Just to stress that, as always, what follows are my own personal views and not those of ICIS By John Richardson DON’T say I didn’t warn you. Three weeks ago I said that Vietnam could well be dragged into the trade war. “A lot of companies are moving to Vietnam, but Vietnam takes advantage of […]
Asian Chemical Connections
US LLDPE imports and the impact on European petrochemicals
By John Richardson EUROPEAN linear-low density polyethylene (LLDPE) markets have yet to feel the full effect of the big increase in US production in 2019. One of the reasons is that some Middle East material that should have gone to Europe was diverted to China in January-April. Netbacks to China were stronger because Chinese […]
Global polyethylene: Supply is not the problem, it is demand
By John Richardson WHEN people talk about supply it is very often because it is much easier to quantify than demand when, in fact, it is demand that’s the real problem. This is the case today in the global polyethylene (PE) market where the focus is on the big slug of new US supply hitting […]
Trade war certainties: A bi-polar world and the overwhelming importance of Chinese demand
By John Richardson THE IRONY IS that if the US trade deficit with China shrinks because of the trade war, its deficits with other developing countries may continue to increase as manufacturing chains are shifted away from China to avoid tariffs. The longer this situation continues, the more likely it could be that the US […]
China PE spreads at seven-year low indicates too many eggs in one basket
By John Richardson CHINA polyethylene (PE) spreads over naphtha feedstock costs are at a seven-year low and I believe that spreads will continue to decline to below their 2012 levels –a year which marked the last major industry profitability downturn (see the above chart). You might want to argue that this has to do with […]
Vietnam PE demand booms on trade war, but for how much longer?
By John Richardson GLOBAL manufacturing supply chains are adjusting to the US tariffs against China, accelerating a process that began a decade or so ago because of China’s ageing population versus more youthful populations elsewhere. Let’s use Vietnam as an example to first of all examine the longer term drift away from China. Since 2010, […]
Longer trade war: Impact in numbers on China polymers demand
By John Richardson WE MUST now start to quantify the impact on the petrochemicals industry of no end to the US/China trade war during 2019. Economists at Barclays estimate that a 25% US tariff on $200bn of exports could cut Chinese growth by half a percentage point over 12 months, and as much again if […]
Plastics pollution crisis: Impact on polyethylene margins in 2022-2027
By John Richardson ALMOST all countries late last week signed a UN deal to monitor the flow of hard-to-recycle plastics to poorer countries. The US was amongst the few countries which declined to sign the agreement. The deal is the result of the increase in contaminated plastic waste exports to Indonesia, Malaysia and Vietnam etc. […]
China PE demand boom will not stop further margin declines
By John Richardson CHINA’S polyethylene (PE) market is being temporarily weighed down by overstocking which is the result of the big surge in March imports. Many of the arrivals in March were of material booked late last year when oil and so PE prices were falling, drawing traders and Chinese buyers into major commitments. This […]
President Trump’s Tweets increase risk of no trade deal until 2021
By John Richardson THE PROSPECTS of a trade deal seem to have have faded into the distance as a result of Tweeted threats from President Trump that the US will raise tariffs to 25% from 10% on $200bn worth of Chinese imports, including several chemicals and plastics. The increase would happen on Friday, he said. […]