By John Richardson CHINA’S polyolefins markets were in a muddle last week as a result of resilient offer prices for imported material versus a fall in pricing for domestic cargoes. Domestic polyethylene (PE) prices were largely softer, but local distributors were unwilling to significantly cut their offer prices for imported because of tight supply across […]
Asian Chemical Connections
China Jan-Feb Deflation Deepens, Growth Collapses
By John Richardson CHINA’S economy is now showing signs of extreme weakness, according official year-on-year data for January-February: Fixed asset investment, the biggest driver of growth in China’s economy, rose by 13.9% – the weakest rate of expansion since 2001. The 6.8% year-over-year growth in industrial production was “the weakest year-over-year reading ever outside the global […]
China: Affordability, Affordability And Affordability
By John Richardson THE charts below, provided by fellow blogger Paul Hodges, are of great value for any chemicals company looking beyond the current cycle of deflation and debt in China. If you want to be a winner in the world’s most-important market once this cycle is over, the charts are a key starting point. […]
Recent History Of Oil Suggests Production Will Stay High
By John Richardson THERE is a much-broader acceptance today of the recent history of oil markets, which in summary was as follows: Oil and other commodities became a great way to make money for speculators at the height of the Fed’s quantitative easing (QE) programme. This was made easy because the financial system was awash […]
China’s Li Keqiang Pulls No Punches On The Challenges Ahead
By John Richardson Li Keqiang was short on detail during a major speech last week, said some analysts. This was taken as a sign that Beijing has become nervous about the pace of the economic slowdown, a theory supported by “policy backtracks” – for example, last month’s decision to lower interest rates for the second […]
China’s Polyolefins Price Recovery: The Role Of Crude
By John Richardson THE above chart is a useful reminder of the role that crude prices has played in influencing the pricing of polyethylene (PE) and polypropylene (PP) in Asia since January of last year (I have picked just two grades of PE and PP, but the story is similar across the other grades). You […]
The Long Term Average Price Of Oil Is $30 A Barrel
By John Richardson OIL and petrochemicals markets have behaved from mid-February until today as if the world is about to return to the way it was in the first half of last year. Here is the thinking behind this behaviour: What happened from around September 2014 onwards in crude market until mid-February of this year […]
How China Can Fix Its Housing Crisis
By John Richardson THE above chart shows the affordability of real estate in China’s Tier 1 cities (its biggest cities) as of June 2013 compared with many of the world’s other “rich cities”. Why the speech marks around “rich cities”? Because believe it or not, some people are still clinging onto the idea that China’s […]
China’s Real Estate Crisis Was Entirely Predictable
By John Richardson AN investment bubble can only remain stable if you pump ever-more air into the bubble. If you don’t continue to do this, then the bubble is in severe danger of bursting. The warning signs started flashing red for China after the crucial November 2013 Third Plenum meeting. At that point, it had […]
Be Very Careful Of the $60-70 Oil “New Normal”
By John Richardson THERE is an argument being made that the recent stability in oil prices will continue as crude enters a “New Normal” of $60-70 a barrel. This type of thinking seems to have had an effect on petrochemicals markets – for example, in the key China polyethylene (PE) market. “Our customers in China […]