Not “Business As Usual”

Business, China, Company Strategy, Economics, Europe, Polyolefins


PE11June2012.jpgBy John Richardson

THE notion that Asian polyethylene (PE) markets would soon bottom out, which was widely expressed at the Asia Petrochemical Industry Conference (APIC) last month, seems to have been discredited.

There was a slight recovery for the week ending 1 June, when prices had crept up by $10-20/tonne on improved confidence amongst traders, according to ICIS.

Confidence was boosted by the belief that China would launch a huge new economic stimulus package.

“But then, everyone began to realise that economic stimulus would not be on the same scale as in 2008,” said a Singapore-based polyolefins trader.

Even last Thursday’s decision by China to cut interest rates by 25 basis points failed to lift the renewed negative sentiment. As a result, pricing for the week ending 8 June was assessed $10-50/tonne lower by ICIS.

Volumes are substantially down because few end-users want to commit to anything more than hand-to-mouth purchases, until or unless macroeconomic and political uncertainties are resolved. In thinly traded markets, pricing tends to bounce around, and so a few more mini recoveries, followed by further declines, seem likely.

This is not a “business as usual” scenario, as some major Asian producers insisted was the case during APIC. China’s buyers haven’t just tactically retreated until pricing has bottomed out.

Instead, we face the biggest crisis since 2008, which was further underlined by the release of weak economic data by China over the weekend.


China Rate Cut


By John Richardson CHINA surprised economists and markets with a 25 basis point ...

Learn more

China's Demographic Crisis



Learn more
More posts
Global PE market to remain long despite Saudi cutbacks caused by drone attack

By John Richardson TRADERS lucky enough to be holding long positions in PE ahead of the 14 September...

Risk of stagflation and recession from drone attack on Saudi oil facilities

By John Richardson ANY major change in US government foreign policy always carries major risks becau...

Drone attack on Saudi oil facilities: Substantial investment required to avoid a repeat

The views expressed below are personal and do not express the views of ICIS Here is a another blog p...

President Trump can only cause major economic damage by beating China, unless he has a time machine

The views in this blog, are, as always, my own personal views and don’t reflect the views of I...

Unsustainable boom in China auto market ends as sales of new vehicles move permanently lower

By John Richardson THERE IS a big temptation when making forecasts of becoming too excited about the...

Global PP demand could be 81.5m tonnes less than forecast in 2019-2028 as China Debt Supercycle ends

By John Richardson SOME PEOPLE argue that despite the rapid rise in Chinese consumer debt over the l...

China economic stimulus and PP: How global demand could have been 71m tonnes smaller

By John Richardson CHINA came to the rescue of the global economy in 2009. This wasn’t for altruis...

Hong Kong an example of rising political risk and the end of easy growth

This blog expresses my opinions and not those of ICIS By John Ricuardson THE UNREST in Hong Kong wor...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more