Innovation is the life-blood of the chemical industry. It is also a critical success factor as we transition to the New Normal. Many of today’s plants and processes are simply too old and inefficient to remain competitive in a world of slow and volatile economic growth. Equally important is that changing demand patterns will demand […]
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China is the world’s largest polyethylene market. One-third of the way through the year, it is therefore interesting to analyse the ratio of its own production versus imports, and look at relative import market shares. The chart shows annual data since 2005, with 2015 data to April, based on trade data from Global Trade Information […]
Volatility creates uncertainty. And uncertainty can easily lead to paralysis, if a company hasn’t planned ahead for the range of potential scenarios that might develop. This is the risk highlighted in my usual analysis of quarterly results. A key warning sign is the divide that has developed recently in performance in different regions and industry sectors, […]
China no longer wants to be the ‘manufacturing capital of the world’. Its ‘New Normal’ policies are instead taking it in a new direction, where growth will be based on income levels, not property wealth effects. So this seems a good moment to step back, and focus on the changes this is likely to bring. […]
Who would have believed, a few years ago, that European cracker operators would see an operating rate of 84% as something to celebrate? It would have been thought a disaster prior to 2008, when rates typically ranged around 90%. But whilst nobody is flying flags, last year was the best year since 2007. And as […]
The above chart is a major wake-up call for anyone who still believes that China will continue to import ever-increasing volumes of major commodities such as polyethylene (PE). It suggests demand and import growth are now at much lower levels than in the past, and may even have begun to peak. The chart shows cumulative volumes in […]
Sinopec, China’s largest chemical company, has just published its operating results for 2014. We don’t yet have all the details, but the chart above highlights the key points of its cumulative performance since it first filed public accounts in 1998: It has invested Rmb 288bn ($41bn) in capital expenditure for refining, and Rmb 239bn ($33bn) for chemicals (blue columns) […]
Today’s market conditions are some of the most dangerous that I can ever remember. Of course, markets are always unpredictable. As UK prime minister Harold MacMillan noted in the 1960s, when asked what kept him awake at nights. “Events, dear boy, events”. But today’s markets have a 3-dimensional unpredictability: They have the normal issue of trying to understand fundamental levels […]
Chemical production is a time-proven leading indicator for the global economy. And as the chart above shows, it has been signalling that a downturn is underway since April. Based on American Chemistry Council data, it highlights: Global growth peaked at 5% in April and was down to 3.3% in January (black line) Only the N American […]
European chloralkali producers ended up having a relatively good year in 2014, despite having been over-optimistic about likely demand levels in Q3. They held operating rates at 78% in Q3, in line with H1 levels. But realism soon prevailed, and producers quickly cut rates to average 75% in Q4 to compensate. The chart shows the detail of developments since 2009 (based […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
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.