The blog has been following the debate over ‘decoupling’ with some interest. With the US going into a downturn, it is critical to understand whether Asian chemical markets will follow. Until recently, they have been buoyant, allowing US companies to make up for some of the decline in their domestic markets via exports. But I […]
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US housing markets are getting worse. Today’s S&P/Case-Schiller index showed prices declined 8.9% in December. Moody’s said that 10% of homeowners (8.8 million people) had negative equity in their homes. And unsurprisingly, given this background, bank repossessions rose 90% versus January 2007 levels. Price changes generally follow changes in volume, up or down. And so […]
Its not often that one gets clear statements from central bankers. Today’s comment from the Bank of England’s Deputy Governor that the credit crunch was ‘an accident waiting to happen’ is truly remarkable for its clarity. She also gives the best one sentence summary that I have seen on the background to today’s credit crunch. […]
Wheat prices rose 25% yesterday, the biggest one-day rise ever, as Kazakhstan imposed restrictions on wheat exports. The rationale for today’s rising prices is three-fold: • US farmers have shifted land over to corn, to meet increased ethanol demand, and US wheat inventories are forecast to hit 60 year lows • Emerging countries are now […]
BASF Chairman Jürgen Hambrecht sounded confident last week, following their annual results. 2007 sales were €58bn (up 10% on 2006), and income from operations was €7.3bn (up 8%). However, Q4 saw sales up just 1.6% at €14.7bn, and income actually down 3.4% at €1.6bn. The main culprit in Q4 was chemicals. Sales were marginally down […]
Quietly, oil has moved back to the $100/bbl level. This is quite different from January, when it first hit the magic $100/bbl number. Financial players had jumped on the trend from November as crude rose above $80/bbl, and then wanted to ‘get out at the top’. Their thinking was that a US recession would reduce […]
There’s an interesting article on Bloomberg, suggesting that the US Fed’s dramatic interest rates reductions are ‘driving Asia’s governments back to controlled economies’. Its argument is that by cutting rates, Bernanke is ‘limiting his Asian counterparts’ ability to curb inflation’. It goes on to argue that Asian banks cannot now raise domestic interest rates to […]
The UK government has today nationalised the country’s 8th largest bank, responsible for 18.9% of UK mortgage lending. You may remember that Northern Rock was an immediate victim of the US subprime crisis. Its funding model, based on securitisation, failed to work once lenders became more concerned about return of capital than return on capital. […]
China has been a major source of price deflation for the past decade. It is now the world’s leading manufacturer of a whole range of products from microwaves to DVDs. And the rest of the world has benefited from the lower prices that it has provided. But not any more. The attached chart from the […]
Ratings agencies Moody’s and S&P started taking a heavy line with Sabic in December over the supposed decline in the business environment at Sabic Innovative Plastics (the former GE Plastics business). This caused me to speculate that they were preparing the ground for a more wide-ranging move. Today’s S&P report on private equity owned companies […]
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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.