ATMs. The blog is indebted to Thomas Friedman for this gem. Thanks also to a blog reader for these 2 jokes from the Jay Leno show: ‘The […]

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Another US Treasury Secretary speaks out

James Baker was Treasury Secretary to President Reagan. When he says that the US is “repeating Japan’s mistake by viewing our banking crisis as one of liquidity and not solvency”, the blog listens. His prescription is stark: “we should divide the banks into 3 groups – the healthy, the hopeless and the needy”. And he […]

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BASF – the German oil and gas company

BASF’s reported results for 2008 show that its profits are increasingly coming from the oil and gas sector. Geographically, it is becoming similarly dependent on its German operations. Agricultural and performance products put in a strong performance during the year, with their combined EBIT rising €300m to €1.5bn. But the chemicals, plastics and functional businesses, […]

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US home sales keep falling

Kevin Swift at the American Chemistry Council issued a new 2009 Outlook this week. His analysis suggests that we will see a V-shaped recession, as the “massive stimulus being injected into the US and other world economies will foster demand and a virtuous cycle of recovery will engage”. His optimism is very welcome, given the […]

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The cycle of deflation

US fund managers Comstock Partners reported a 50+% gain on their flagship Capital Value Fund in 2008. The logic behind their out- performance is summarised in the chart, which depicts their belief that we are now in a global cycle of deflation. Their analysis is that this cycle: • Began with a rise in savings […]

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Asian exports collapse – Japan’s fall 46%

Japan’s exports fell 46% in January, after a 35% fall in December. Exports to the US fell 53%, and to China fell 45%. This makes it likely that Japan’s economy will shrink further, after the 3.3% decline in 2008. It could soon become the first G-7 economy to fall into depression – defined as a […]

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