By John Richardson US stock markets yesterday demonstrated their worst negative reaction to a US Federal rate rise since 1994. Asian equities also fell this morning in response to the Fed decision. But you would be entirely wrong to conclude that all that needs to happen to return to the bull run is for the […]
Asian Chemical Connections
You must not assume a Goldilocks oil price in 2019 – not too hot, not cold
By John Richardson TIME AND again people get oil markets wrong because they entirely focus on the physical supply and demand of the black stuff whilst ignoring the pivotal role that financial speculators play in driving prices higher or lower. Since 2000, futures speculation has greatly increased because of regulatory liberalisation, as I wrote in […]
Asian PE margins to test 2012 lows as consensus catches up with economic realities
By John Richardson IT HAS been evident since as early as February this year that China’s economy is slowing down. But once again, as in 2014, companies and investors have overlooked the key indicator of a slowdown: The sharp decline in credit availability, particularly via China’s shadow banking system. “Not to worry,” I can hear […]
Preserving working capital the key as crisis conditions intensify
By John Richardson PRESERVING working capital is the key for chemicals industry purchasing managers and finance directors as we head into what I believe will be a global recession. The problem for chemicals companies is having the confidence to ignore conventional opinion which time and again is wrong as it is so often driven by […]
Latest global chemicals production data indicate recession likely very close
By John Richardson ONE OF THE useful things about chemicals industry data is that they are an early indicator of macroeconomic trends because chemicals are of course the raw materials for so many finished goods. If demand for chemicals rises this serves as an early indicator of stronger sales of TVs, smartphones, autos, computers and […]
Negative Asian polyolefins margins show need for recession planning
ASIAN PE and PP spreads turned negative in October this year for the first time since the same month five years earlier. As spreads turned negative it seems certain that margins would have been in deeper negative territory as spreads don’t account for the full costs of production. Back in October 2014 the sharp fall […]
President Trump’s “very good” call with President Xi: Nothing changes
PRESIDENT TRUMP said yesterday that his discussions with President Xi Jinping were “moving along nicely” following a “very good” telephone call ahead of their critical G20 meeting at the end of November. But on the same day that the US president made his comment, the US Justice Department issued indictments against Chinese and Taiwanese semiconductor companies over […]
Global recession approaches as chems data weakens, debt problems build
THE CHEMICALS industry is the “industry of industries” – upstream of all the manufacturing chains. This is why what is happening in chemicals serves as such an important early indicator. Take a look at the above chart – the latest from the American Chemistry Council. It shows that during September, capacity utilisation in the global […]
China’s PE market in 2019 at risk of lower growth
By John Richardson THIS MIGHT turn out to be another good year for Chinese PE demand growth as the preliminary estimate from our China team is that 2018 consumption growth will be 7% compared with last year. This compares with the forecast in our Supply & Demand database of a 5.4% increase. The above […]
China PP growth at risk from lower auto sales, trade war
By John Richardson WE EXPECT China’s PP demand to rise by 6.5% in 2018 to total consumption of 27.8m tonnes. We then expect a further increase of 6% to 29.3m tonnes next year. It is too early to say for certain, but there is a risk that 2018 and 2019 PP demand growth will be […]