By John Richardson NICE WORK, if you get can get it. A trucking company in Fort Worth, Texas, is offering to pay experienced drivers $14,000 a week – $728,000 a year – as the US struggles with a nationwide shortage of truckers or lorry drivers. This reminds me of perhaps an apocryphal tale, from the […]
Asian Chemical Connections
China To Drive Return To Global Deflation
By John Richardson THE Wall Street Journal agrees up with my blog: Two months after I warned that a slowdown in lending growth in China was a major threat to the global economy, its 1 May front-page article echoed my warning. Meanwhile, evidence continues to build that the pace of the credit slowdown is accelerating. First […]
China Commodity SpeculationThreatens Price Correction
By John Richardson A SMOKING gun that points to more market-distorting high levels of speculation in China’s commodity markets? Have “circular trades” have made a comeback, where one commodity is bought merely to speculate in another commodity or even in real estate? Please consider the following evidence: China’s coastal iron ore inventories in early March […]
Oil Prices Start To Catch Up With Supply And Demand Realities
By John Richardson I HATE to say “I told you so,”, but I have been telling you that this would happen. Oil prices on Thursday fell below $50, and were at their lowest levels since December as the realities of supply and demand caught up with the market In summary, I have been arguing the following […]
The Real Story Behind The Commodities Price Rebound
By John Richardson THE job of anybody involved in financial markets, whether equities or commodities, is to of course make money – whether by going long or short. What matters, therefore, is not whether an economic theory ultimately turn out to be true or false. All that matters is that the theory moves markets in […]
Tackling China’s Latest Steel Bubble: Implications For Petrochemicals
Note: A technical fault meant I was unable to update the blog on Wednesday and Friday last week. Business as usual returns this week. By John Richardson THE stop, start nature of economic reforms in China, which is the result of the battle between the reforming “princeling” politicians and the “populists” who want to maintain the status […]
Don’t Bet On A Post-Lunar New Year Rebound
By John Richardson THERE is a very risky theory that I have picked up in my conversations with Asian polyolefin industry players over the past few days: Strong underlying demand growth in China, low stock levels held by the country’s plastic converters and a stabilisation of oil prices will result in a firm recovery […]
Iron Ore and Petrochemicals Share The Same Delusions
By John Richardson BACK in January we wrote: “As China’s investment growth model is unwound – for economic as well as social reasons – iron ore prices [will] decline significantly, leading to the failure of the smaller mining companies and some of the service providers. This could happen just as a lot more iron-ore supply […]
Asia Chemicals Will Need To Cut Operating Rates
By John Richardson THE above chart, from Paul Satchell’s latest Volume Proxy*, indicates that the downturn in Asian chemicals markets has become more entrenched. “The continued decline in the Asia line lends further support to our earlier assertion that the peak manufacturing season in China is likely to disappoint,” writes Satchell, a UK-based chemicals analyst […]
China Will Not Shut Down. It Will Instead Run Harder.
By John Richardson EVERY $10 decline in the iron ore price knocks more than $2bn off the annual revenues of Vale, Rio Tinto and BHP Billion and around $250m from those of Anglo American. We can see a similar dynamic playing out in chemicals and polymers markets, but on a scale that has yet to […]
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