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 – still high, but down 74% from the peak. A number of other signs also show that the ‘China story’, which has supported chemical, commodity and financial markets for the past year, may be coming to an end:
• LLDPE prices (red line) are down 4% versus the end-February peak, even though crude oil prices have risen 8% over the period
• Prices on the Shanghai stock market are down 6% over the same period
Plus, of course, the government is now scaling down its massive lending programme – the underlying support for all these markets.