TEN-YEAR US TREASURY RATES UP UNTIL DECEMBER 15 2015 By John Richardson AN important article in the New York Times almost gets there, but like so much coverage out there, misses the crucial conclusion: Demographics drive demand and there is nothing that the Fed has done, or can do in the future, to alter this […]
Asian Chemical Connections
Oil At $25 Or Even Lower By The End Of This Year
By John Richardson AS most people react like a rabbit caught in a car headlight to the latest collapse in crude-oil prices, they need to take note of this: The long term average price of oil, adjusted for inflation, is only $33 a barrel. Why were so many misled into thinking that the natural price […]
Deflation Threatens Asia’s Ethylene-Polyethylene Link
By John Richardson AS you can see from the above chart, ever since April 1997, when we first started providing price quotes for spot Northeast Asian (NEA) high-density polyethylene (HDPE) film grade, it has been spot ethylene rather than spot naphtha prices that have driven HDPE prices. You can find the same pattern for any […]
China Will Continue To Drive Global Deflation
By John Richardson JANET Yellen has firmly signalled that US interest rates will be raised later this month for the first time since 2006. There will be collateral damage, sure, as I discussed in September, most importantly because of the private-sector debt binge in emerging markets resulting from such a long period of record-low US […]
Changing Demand Is Demanding Better Answers
By John Richardson I HAVE spent the last two weeks travelling in the Middle East, Southeast Asia and Northeast Asia and during that time, I didn’t meet one senior petrochemicals industry executive who talked in detail about demand. Instead, the focus of just about everything they wanted to discuss was supply. The big question on […]
China Is The World’s New Swing Petchems Producer
By John Richardson CHINA is the new “swing producer” in some global petrochemicals markets, as is the case with US shale oil producers in the global oil market. Let’s start with US shale oil. Here, the Catch 22 situation is that every time global oil prices edge up, the US shale industry will boost production. Breakeven […]
Oil Prices: How To Avoid “Rear-View Mirror” Thinking
By John Richardson EARLIER this year I said that crude prices in the region of $30 a barrel were perfectly possible. Now, rather belatedly I feel, Goldman Sachs and other some other analysts are waking up to this possibility, with Goldman even going as far as saying $2o a barrrel is possible. Chemicals companies cannot […]
China Polyethylene: Please Tread Very Carefully
By John Richardson HAND on heart, how many of you saw the above slide coming? As you can see, China’s polypropylene (PP) self—sufficiency will have risen from 69% in 2010 to 82% in 2015. And by 2020, we forecast it will be at 88%, leaving very little room for imports. The widespread assumption is that […]
Deflation, Customer Cost Cutting And Polyolefins
By John Richardson MOST of the world’s top ten chemicals producers reported lower sales for Q3 2015, but saw their profits improve on lower oil prices. Sticking to the sector which I follow closely, which is polyolefins, this is down to a “lag effect”. The collapse of oil and so naphtha costs has not being […]
Latest US Jobs Report Means Oil At $100 In Early 2017
By John Richardson THE US economy is well and truly back is the conclusion you will reach if you read just the front page newspaper articles following the release of last Friday’s October jobs report. “Friday’s numbers are a vindication of Fed chair Janet Yellen,” was, for example, what the Financial Times wrote on the front […]