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23 Mentions Of China Downturn At APIC

Business, China, Company Strategy, Economics, India, Middle East
By John Richardson on 26-May-2011

By John Richardson

THE blog attended the Asia Pacific Petrochemical Conference (APIC) in Fukuoka, Japan, today during which it heard mention of the phrase “China downturn” on 23 occasions from different contacts.

Confidence is clearly at a lower than last year than at APIC in Mumbai, when all the talk was about delayed introduction of new supply into the market and emerging-market growth way beyond anyone’s expectations.

A toxic combination of power cuts in China that is said to have depressed petrochemical pricing since March – and the measures to combat inflation in both China and India – is behind the significant change in mood.

Another reasons for the shift in outlook is crude oil. Steady increases in pricing up until February, leading to chemical and polymer consumers buying forward, have been followed first by flat crude and now greater volatility and sharp declines.

“The momentum has changed. Petrochemical pricing went up too much in response to crude, it hit a ceiling and now the concern is where it goes from here,” said an Indian industry source.

“Margins are under a lot of pressure, particularly for the higher-cost Northeast Asian cracker operators.”

The optimists believe that inflation will be brought under control in China in 2-3 months.

But what if underlying inflationary pressure means that a lot tougher measures will needed to moderate the rise in the cost of living?

More to follow when the blog is feeling a little less full of Asahi.