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
China moves closer to Iran as tensions with the US build: Implications for petrochemicals
02/08/2020

By John Richardson Opinions and emotions and can shape how we interpret data, but, as we all know, o...

Read
China polyolefins market H1 review: so far so good, but beware of the risks ahead
30/07/2020

By John Richardson ALL looks fine in the polyolefins world. The Old Normal appears to have reasserte...

Read
Polyethylene market recovery could be threatened by slower China crude buying, weaker economic growth
28/07/2020

By John Richardson EVEN by China’s standards, where just about every number is eye-wateringly larg...

Read
Why the polypropylene industry must switch from volumes to value
26/07/2020

By John Richardson EVERYONE knows about the oversupply in the polyethylene (PE) market as it has bee...

Read
China consulate closure underlines long-term split with US, potential big shift in petchems trade flows
23/07/2020

The views in this blog post are, as always, my personal views and do not reflect the views of ICIS. ...

Read
China’s real GDP could have been negative in Q2: What this may mean for PP
22/07/2020

By John Richardson CHINA’S official GDP growth of 3.2% for Q2, which was announced last week, may ...

Read
Iran and China new deal could hasten Belt & Road Initiative petrochemicals self-sufficiency
19/07/2020

By John Richardson ONCE AGAIN, please don’t say I didn’t tell you. A proposed new investment and...

Read
China paraxylene imports head for bigger declines as excess industrial production appears to boost GDP
17/07/2020

By John Richardson SOME PEOPLE see the 9.9% year-on-year rise in China’s crude oil imports in Janu...

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