European cracker margins are currently “at top of cycle levels” according to INEOS last week. But as the above chart shows (based on APPE data), they remain supported by supply issues rather than demand. Operating rates actually slipped to 81% in H1, a figure more normally associated with a downturn. Detailed output figures for Q2 […]
Chemicals and the Economy
US GDP still below 2007 levels
On Friday, the US government announced that GDP grew just 0.8% in H1. This, of course, was far below the US Federal Reserve’s confident estimate of 3.5-4% for 2011, given only 4 months ago in March. We are indeed in a New Normal. But the consensus simply refuses to recognise the impact on demand of […]
Petchem markets stabilise
Petchem markets have moved into an interesting phase. Optimists will point to the recovery in crude oil and financial markets, plus higher prices for naphtha and benzene. They will see these as signs that we are just in the middle of a typical correction. And they will hope for further price increases over the summer. […]
Oil markets surge on QE3 hopes
“Will he, won’t he?” That was the only question in oil markets last week. On Wednesday, US Fed chairman Ben Bernanke seemed to suggest that QE3 might arrive, to follow on from his QE2 ‘LifeBoat’ for the economy. As the chart shows, oil prices leapt $3/bbl within 2 hours as he spoke. But then Bernanke’s […]
Petchem markets become more complex
Our annual Asian conference in Singapore (co-organised as always with ICIS) was very interesting this week. We had some fascinating presentations from major companies including Reliance and Thai Oil, and China insights from CICCC and Chemease. Shell’s GM for strategy, Alexander Farina, discussed changes in cost competitiveness between benzene (grey column) and propylene (red) over […]
Investment banks push oil prices higher
The start of a new half-year usually provides an excuse for the investment banks to publish bullish notes on oil markets. We discuss their role in Chapter 3 of Boom, Gloom and the New Normal, to be published later this month. Thus Goldman Sachs last week suggested oil markets will become “critically tight” in 2012, […]
Downturn Alert shows markets weakened in Q2
The last week of a half-year period often sees greater volatility in financial markets, as players rush to position themselves for client reporting. This was most obvious in stock markets, with the US S&P 500 Index (pink dotted line) staging a 5% rally during the week. Brent crude oil (blue dash) eventually ended unchanged versus […]
Downturn Alert shows markets still weakening
The IeC Downturn Alert launched on 2 May. Later that day, the US S&P 500 – the world’s most important stock index – hit a post-Crisis high of 1370. Last Friday, it closed down 7% at 1268 (purple dotted line above). Many expect this to be just a minor correction, and still believe a new […]
High stocks lead buyers to hold back purchases
Buyers’ behaviour has changed completely since the IeC Downturn Alert launched 7 weeks ago. ICIS news reported Friday a large polypropylene consumer commenting: “I am not buying a lot, just one or two trucks at a time. I kept a high stock level when prices were going up, so now I am using that up. […]
Markets down 9% – 15% since Downturn Alert began
When the blog launched its IeC Downturn Alert in early May, it noted that “they don’t ring bells at market turning points”. However, it hoped that the Alert would provide a replacement. It seems to be doing its job. As the chart above shows, prices for all the products highlighted are now down between 9% […]
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