How on earth does one respond to the daily news flow? The answer must be headline scenarios – best, – medium and worst-case scenarios
Asian Chemical Connections
Ukraine-Russia: how the crisis could reshape petrochemicals demand
I hope what follows helps as a first pass at describing the new environment in which our industry is operating as a result of the Ukraine-Russia conflict.
Ukraine, the global food crisis and implications for polyethylene
THE GLOBAL FOOD crisis is first and foremost a potential humanitarian disaster that must be avoided. But “must” doesn’t mean “will”, of course. Nobody should underestimate the scale of the challenges in front of us.
Geopolitics have always shaped the petrochemicals industry
THE HEADLINE IN the above slide has always been the case. But why it was forgotten could be because many of us spent most, if not all, of our professional careers in the benign period between the end of the Cold War in 1991 and the pivot in the US approach to China, which happened some four years ago.
European polyethylene and Ukraine: a new set of challenges
A NEW NORMAL for European (PE) markets could be underway, replacing the divided world of the last 10 months, as the chart below suggests.
Global inflation may matter more than China’s latest supply chain disruptions
IF THE REPORTED new problems at Yantian container port –- the third largest in the world –- had happened before 24 February, the only concern would have been further disruptions to the global container business.
Back then, I would have only worried this would have caused yet another delay to in the fall in of east-west freight rates to much more manageable levels.
Under the Old Normal, high freight rates had created a divided polyolefins world – very strong pricing and margins in Europe and the US versus comparatively very weak pricing and margins in Asia.
High container freight rates had limited the ability of Middle East and Asian producers to relieve oversupply in the dominant China market through exporting to the West. The oversupply was the result of a China demand slowdown caused by Common Prosperity and big capacity increases in China and South Korea.
But does it now even matter that much that Yantian is said by CNBC to be effectively shut down because of the coronavirus-related lockdown affecting Shenzhen –- the city of 17m people where the port is located?
Not if we are already amid a collapse in demand for Chinese exports more significant than any reductions in container-freight shipments, the result of high inflation.
Or maybe China will, as it has done in the past, subsidise its exporters to keep the China price cheap enough to sustain its export trade. There are reports of this already happening.
China polyolefins: several years of history pass in just one week
LAST WEEK I challenged whether the longstanding “put option” for petrochemicals companies and investors would still apply to China 2022.
The put option rests on the well-proven notion that the worst things get in the short term, the better the immediate outlook because Beijing always rides to the rescue with big economic stimulus.
The challenge I posed to the put option was that China might only tinker around the edges of its Common Prosperity economic reforms.
European polyethylene: Ukraine and the supply risks
By John Richardson SECURITY OF SUPPLY is a critical concern for European polyolefins producers and buyers because of the risks of interrupted Russian oil and gas supplies. You cannot, of course, run polyolefins plants without sufficient energy supplies. So, in order to support European readers of the blog, let me start with some headline energy […]
China’s HDPE market in 2022 will be a litmus test of how well Beijing can manage unprecedented challenges
By John Richardson CHINA’S INCREASING self-sufficiency in high-density polyethylene (HDPE), combined with the potential for slower economic growth, is a developing story which is obviously being overshadowed by Ukraine. But China’s decisions on operating rates – as much political as economic –- and on whether its sticks hard and fast to Common Prosperity reforms in […]
Tackling the plastic waste crisis must remain a priority because of growing legislative pressure
By John Richardson WE NOW HAVE an agreement amongst 175 countries, reached in Nairobi in Kenya last week, to develop a legally binding treaty to deal with plastic waste. This was something I called for last year. At the time I said we needed global limits on plastic waste that would be as important for […]
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