It could be a very difficult H2 for anyone involved in the Asian oil and polymer markets. And given the global importance of these markets, everyone around the world will also feel the impact. The issue is that most business strategies have been based on 2 increasingly unlikely assumptions: Companies all assumed that oil […]
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Wrong assumptions on China growth and oil prices mean danger lies ahead for refiners and polymer producers
I spent most of last week in New York and Boston, meeting with major investors. One key topic on all their agendas was the major downturn underway in the global mining industry. The connection with my visit was that some have already begun to worry that the planned US ethylene expansions may lead to a […]
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, […]
Simple stories aren’t always true. That’s certainly the case with the fiction that the fall in the number of US oil drilling rigs will soon reduce US oil production. Exxon Mobil CEO Rex Tillerson recently reminded us of this critical point: “Clearly a significant decline in rig activity did not diminish the continued growth of […]
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 […]
China’s property bubble is collapsing, with average house prices now down 10% from their peak. As agents Knight Frank note, “The developers have two to five years of stock to clear. So until that has been cleared, prices aren’t going up any time soon” We are also seeing more bankruptcies amongst property developers. These began a […]
Data over the past month continues to confirm my fears that the US housing recovery is going into reverse. The argument was summed up yesterday by S&P’s chairman, when reporting Case/Shiller housing price data for December: “The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home […]
Welcome to the New Normal. The Great Unwinding of policymaker stimulus has led global oil prices to drop back to $50/bbl. Meanwhile China, the major source of demand growth since 2009, is now seeing a major slowdown. And, of course, this is still only the beginning of the great transformation that is now underway as we enter […]
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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 as 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.