The blog’s former ICI colleague, Tom Crotty, aptly summarised the mood of most petchem players at this week’s meeting in Budapest, Hungary, when telling ICIS’ Nigel Davis that “2011 is a very tough call to forecast”.

Crotty is this year’s president of EPCA (European Petrochemical Association), and it was clear from the blog’s discussions that uncertainty is the key factor in current petchem markets. In particular, people have different viewpoints based on their geographic location:

• Asian, Middle Eastern and Latin American players have had a good year, supported by China’s demand. They hardly recognise that a recession has been underway, but worry China may slow next year.
• European players have seen tight markets, with feedstock supply limited by refinery cutbacks, as I describe in the above interview with ICB’s Will Beacham. But they worry that government cutbacks and austerity programmes will hit demand next year.
• US players have also been supported by Asian demand, and domestic stimulus spending. But the upcoming mid-term elections, and lack of clarity over future economic policy, create their own uncertainty.

In addition, there is the strange case of crude oil prices.

Petchems always do well when these rise, as players build inventory down the value chain (as in 2007-H1 2008). And as in 2008, the blog fears that today’s high prices will also choke off demand, as they reduce discretionary spending.

Equally, oil prices have not been supported by tight supply conditions. Inventories of crude and oil products are at near-record levels. It is only the efforts of financial players, selling the US$ and buying commodities such as oil, that has led to today’s $80+ levels.

Scenario planning seems essential when looking forward to the 2011-12 Budget period, with companies faced by extreme levels of uncertainty over future demand levels, government actions, currency movements and feedstock prices.

The blog will take up this issue in more detail, when presenting its annual Budget outlook later this month.

PREVIOUS POST

Chemical Industry & Employment Outlook webinar

06/10/2010

The blog is pleased to have been invited by the American Chemical Society (ACS) ...

Learn more
NEXT POST

Asian demand key to global chemical outlook

09/10/2010

As promised last week, the blog has undertaken its usual 6 monthly analysis of g...

Learn more
More posts
Global chemical industry – key trends for success in today’s New Normal
02/08/2020

The chemical industry is the best leading indicator for the global economy. On Friday, I had the pri...

Read
Oil prices signal potential end to the V-shaped recovery myth
26/07/2020

Oil prices have moved into another ‘flag shape’ – which previously provided critic...

Read
Bankruptcies now the key risk as hopes for V-shaped recovery disappear
19/07/2020

Governments, financial markets and central banks all originally assumed the Covid-19 pandemic would ...

Read
Reshoring set to create Winners and Losers as advanced manufacturing takes over
12/07/2020

Not many companies still operate in the same way as 500 years ago, or even 50 years ago. But in manu...

Read
Merkel warns of need to prepare for No Deal Brexit
05/07/2020

Most people missed the fact that last Tuesday was the last possible date to delay the UK’s exi...

Read
The Top 5 pandemic paradigm shifts
28/06/2020

The Covid-19 pandemic has accelerated the fundamental changes which were already underway in global ...

Read
Oil prices start to reconnect with coal and gas
21/06/2020

Oil prices are finally starting to reconnect with other fossil fuel prices, as the chart shows.  It...

Read
Economic risks rise as the lockdowns end
14/06/2020

It is now 13 years since I wrote the first post here, in June 2007. A lot has happened since then: ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more