EU Summit Solves Nothing

Business, Company Strategy, Economics, Europe, Polyolefins



European LDPE spot prices at their lowest level since January 2010 


By John Richardson

THE EU Summit results might have bought a little more time, but as John Authers points out in this article in the Financial Times, “the result was the latest politically driven bounce for risk markets (including crude-oil prices and equities), continuing a pattern that has persisted for 30 months, since Greece’s crisis erupted in early 2010.”

In other words, initial euphoria, creating an opportunity to make quick profits from a commodity and equity markets bounce, will give way to sober reflection and the realisation that the summit has, essentially, solved nothing.

At the core of the problem, adds Authers is that “moves to pool borrowing and banking regulation among the Eurozone members, which would solve the crisis, continue to require the kind of ceding of sovereignty that could take years to negotiate, and that electorates may not accept.”

He further points out that government finances continue to be weakened by austerity policies and Greece remains at risk of bankruptcy.

As the dust settles on the summit, it will be interesting to observe whether the European chemicals industry trade group, Cefic, sincerely feels that significant progress has been made.

In a strongly worded letter to EU leaders, which was published last week, Cefic wrote: “Only a more united and integrated Europe, with a common currency, will provide future generations with peace and prosperity. We look to you now for clear leadership.”

It asked politicians, “to pursue the deeper integration of Europe; to undertake structural reforms to boost growth and employment; to establish a budgetary union, based on sound national accounts and integrated control of public finances; to begin a gradual harmonisation of fiscal policy.”

A tall order, indeed, and one that, as Authers says, could take years to fulfil, if it can be fulfilled at all, during which time the EU economy will continue to struggle.

Why would chemicals companies remain anything but extremely cautious  in the current climate?

Evidence of the impact of the Eurozone crisis came in Cefic’s mid-year report, released on June 14. The trade group says that chemicals output growth will be at a standstill in 2012 after a weak 1.3 percent gain in 2011.

And it adds that chemicals output will be stuck 5 percent below the 2007 peak for the rest of 2012 with only 2 percent growth next year.

It expects petrochemicals production to grow by 1.0 percent in 2012 following a 0.9 percent decline last year. It forecasts no growth for polymers following a drop in output of 0.2 percent in 2011.

In a reflection of the weak polymer markets, European low-density polyethylene (LDPE) spot prices last week fell to their lowest level since January 2010, according to ICIS news.


China's Labour Complications


Source: Wang Feng, director of the Brookings-Tsinghua Center for Public Policy i...

Learn more

Managing China's Political Challenge


By John Richardson Getting on with politicians is always pretty useful for doing...

Learn more
More posts
Global polyethylene demand in 2020 could fall by 3.3m tonnes, cost curve analysis turned on its head

By John Richardson NOTHING that’s happened over the last few days that should surprise anyone who ...

Global PVC demand could fall by 1.1m tonnes as coronavirus crisis becomes global

By John Richardson YOU CANNOT stimulate economic activity when factories and offices need to be shut...

China polyethylene imports could be 3m tonnes lower as economy seizes up

By John Richardson IT IS TIME for crisis planning, I am afraid, as a result of the World Health Orga...

Rescue of major conglomerate, struggling SMEs raise risks for China and global economies

The most important issue here remains the human cost of the coronavirus outbreak. My thoughts and ho...

Global polyethylene demand in 2020 at risk of 2.4m decline because of coronavirus

By John Richardson I AM a bit confused this morning following some excitement about the Chinese deci...

Coronavirus: Global polypropylene demand in 2020 could fall by 2.6m tonnes over last year

By John Richardson SOME GOOD news might be that official Chinese state media announced that the numb...

Coronavirus threatens 2.9m tonnes of China PP demand as uncertainties increase

By John Richardson THE RUMOURS travelled around my contacts, and I am sure many of your contacts, fo...

More than 3m tonnes of Chinese polyethylene demand at risk from coronavirus

    By John Richardson THE GOOD news is that medical experts believe the novel coronavirus...


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