Be very careful what you wish for. That is the key message coming out of close analysis of China’s latest trade data. Recent media reports were upbeat at news that China’s exports had increased, as it appeared to suggest Western demand was returning. But it seems nothing could be further from the truth. One major concern is that part […]
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Just as forecast in March, world cotton prices have crashed. Prices peaked at 97.35c/lb on 24 March, just 3 days after the post was published. Since then, they have fallen by a third to 65c/lb. They have now fallen for 11 straight weeks – the longest slump in 55 years, according to Bloomberg. There is no need to repeat […]
To assume, as they say is “to make an ass out of u and me”. That was certainly the case last week, when financial markets assumed that China’s slightly better PMI index was a sign that its domestic economy was stabilising. They had temporarily forgotten the key message of February’s Research Note, namely that the government would aim to […]
It seems that cotton prices are about to return to normal levels again. The blog’s detailed discussion of the issues last September highlighted how current Chinese government policies seemed doomed to fail, at enormous cost to the wider world. It now looks as though China’s new leadership agrees with this conclusion. Since late 2008, the previous leadership’s […]
Cotton will be one of the main case studies used by future historians to highlight the failure of post-Crisis policies from 2008 onwards. It highlights all the key issues: Their tidal wave of liquidity took cotton prices, as the chart shows, to all-time record levels. They soared to a record monthly level of 230c/lb in March 2011, nearly double […]
The blog is extremely concerned about recent market developments. Nobody minds higher prices, if they are a response to strong demand and can be passed through to customers. But today’s high prices have nothing to do with strong demand. On the contrary, in fact. Most consumers are actually reducing output. Equally, the wider economic outlook […]
Trading volumes in financial markets are very low these days. Many ordinary investors are on holiday, and others are focused on the Olympics. So it is easy for the high-frequency computers to create major volatility – and large profits for their owners. Thus they managed to create a 1.5% fall in the S&P 500 on […]
The last few days have seen financial markets rallying, whilst the news from the real economy gets worse. US GDP growth in Q2 was just 1.5%. And the Wall Street Journal notes the recovery since 2009 has been the weakest in the post-War period. But that doesn’t matter to the computerised trading systems that now […]
‘Waiting for Godot’, the great play by Irish writer and Nobel Literature Prizewinner, Samuel Beckett, deals with the meaning of existence. Written just after the Second World War, its two characters wait endlessly for the arrival of Godot. US financial markets are currently staging their own version of the play: • They no longer see […]
Pity the poor purchasing manager, who: • Must keep inventories low as end-user demand remains slow, and the CFO remains very worried about the working capital risk • Must keep inventories high, to minimise the risk of running short if supply problems develop and prices jump Benzene (green line), as always, is the great example […]
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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.