By John Richardson IT IS clear that the Remain campaigners were not exaggerating the short term impact of a successful Leave vote during the EU referendum campaign. They have instead very probably underestimated the immediate effect on the UK and global economies. The problem is that the referendum result came at a time of what was […]
Asian Chemical Connections
Britain’s EU Exit Vote Reflects Lack of Trust In Expert Opinion
By John Richardson MOST politicians, central bank governors, economists and business leaders told everyone that there was no way that the US housing market could drag the world into a global financial crisis. Then we were told that China’s economy could not possibly slow down, and that its vast investment in manufacturing capacity during […]
Brexit, Other Uncertainties Undermine Seasonal Pricing Confidence
By John Richardson FOR many, many years, seasonality has been a great guide to short term pricing patterns in Asian chemicals and polymer markets. Take high-density polyethylene (HDPE) injection grade as just one example, which is used to make a wide range of finished goods, including pallets, crates and food containers: Over the last ten […]
China Reformers Regain The Upper Hand
By John Richardson THE above chart indicates that the reformers have regained influence in China: Whilst new loans from state-owned banks in May beat analysts’ expectations by a big distance, total social financing (TSF), which is the measure of all forms of new lending, was substantially down compared with the previous month. The reason for lower […]
German Bond Yields Go Negative On End Of Economic Supercycle
By John Richardson OIL markets remain fundamentally long. There is little to support the notion that the recent price rally has anything to do with anything but confidence that US interest rates will be lower for longer than had been previously expected. A key catalyst for a correction will be whether or not the US […]
“Out Of The Box” Solutions Can Prevent Global Trade Tensions
By John Richardson IF you are a politician in the West, one approach to today’s crisis of global industrial overcapacity is heap most of the blame on China and threaten China with trade barriers. But if China doesn’t respond to your rhetoric, the problem is that you might be forced to follow through by actually […]
Oil Prices: Beware Return Of The Financial Bears
By John Richardson THE above chart shows the extent to which this year’s oil-price rally has been led by futures markets. What is significant, though, is that futures activity seems to have plateaued. Sure, futures activity could easily go the other way again, driving prices significantly above the $50/bbl level. But barring a decision by […]
China’s “Teapot” Refineries: Example Of The Bigger Picture
By John Richardson IT is all about jobs, jobs and more jobs in politics. Promising to create and maintain employment is how politicians win office. And delivering on these two pledges keeps them in power. But let’s not by cynical about this. You can make a very strong argument that whilst keeping a particular factory […]
Asian Polyethylene: Challenge The New Paradigm
By John Richardson IT would be very interesting to go back to 2000 and compare the strength of positive sentiment towards the future of the Asian polyethylene (PE) industry to the above chart. The chart shows spreads between naphtha costs, which is the main feedstock for making PE in Asia, and the prices for one […]
Oil Storage, China Credit Threaten Crude-Price Rally
By John Richardson MANAGE your naphtha and other raw material inventories incredibly carefully over the next few months, as you cannot afford to believe the hype that oil prices have definitively, without doubt, bottomed out. This has to be the only sensible approach for petrochemicals companies, given that: The hedge funds and pension funds poured […]
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