By John Richardson HEDGE funds and other speculators had amassed a record amount of futures contracts of 885m barrels by 31 January, according to the Financial Times. These contracts were equivalent to almost nine days of actual, physical demand. And the overwhelming majority of these contracts were “long” – i.e. they were of course based on the assumption […]
Asian Chemical Connections
Another Layer Of Trumponomics Risk: Equities Versus Real Economy
By John Richardson THE TOP chart shows that global chemicals industry operating rates fell to just 78.3% in November, even though companies up down the industry’s value chain were building inventory ahead of expected New Year price rises. This was in response to all the excitement generated by expectations of an OPEC-Russia deal to reduce […]
Donald Trump And The Polyethylene Industry: What Happens Next
By John Richardson EVERYTHING started going very well for the global polyethylene (PE) business from the end of 2014/early 2015 if you look at the spreads, or differentials, between naphtha costs and PE pricing. Spreads are only a blunt instrument to measure real profits. But both spreads and integrated naphtha-based margins have reached historic highs since this turning […]
Xi’s Davos Speech: Risks, Opportunities For Chemicals Industry
By John Richardson CHINA’S President Xi Jinping yesterday delivered a speech to World Economic Forum in Davos that has been widely praised. What made the speech very striking was how its tone and content contrasted with just about everything US president-elect Donald Trump has said. Let’s look at just two aspects of the speech (please read […]
Trump’s Diplomacy And Oil Prices
By John Richardson WHEN he was a candidate for the presidency of the US, Donald Trump promised to “bomb the hell” out of oilfields controlled by ISIL. He also declared: “I’m good at war in a certain way” and “I love war… including with nukes, yes, including with nukes.” What is said about policy during […]
India’s Demonitisation: Measuring The Real Impact
By John Richardson FOR those interested in what demonitisation might mean for Indian polyethylene (PE) demand in the calendar years 2016 and 2017, the above two charts will be useful. The top chart shows our base case for Indian demand growth, and for operating rates, from our Supply & Demand database. This was drawn up before Narendra Modi’s […]
US And China In 2017: Political Risk Analysis Is Essential
By John Richardson ON MONDAY, I talked about how US companies might lose out in the long term under the new Trump administration as China’s economy evolves. This post was mainly for chemicals industry strategic planners with a 5-10 year perspective. The more immediate concern for the chemicals industry centres around statements such as this one, […]
US And China: Into The Unknown on 20 January
By John Richardson WHERE would Apple be without China’s pivotal role in the globalisation of manufacturing? I think it is fair say that Apple with just 12% of the world’s smartphone sales would not account for 90% of industry profitability (Favourable tax treatment by countries such as Ireland might well be another factor here, but’ that’s […]
Success In 2017: Move Quickly from Denial To Acceptance
By John Richardson COUNTING the deckchairs on the deck of the Titanic as it heads towards the iceberg is the exact equivalent of assuming that 2017 oil prices will almost be entirely determined by whether or not OPEC and non-OPEC comply with their production cutbacks. We might of course steer around the iceberg, but, as […]
The Future Isn’t What The Dow Jones Is Telling Us
By John Richardson WHAT for you is the most important chart, the one on the left or the one on the right? If you are a chemicals producer rather than stockmarket investor, I would suggest it is the one on the right. The chart on the left shows the rise of the Dow Jones Industrial […]
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