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
China’s Polypropylene Market: The Big Inland Growth Opportunities
By John Richardson A CONVENTIONAL WAY to assess the pace of polymers demand growth in a developing country is to assume links with historical patterns in developing countries. How long did it take the US, Western Europe and other developed economies to reach their current level of per capita consumption? From these rates of increase, […]
China’s Polyethylene Market: Three New Scenarios For 2018-2025
By John Richardson THE above slide underlines the growing complexity surrounding China’s economy, politics, society, environmental policies and trading relationship with the US. I’ve placed this complexity in the context of the implications for the polyethylene (PE) industry. The above slide, and the full explanation below, updates my three scenarios from last September. These new […]
China Shadow Banking Squeeze Threatens Global Economy
By John Richardson THE trend that I identified last August is continuing. China is in the midst of a major contraction in lending via its highly unregulated, and so very risky, shadow banking system. Last year we saw a big fall in shadow lending, but now it has totally collapsed. In January, shadow lending was […]
Petrochemicals Destocking Phase Likely As Crude Volatility Increases
By John Richardson WE COULD now be in a destocking phase in petrochemicals markets as oil prices are falling on a surge in US production. This would obviously mean lower petrochemicals pricing, leaving companies that have overbuilt raw material inventories with substantial financial losses. I hope that most companies have been prudent. In January, the […]
House Of Cards Waiting To Fall: Oil, Equities And The Economy
By John Richardson HOW much of the rise in oil prices since June of last year has been down to the fundamentals of supply and demand versus the hedge funds taking out a record number of short positions? We are about to find out, I feel. There are early signs that the hedgies have started […]
US Stock Market Decline Highlights Consumer Spending, Income And Debt Risks
By John Richardson THE SUSTAINABILITY of the US economic recovery rests on the willingness of people who cannot afford to spend money to continue to spend money. In order to explain what I mean, let’s start with income and wealth distribution in the US. A US Federal Reserve study showed that the 90% of US […]
Petchems Pricing Power, Operating Rates Tell Real Economic Story
By John Richardson PETROCHEMICALS and polymers pricing power – how easily petrochemicals producers can pass-on higher oil prices to their customers – is a great measure of the strength of the overall global economy. The reason is that petrochemicals are used to make a huge range of finished goods. In a booming economy, the pass-through […]
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 […]
Global Economy In 2018: Stimulus Withdrawal Threatens Complacent Outlook
By John Richardson IN TODAY’S world of soar-away stock markets backed up by the notion that the sustained global economic recovery will not be derailed in 2018, there is a need to detail the major risks out there. Today’s post will look at the risks posed by the withdrawal of Western and Chinese central bank […]