Asia Chemicals Will Need To Cut Operating Rates

Business, China, Company Strategy, Economics

Cannacord2

By John Richardson

THE above chart, from Paul Satchell’s latest Volume Proxy*, indicates that the downturn in Asian chemicals markets has become more entrenched.

“The continued decline in the Asia line lends further support to our earlier assertion that the peak manufacturing season in China is likely to disappoint,” writes Satchell, a UK-based chemicals analyst with investment and investor services firm, Cannacord Genuity, in his 4 September Volume Proxy.

“This view is also reflected in the downbeat market intelligence from the region. One interpretation of the soft demand for chemicals in China is that demand from Western customers is weak. However, restricted access to financing is also likely to be inhibiting at least the important  small and medium-sized enterprise segment of chemicals purchasers in China”.

We worry that this is only just the beginning of a very difficult few months as it dawns on chemicals and other commodity markets that China has, indeed, firmly changed course.

Interestingly, only a few months ago, the talk in iron ore markets was of resilient Chinese demand growth being sufficient to absorb new capacities.

But now, for the first time in a decade, there is talk of cutting back on production.

We suspect that operating rating cuts across the chemicals industry in Asia will also be necessary.

*The Volume Proxy gauges volumes, and thus demand, through weekly changes in 33 spot chemical prices in the US, Europe and Asia, as assessed by ICIS.

PREVIOUS POST

Shanghai And The Real Pessimists

03/09/2014

By John Richardson THE blog is used to being told “you are too pessimistic on ...

Learn more
NEXT POST

China Transformation Webinar Tomorrow

08/09/2014

By John Richardson EVERYWHERE you look is the same,  according to the Asia ICIS...

Learn more
More posts
Polyethylene producers must avoid repeating the mistakes of Q1
05/06/2020

By John Richardson AFTER a very challenging first quarter, nobody wants to make further write-downs ...

Read
China’s PP production growth could lead to big declines in 2020 imports
01/06/2020

By John Richardson PLEASE DON’T say I didn’t warn you. China is rapidly moving towards polypropy...

Read
Coronavirus, impact on the developing world and the scale of demand losses
29/05/2020

By John Richardson ALL OF us are struggling to come to terms with a collapse in the global economy t...

Read
Coronavirus, reshoring and the polyester industry: Good luck with that
27/05/2020

By John Richardson POLITICIANS, not just including the Populist variety, are talking a lot about res...

Read
Beware of the fragile nature of the oil and petrochemical price recovery
22/05/2020

By John Richardson RECENT rises in oil and petrochemicals prices should not in my view be taken as a...

Read
China petrochemical inventories build on what could be false hopes of a V-shaped rebound
19/05/2020

By John Richardson AS PETROCHEMICALS storage space in China fills up on the hope that the country ca...

Read
Further polyethylene rate cuts seem inevitable with no certainty on who will blink first
18/05/2020

By John Richardson IT IS NOT just a razor-like focus on petrochemicals demand that will get you thro...

Read
What petrochemical companies must do to adapt to a smaller coronavirus economy
15/05/2020

By John Richardson PETROCHEMICAL companies can adapt to the coronavirus New Normal by running their ...

Read

Market Intelligence

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

Learn more

Analytics

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