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European ethylene margins slip as oil prices rise

The excellent ICIS European margin report for ethylene shows an interesting picture this week. The chart above compares contract margins based on naphtha (red line) and LPG (yellow line) feedstock. Both have been slipping since September, when they peaked at €398/t and €357/t respectively. This week, they are over 40% lower, at €232/t and €208/t. […]

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US housing remains weak as unemployment rises

The US housing market was worth $35bn a year in terms of chemical sales in 2006. In that Boom year, 2.2m homes were built, each using $16k of chemicals. But as the chart above shows, from the ACC’s weekly report, there has been a steady decline since then. The recent introduction of the $8000 first-time […]

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Reliance offers c$10bn for LyondellBasell (Update 1)

LyondellBasell (LBI) yesterday confirmed the rumoured takeover bid from Reliance. In a statement posted on its website, it says it has “received a preliminary non-binding offer from Reliance Industries Limited to acquire for cash a controlling interest in the company contemporaneously with the company’s emergence from Chapter 11 reorganization“. It noted “this offer is in […]

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US interest rates turn negative

The irresponsibility of some parts of the global banking system continues to upset the blog. First, there was news that several banks are planning to award themselves huge ‘bonuses’, based largely on their trading success. Yet the money they are using for this trading has mostly been provided by central banks and governments. And it […]

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Abu Dhabi looks to build its petchem activities

IPIC, Abu Dhabi’s International Petroleum Investment Company, made a very shrewd acquisition of Nova at the bottom of the market, earlier this year. And now they are apparently in talks with a number of major chemicals companies about joint ventures and possibly acquisitions. The key for IPIC is to obtain technology, with which they can […]

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Devaluations risk leading to a Cycle of Deflation

In February, the blog worried that we were at the start of a cycle of deflation, as depicted in the above chart from Comstock Partners. The warning signs were that major excess capacity was developing in many industries, and some major countries were devaluing. Since then, the US and China have both undertaken competitive devaluations […]

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OECD Indicators paint a confusing picture

Leading indicators are useful reference tools, but sometimes they can also mislead. The chart above, from the ACC’s excellent weekly report, seems to provide a good example of this problem. The blue line shows the official Leading Indicator for the OECD area plus the 6 major non-OECD countries. It suggests that a strong recovery is […]

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IEA, OPEC, worry about high oil prices and CO2

The new World Energy Outlook from the International Energy Agency (IEA) spells out two major challenges. It: • “Identifies higher oil prices, coupled with the downturn in oil sector investment, as a serious threat to the world economy, just as it is beginning to recover“. • Suggests that “a profound transformation of the energy sector” […]

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Wal-Mart sees global price deflation continuing

The blog regards Wal-Mart and other major retailers as excellent leading indicators of trends in the wider economy. It was therefore concerned to see CFO Tom Schoewe reporting today that Wal-Mart continues to “operate in a very challenging economy“, where the key driver is to provide “the lowest prices to our customers around the world.” […]

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China’s oil imports not driven by domestic demand

A key driver for the rally in crude oil markets has been the increase in China’s demand. The assumption has been that this confirms economic growth is recovering strongly. Crude oil imports have certainly been rising since Q1, and have recently averaged 500kbpd more than 2008. Refinery runs have also been higher. However, new analysis […]

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