By John Richardson FIRST of all, we were told that $100 a barrel, or thereabouts, was the natural price for oil. And then we were told this after the price collapse: “Not to worry, this is just a temporary supply glut. Output cuts will soon be sufficient to restore the price back to the region […]
Asian Chemical Connections
China Would Be The Only Winner From A Price War
By John Richardson IT IS dangerously wrong to still think of China as just a cheap, copycat low-value manufacturing nation. Yes, cheap, agreed, and to begin with, as was the case with the US, it has copied other countries’ technologies. But forget low value, as China’s extraordinary growth in the smartphones business indicates. Eventually in […]
Oil Markets In One Word: China
By John Richardson A COMMENT I have heard so many times over the last two months is that once oil prices settle down, China’s petrochemicals buyers will have to come back in large numbers in order to replenish what must be, by now, very low inventory levels. For example, last month I was told: “If […]
China Polyethylene: Three Predictions For 2015
By John Richardson THE chart below serves as an excellent illustration of the big shift in consensus thinking about China’s overall economy, as it shows that: PE imports surged in January on the belief that China would “blink” – and they remained, on the whole, strong until October. The resilience in imports persisted despite evidence […]
Starting All Over Again: A Ten-Point Guide For 2015
By John Richardson AS chemicals companies go back to their budget plans for 2015, and redraw them entirely, here are ten things that they must take into account: The oil price is not going to return to $100 a barrel in a hurry, barring a major geopolitical shock – indeed, there is a chance that […]
So Much For The Bonus From Cheaper Oil
By John Richardson THE big turning point in Asian petrochemicals markets can be traced back to around the end of July for three big reasons: • It was broadly accepted from then onwards that China wasn’t going to change its policies. There would be no “blinking” via a big, old-style economic stimulus package. • The […]
US Petrochemicals Will Suffer From “The Blame Game”
By John Richardson THE chat below provides some very instructive reading as it shows that: Since 2000, overall real consumption in US polyethylene (PE) has fallen from around 12.5m tonnes to 12.3m tonnes (real consumption is domestic production plus imports, and then minus exports, with end-year adjustments made for any inventory distortions). Low-density PE […]
Asia’s Petchems Decline: Reject Tried And Trusted Analysis
By John Richardson ASIA’S petrochemicals traders and producers have on the whole done fantastically well over the last 20 years by sticking with tried-and-trusted ways of assessing markets. It is very tempting, therefore, to think that today’s weak demand will soon be put right through just a few production cutbacks. Last week, my colleagues at […]
US Polyethylene’s Weak Pricing Power
By John Richardson HERE is the thing: Petrochemicals pricing for just about every product in every region is usually pretty much set by crude oil and yet in the US, the correlation between polyethylene (PE) pricing and oil has been just 32% since 2010, according to Wells Fargo analyst Frank Mitsch. An ICIS analysis for […]
Global Polyethylene: A Painful Balancing Act
By John Richardson HERE are a few important facts about polyethylene (PE): China accounted for 30%, or 2.35m tonnes , of global imports of linear low-density PE (LLDPE) in 2013 (see the above chart). It accounted for 43% of high-density (HDPE) imports. This represented 4.73m tonnes of shipments to China. And in the case of […]
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