Studygraphic

By John Richardson

WE were right about China’s change of economic direction, which we identified in November 2013. We were then right about the collapse in oil prices from August 2014 onwards. And we also made the right call when we pointed out that these two events are inextricably linked.

Being right in the past is, of course, no guarantee of being right in the future. But do you really want to base your entire business strategy on the assumption that our core argument is wrong – that these two events are a part of the end of an economic Supercycle which requires you to entirely change the way in which you do business?

Do you really want to wager the entire future of your company on the notion that oil prices must inevitably return to around $80-100/bbl?

And do you really want to bet everything on the highly questionable notion that China is rapidly building a new economic growth model that requires you to make no adjustment whatsoever in the way that you do business?

Of course not. Your company is today struggling to deal with the immediate fallout from getting the oil price and China so badly wrong. So it would be very wrong to take the risk of multiplying the scale of this damage many times over during the next few years, to the point where the very survival of your chemicals companies could well be in question.

But that’s exactly what you will be doing if your sole scenario is a return to “business as usual” – the world before the about turn in China and the collapse of oil.

You instead need a rigorous set of scenarios to guarantee survival and prosperity. These scenarios are detailed in our new Study, which has now been released – Demand :The New Direction for Profit. Please click here for more details.

scenario-study-iec-horiz

We put forward three demand-led scenarios that challenge the supply-driven model:

•$25/bbl oil = Collapsing demand. Emerging markets submerge, and developed markets slow dramatically as stimulus-created debt has to be repaid

•$50/bbl oil = Comfortable middle. Stimulus policies prove to have worked, demand recovers, project cancellations and revived growth prospects create a balanced market

•$100/bbl oil = Continuing tension. Further central bank stimulus takes place as economic recovery stalls, and geopolitical risks rise, along with the potential for supply disruptions

Our core argument is that companies cannot any longer simply invest in new capacity on the assumption that demand will soon catch up.

Clearly, we cannot prove at this stage that our analysis is correct. But what would happen if we were right again, this time with our “paradigm shift” argument? At the very, very least, you need a fallback plan.

Please click here to download a copy of the Prospectus, and contact me at john.richardson@icis.com for more information.

PREVIOUS POST

China: Wrong Questions Will Give You The Wrong Answers

07/03/2016

By John Richardson IF you start with the wrong questions about China, you are ob...

Learn more
NEXT POST

China: Ignore Misleading Analysis On Reform Reversal

11/03/2016

By John Richardson A GREAT deal of misleading analysis has been written about th...

Learn more
More posts
China bans on single-use plastics move forward with major recycling investments likely
22/09/2020

By John Richardson THIS EVENT slipped under most people’s radar in the midst of the pandemic crisi...

Read
Developing world polymers demand unlikely to see quick rebound
20/09/2020

By John Richardson THIS IS a tragedy in the genuine sense of the word, not just in the so-often misu...

Read
China’s policy dilemma: raising local demand while protecting exports
13/09/2020

  By John Richardson IN THIS Western-centric world, a huge amount of ink is split over the cons...

Read
China’s polyethylene demand good so far in 2020 but beware of risks ahead
10/09/2020

Note that all the comparisons in this post are on a year-on-year basis unless otherwise stated By Jo...

Read
Ah, I see: China’s booming demand mystery a little closer to being solved
08/09/2020

  Note that all the data comparisons below are on a year-on-year basis By John Richardson THE P...

Read
The China polyester mystery continues in a world turned upside down
07/09/2020

By John Richardson SOMETHING very strange is happening in China’s polyester industry which has eno...

Read
China will struggle to boost local retail sales during rest of 2020 with export outlook uncertain
04/09/2020

By John Richardson IF IT were easy, then there would be an oversupply of owners of large yachts in M...

Read
Pandemic and the developing world: No quick and easy solutions
01/09/2020

By John Richardson POVERTY alleviation in low-income developing countries could be set back a decade...

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