CFR China PP injection grade price spreads over CFR Japan naphtha costs averaged $546/tonne in 2003-2021 compared wit $251/tonne so far this year – a 118% difference. When you consider China’s economic fundamentals, it is unrealistic to expect a recovery to the long-term historic average in 2023.
Asian Chemical Connections
THIS IS A POLYPROYPENE ((PP) world being turned upside down. China has entered a period of lower growth with capacity additions so big that imports are collapsing as China also starts to substantially increase exports.
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.
By John Richardson WE NOW HAVE enough data to make some firm conclusions about what the Chinese polyethylene (PE) market will have looked like in 2021. We can also make some early estimates about the shape of the market in 2022. The slide below details what the ICIS apparent demand data for January-October 2021 (our […]
By John Richardson WE ALL NEED TO ASK ourselves whether the global patterns in polyethylene (PE) and polypropylene (PP) pricing and margins that we have seen over the last year represent a long-term divergence in global markets or something temporary. As discussed on Monday, when I examined linear low-density PE (LLDPE) market (and the same […]
By John Richardson THE BALTIC DRY INDEX, one of the excellent barometers of overall economic activity, was late last week at its lowest level since June on a slowing Chinese economy, easing congestion at Chinese ports and a fall in Chinese coal imports (more on this in a moment). “The index was around 1,000 a […]
By John Richardson AGAIN, DON’T say I didn’t tell you. In my 11 October blog post, having talked to people who know what they are talking about, I flagged up the possibility that China’s energy shortages could be fixed a lot quicker than many people were suggesting. Those in the know about China told me […]
By John Richardson TRADE DATA when combined with price assessments, supply and demand estimates and market intelligence is the modern-day equivalent of alchemy with a rather important difference: we can genuinely convert numbers and conversations with the market into gold, unlike the bogus science of alchemy. A great example is the chart below, the first […]
By John Richardson RARELY, IF EVER, have events felt so bafflingly complex in the global polyethylene (PE) business. Take as an example the chart below listing the factors that have reshaped demand since the beginning of the pandemic. Let’s go through these factors one by one, box by box. It is reasonable to assume, starting […]
By John Richardson IF YOU THINK that forecasting the direction of China’s petrochemicals demand has become complicated enough because of Common Prosperity, the new complexities around demand pale into insignificance compared with the tangle of fresh variables shaping local capacity growth. The above slide is just my back-of-the-envelope attempt to chart some of […]