Tag Archives | Polyethylene

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China cracks down on futures speculation

China’s Dalian futures market has become a hotbed of speculation over the past 2 years, since the government doubled bank lending to $1.4trn during 2009, equal to 1/3rd of GDP. Traders have particularly focused on the assumed linkage between LLDPE (linear low density polyethylene) and crude oil, with price movements mirroring each other most months. […]

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Dalian follows oil, interest rate, speculation

The past fortnight has confirmed the strong linkage between Dalian futures trading, and financial market speculation. Dalian prices (red line) for linear low density polyethylene (LLDPE) rose steadily in early September, as traders bet on higher crude prices. They had gained RMB 600/t ($90) by last Wednesday. But then rumours began flying that China’s interest […]

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Dalian’s LLDPE contract rises as demand slows

Undertaking fundamental analysis of a market can be a tedious business. You have to try and understand what uses the product might have, and the alternatives for the feedstocks. You might even have to look at inventory, and forecast future supply/demand levels. Luckily, however, for the modern financial investor, these sad disciplines have been resigned […]

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Propylene prices reach parity with ethylene

As promised on Saturday, today’s post looks in more detail at the major change taking place in the relationship of propylene to ethylene prices. When the blog joined the chemical industry in the 1970′s, propylene was often regarded as a disposal problem by many cracker operators. They ran their plants to produce ethylene, which was […]

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China’s Dalian volumes drop 74%

A year ago, China’s Dalian futures exchange was hitting its peak, in terms of polymer volume. The Linear Low Density Polyethylene (LLDPE) contract saw 80 million tonnes (blue line) traded in April. This was more than 3 times total annual world production. But as the chart above shows, volume last month was ‘only’ 21MT – […]

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Asian PE margins under pressure as oil prices rise

China’s demand has been the main driver for the global chemical industry over the past year. And prices on China’s Dalian polymers futures exchange have been a key indicator of the boom. But now, the rally seems to be running out of steam. The key signs are in the above chart: • At the end […]

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European propylene, butadiene, prices rise above ethylene

A remarkable thing happened this week in European olefin markets. Contract prices for butadiene and propylene were finalised for April/Q2 at higher levels than for ethylene. This has never happened before, in Europe or other regions. The chart, based on ICIS pricing data, shows how ethylene (blue line) has normally been the highest priced olefin. […]

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Polyolefin demand follows GDP/capita

The blog was in Vienna this week for a World Refining Association conference on the Global Petrochemical outlook. It had the privilege of chairing a very distinguished panel of industry leaders in a discussion about managing through the downturn. One of the key inputs came from Anton de Vries, LyondellBasell SVP, who had earlier shown […]

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Insights from LyondellBasell and BASF

Recent comments from LyondellBasell’s COO, and BASF’s CEO, seem worth highlighting as we come to the end of the results season. Ed Dineen noted that China’s polyethylene demand seems partly linked to changes in crude oil pricing, “It turned down somewhat as we saw crude retreat a little, but as crude turned back up toward […]

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China’s economic “bubble” continues to deflate

This year’s speculative boom in China’s economy, created by major government lending and stimulus programmes, now seems to be ending. The evidence for this is in the above chart, showing LLDPE futures trading on the Dalian exchange. This hit 80 million tonnes (MT) in April, versus total global output for this type of polyethylene of […]

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