Source of picture: Rex Features By John Richardson WE are worried that the recovery in Asia’s chemicals and polymer markets may not be sustained. One of our biggest concerns is that China’s small and medium-sized enterprises (SMEs), which make up 60% of the economy and are responsible for 80% of employment, are under more […]
Asian Chemical Connections
China Credit, Commodities Bubble
By John Richardson China announced last week that its state-owned banks had lent Rmb1.07 trillion ($172m) in January, which was more than double the amount in December. Financial markets have taken as evidence that the economic recovery has gained momentum. But when you combine January-February lending for 2012 in order to get rid of the […]
China’s PE Cycle Repeats Itself
By John Richardson THE above chart shows that China’s polyethylene (PE) demand growth has been well below that of overall GDP for most of the years between 2006 and 2012. This supports the argument that economic growth has been too heavily focused on investment rather than consumption, given that the majority of PE goes into […]
Beware Of Excessive Optimism
By John Richardson CHEMICALS and polymer markets have enjoyed a very strong recovery in Asia since November/December, according to many of the traders we have spoken to. “We are getting $150-200/tonne more for benzene and toluene in January compared with early November. There has been a strong recovery in confidences,” said a Dubai-based trader. […]
China: The Politics Behind The “Recovery”
By John Richardson THE overall HSBC flash purchasing managers’ index for January, which was released yesterday, was at a two-year high (see the above chart), with the sub-index of production at a 22-month high. This is great news for equity values and commodity prices, including petrochemicals. We might well see a rally in petrochemicals prices at […]
PTA Price Decline Reflects Realities
By John Richardson The end of the eight-week long bull-run in China’s purified terephthalic acid (PTA) pricing might well indicate a wider problem about to beset other petrochemicals: Reality undermining the positive sentiment of the early part of this year. “PTA prices surged by 10% from early November to early January, mainly led by a […]
China’s Environmental Balancing Act
A woman wearing a mask looks across the Pudong on 16 January this year Source of picure: Zuma/Rex Features By John Richardson A DISPUTE between state-owned refiners Sinopec and PetroChina and environmental regulators serves as a good example of the difficulties China faces in reforming its growth model. The debate about the environment is […]
Labour Supply After Chinese New Year
Chinese job seekers at a recruitment fair Imaginechina/Rex Features By John Richardson As petrochemicals markets begin to slow down ahead of the Chinese New Year, which this year falls on 10 February, a lot of attention is, as always, being focused on the likely strength of demand after the holidays. The hope is that […]
Northeast Asian PE Margins Positive
By John Richardson THE latest Northeast Asian high-density polyethylene (HDPE) chart from ICIS (see above) hardly suggests a tremendous increase in profitability, despite the improvement in sales volumes and sentiment in China that we first highlighted in December, and provided more details on last week. At least the Northeast Asian producers have moved into slightly positive territory, though, […]
1.5m tonnes Of New Asian PE Supply In 2013
By John Richardson SOME 1.5m tonnes of new polyethylene (PE) supply will arrive in the Asian market during 2013 at a time of very uncertain and fragile demand, a source with a global producer has told the blog. A large amount of new polypropylene (PP) supply is also expected to enter the market. “Even if there […]
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