By John Richardson ASIAN naphtha-to-polyethylene (PE) spreads collapsed by 80% in the first week of January compared with December last year because of the failure to pass on the rise in naphtha feedstock costs resulting from higher oil prices. In an update of the chart I’ve been running since late last year, what you see […]
Asian Chemical Connections
US-China Trade Relations In 2018: Prepare For The Worst
By John Richardson WE GOT away with it in 2017 by luck rather than design, as there is of course very little that petrochemicals and polymers companies can do to prevent a global trade war other than lobbying politicians. Part of the reason for the lucky escape was the warmth of the Trump-Xi meeting in […]
Why US Tax Reforms May Fail To Address The Big Challenges
By John Richardson CORPORATE America is of course delighted with the biggest US tax reforms in a generation that seem very likely to pass unheeded through Congress this week and reach the president’s desk for final sign-off before Christmas. What isn’t there is to be pleased about, given that the main Federal corporate tax rate […]
China And Xi Jinping: The Five Big Challenges You Must Understand
By John Richardson THE above slide, from my speech at this year’s Gulf Petrochemical Association Forum, is a summary of much of the analysis on this blog over the past 12 months. This is another of my print-out-and-keep guides. Please pin to your chemicals company boardroom wall as you plan your scenarios for China. In […]
Global Economy Is Less Able To Withstand A New Oil Price Shock
By John Richardson HISTORY has a tendency to move very slowly, inching forward incrementally, and then all of a sudden a flurry of events over an incredibly short space of time can change everything. This is where we are today. Oil prices had been creeping up long before the 4 November launch of the anti-corruption […]
Asian Polyethylene Producers: What You Must Do Now $70 Crude Is More Likely
By John Richardson THE facts on the ground in global crude markets have shifted even further in just two days. Now it seems more likely that oil prices will rise to $70 a barrel or above in Q1 of next year, possibly even earlier. What has changed are the ramifications of Saudi Arabia’s anti-corruption campaign. […]
How US Polyethylene Exports To China Could Come To A Halt
By John Richardson THE US has abundant shale gas reserves that have in effect been solidified into new polyethylene (PE) capacity, which is largely for export as this is a cheap way of shipping ethane. If you subscribe to the standard view of how the world’s economy will behave over the next decade, growth will […]
Global Debt At Unsustainable Levels As We Wait For Trigger Factor
By John Richardson THE whole point about debt is that it should be sustainable. You should only lend or borrower money if you are entirely convinced that future economic conditions – i.e. future demand – justify your commitments. Nice theory, shame about the practice. If lenders and borrowers badly misjudge future real demand then we […]
Threat To US Polyethylene From President Trump’s Iran Decision
By John Richardson THE geopolitical and economic relationship between China and Iran was already very strong even before Donald Trump decertified the Iranian nuclear deal. Now, though, Iran and China could draw even closer. This could pose a major threat to the US polyethylene (PE) industry as it ramps-up capacity. Here, first of all, is […]
Rising Trade Tensions Could Threaten US Petchems Exports
By John Richardson THE Trump administration is holding out against a capital increase for the World Bank unless the bank reforms the way that it lends money to China, according to the FT. China is the World Bank’s biggest borrower. Scott Morris, a former US treasury official, views this as strategic, as it is enabling […]