There are increasing signs that China’s economic growth is slowing. Local gasoline and diesel prices are now (as in Europe) at record levels. Gasoline is Rmb 8.2/litre, the equivalent of $1.20/l, or $4.40/US gal. Unsurprisingly, this leaves people with very little spare cash, especially with food price inflation still at 6.2%. Equally, with rumours of […]
Chemicals and the Economy
Petchems ‘sailing towards a storm’
Q1 should have been a strong quarter for global petchem demand: • Buyers had to restock in the New Year, as CFOs had cut working capital for year-end reasons • In the West, Easter is delayed until April, and the USA has benefited from the warmest winter in 50 years • China’s holidays took place […]
Financial and petchem markets differ on the outlook
“Two roads diverged in a yellow wood,And sorry I could not travel both“ The opening of Robert Frost’s famous poem ‘The road not taken’ aptly sums up today’s market situation:•Financial markets continue to be supported by the Fed’s Operation Twist•Petchem markets are slowing in reaction to weaker consumer spendingBoth of them cannot be right. Either […]
Benzene, PTA warn new downturn may be close
As regular readers know, the blog regards benzene as an excellent leading indicator for petchem markets and the global economy. Its track record since the start of the crisis in 2008 has continued to be strong. The reason is probably two-fold: • It is one of the oldest, and widely used, chemicals. In many ways […]
China’s growth surge has ended
Last May, the blog raised major questions about the sustainability of China’s petchem demand growth surge in 2009-10. It suggested in an ICB article that “China’s 53% rise in PE demand is a warning sign in itself that its economy may be over-heating. Inflation is also rising – far too high for comfort“. Now new […]
Markets wait for oil price lead
The March IeC Boom/Gloom Index confirms the blog’s sense that markets are sitting on a fence, waiting for something to happen. As the chart shows (blue column), it has risen back to 4.1, just at the point which divides strong from weak markets. Similarly the US S&P 500 Index (red line) is stuck at 1369, […]
Demand declines as Federal Reserve fuels oil price rise
The Wall Street Journal carried an interesting opinion piece on Friday, assessing current market conditions from the viewpoint of the film character, Forrest Gump. Gump’s key insight is that “Stupid is as stupid does”. Thus the Journal noted: “Oil staged its last price surge along with other commodity prices when the Fed revved up its […]
Déjà vu all over again in petchem markets
This time last year, the petchem industry stood on the edge of an unseen precipice. Life seemed good. Prices were racing ahead and demand appeared buoyant. But in reality the buyers were only buying forward to protect margins, whilst end-user demand was slowing fast. This year, the blog fears, we may be about to take […]
US PE exporters face more competition in Brazil
As promised, the blog looks today at the performance of US polyethylene (PE) exporters in Brazil. It was the fastest-growing of the major markets in 2011, as the wider economy benefitted from China’s demand. Since 2008, Brazil’s PE net imports have grown 78%, from 445KT to 793KT in 2011. But as the chart shows (based […]
US exports to China fall, as cost advantage grows
US petchem producers are planning a major boost to ethylene capacity. They now have the 2nd cheapest feedstock in the world, due to ethane from shale gas. The only question is, where will they sell their product? Ethylene, of course, is very expensive to export. So derivatives such as polyethylene (PE) are the main way […]
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