By John Richardson THE PROSPECT of a US-China trade war has edged closer as a result of President Trump’s announcement yesterday that the US will impose 25% import tariffs on steel and 10% import tariffs on aluminium. Countries hit hard by the tariffs will include China and Canada. We luckily avoided a trade war in […]
Asian Chemical Connections
Asian Petchems Profits Could Test Historic Lows In 2018
By John Richardson THE ASIAN steam cracker business has struggled to pass on higher oil prices as the above chart further underlines. As you can see, high-density polyethylene (LLDPE) injection grade spreads including selected co-products have slipped over the last few months. Spreads are a rough but still useful measure of profitability, and so tell […]
Asian Naphtha Cracker Spreads To Fall By 50% In 2018
By John Richardson ASIAN naphtha cracker operators will see a 50% decline in average spreads, or differentials, between their raw-material costs and finished product prices in 2018 compared with last year, according to my forecasts in the above chart. This will be the result of a further steep rise in oil prices and increased polyethylene […]
China’s Plastic Clean-Up Threatens Polymer Growth Assumptions
Last week saw the release of an EU Plastics Strategy which aims to make packaging plastics 100% recyclable in the EU by 2030. China is also moving in the same direction, as I discuss below – and this doesn’t just apply to its well-publicised ban on imported scrap plastic. Domestically-produced plastic waste is also being […]
China’s Pollution/Economic Campaign To Reshape Petchems
By John Richardson I BELIEVE that China’s environmental crackdown will continue to disrupt petrochemicals and polymers markets for the next few years. This is not a temporary phenomenon that will largely go away with the end of the September 2017-March 2018 campaign to minimise air pollution in 28 northern cities. Further waves of environmental inspections […]
China Govt Policy To Shape Petchems Demand, Pricing In 2018
By John Richardson NAPHTHA feedstock costs are on the way up, which is of course the result of higher crude prices. So far this year, the naphtha cost for Asian steam cracker operators has averaged $479/tonne CFR China. But our forecast for November 2017-March 2018 is $541/tonne CFR China. This might turn out be an […]
Measuring Crude Prices And Asian Petchems Profitability
By John Richardson YESTERDAY I posted this slide on LinkedIn, in response to a lot of concern amongst the more than 150 or so delegates at the 5th ICIS Asian Polyolefins Conference in Bangkok about the impact of rising crude prices on profitability. The chart shows spreads between naphtha costs, CFR China injection grade HDPE […]
China’s Accelerating War On Air Pollution: Latest Implications For Petchems
By John Richardson CHINA has steadily increased the intensity of its war against pollution over the last three years – especially the war against pollution generated by burning coal. This has major implications for the petrochemicals industry, which we will detail later on this post. Firstly, though, here is a timeline of events over the […]
Next Polyethylene Downcycle: Risk That History Will Repeat Itself
By John Richardson WE can break the history of the global polyethylene (PE) business so far this century into four major phases, thanks to the above chart, which was compiled with the help of our excellent Supply & Demand Database: 2000-2001: Global polyethylene (PE) operating rates dipped to an average of 81% on the end […]
China’s 19th Party Congress: Stronger President Xi Good For Petchems Growth
By John Richardson I SEE three Scenarios for Chinese economic growth, and so of course petrochemicals demand growth, in 2018-2025. See below where I detail how these three Scenarios would affect growth in demand for polypropylene (PP). But first of all, let’s deal with the issue of the 19th National Party Congress meeting, which begins […]