One In Three Chance Of 5% China GDP Growth

China%20elec%20Apr13.pngBy John Richardson

THERE is a one in three chance of China’s real GDP growth averaging 5% or less over four consecutive quarters before the end of 2014, warns Nomura, said Bloomberg in this article.

And the bank added that its China Stress Index, which monitors the risk of a hard landing, recorded its highest reading since it started in November 2011, driven by credit and property market booms.

Meanwhile, the Politburo Standing Committee once again underlined, in a meeting held last week, that there would no big new stimulus programme to rescue growth because of financial risks.

The extent of the real slowdown in the economy, far worse than even revised-down estimates of full-year 2013 GDP growth suggest, is evident in electricity production. It grew at just 4% in Q1 (red square) versus 9% in 2012 (green). In March, consumption was only up by 2%.

Petrochemicals markets have for a long while been telling us that growth will be a lot weaker in 2013 than some economists would still have us believe.

For example, some 12m tonnes/year of Asian purified terephthalic acid (PTA) – 21% of the region’s total capacity – remains shut down because of weak demand and poor margins, according to Becky Zhang, the ICIS Asian fibre intermediates editor.

In polyethylene (PE), it is worth recalling that this year’s new capacities were supposed to be easily absorbed by the market. An upcycle was forecast to be about to begin.

But concerns, for example, persist over the disruptive effect of any increased production from the new ExxonMobil metallocene linear-low density PE (LLDPE) plant in Singapore. There has been no official confirmation that the complex is being ramped-up.

China’s first-quarter apparent demand growth for PE is widely expected to be once again below the official 7.7% increase in GDP. Official data, which hopefully should be available soon, is likely to confirm this.

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