By John Richardson BACK in November 2014, when I first suggested that China might move to self-sufficiency in paraxylene (PX), my blog post was met with widespread scepticism. At that time, China was moving from a major import position in purified terephthalic acid (PTA) towards becoming a net exporter. This led to a lot of […]
Asian Chemical Connections
China Consolidation? Forget It in Purified Terephthalic Acid
By John Richardson TOO many people still assume that the above kind of chart always leads to capacity closures in any industry that is as oversupplied as purified terephthalic acid (PTA) is in China right now. In 2015, we estimate that China’s capacity will total 4.6 million tonnes/year versus consumption of just 3 million tonnes. […]
China’s Polyester Crisis: The Global Implications
By John Richardson EVERYWHERE you turn it looks bad in China, especially in the polyester value chain. “So has it always been in polyester. Because of its ownership structure, capacities up and down the chain are often out of sync,” said an industry observer. “Hence, the current big overhang in purified terephthalic acid (PTA) capacity […]
China Polyester: Failure To Ask The Right Questions
By John Richardson HERE is a historical account of what has gone wrong with China’s polyester industry: Apparel and non-apparel manufacturers were first encouraged to back-integrate to polyester fibres production and then to purified terephthalic (PTA) as the central government sought to develop the economy through import substitution. This might have been fine without decision […]
China’s Polyester Industry And The New Big Picture
Source: ICIS supply and demand database By John Richardson THE polyester chain in China is a good example of the dangers of assuming that the big macroeconomic picture will remain more or less unchanged. Large amounts of purified terepththalic acid (PTA) (see the above chart) and polyester capacity seems to have been added in […]
South Korea “Denial” Continues
By John Richardson EARNINGS estimates for South Korean petrochemicals companies for the full-year 2012 remain around 30 percent above where they should be because “most financial analysts remain in denial“, said an industry source. A sign of how bad the times have become was that LG Chem’s Q2 results, which were released last week, […]
Fibre Intermediates In Panic
By John Richardson A SENSE of panic has gripped the fibre intermediates chain as a result of falling crude oil prices, an industry observer told the blog. “Nobody knows where the bottom of the market will be, which, to me, feels a great deal like the crisis in late 2008,” he said, “Prices are in […]
Consensus Misses The Point
By John Richardson The consensus view on China remains that we have reached, or are near, the bottom of the decline in GDP (gross domestic product) growth. This was how yesterday’s release of the preliminary HSBC China Manufacturing Purchasing Managers Index for April was interpreted. Although the index contracted for the sixth month in a […]
China Economic Optimism
By John Richardson ECONOMISTS think China’s growth has bottomed out, thanks to unexpectedly strong March bank lending. They also think that interest rates will stay low for a long time, even if rates cannot be cut because of the inflation problem. New loans in March totalled Rmb1trn ($159bn), more than banking analysts had expected. This renewed […]
China Synthetic Fibres Fall Further
By John Richardson CHINA’S synthetic fibres chain continues to show serious signs of distress as a result of weak domestic and export demand, according to my ICIS colleagues, Judith Wang and Becky Zhang. Traders in monoethylene glycol (MEG) must have believed the theory that petrochemicals demand growth in general would be strong, as inventory levels in Chinese ports […]
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