China’s economy hits the ‘pause’ button

Chemical companies, Consumer demand, Economic growth, Financial Events, Futures trading, Leverage

China lend Mar11.pngThe blog’s recent Asian visit revealed considerable anxiety about the state of demand in China. As its blogging colleague, John Richardson, has also described, the country’s lending cutbacks may finally be taking effect.

New official figures for lending and electricity consumption support this view. These are two of the only 3 figures trusted by likely future premier Li Keqiang. He described GDP numbers as being for “guidance” only.

And as the chart shows, both lending (red column) and electricity consumption (blue line) were down in February. Of course, part of this was due to Lunar New Year. But even so, total lending in Jan/Feb was down 24% versus 2010, a quite remarkable fall. Electricity growth also seemed to slow, up ‘only’ 11% compared to 2010’s 28% rise.

Last week, further signs appeared that a ‘pause’ may now be underway:

• ICIS’s Linda Naylor, one of the most trusted observers on the polymers scene, reported offers of Chinese polyethylene (PE) into Europe at €100/t ($143/t) below current prices.
• Earlier, ICIS’s Fanny Zhang in Shanghai had reported ethylene sales underway from the Fujian JV, due to “high inventories“.

Polyethylene is THE leading indicator for chemical demand in China. Not only is it the world’s major polymer. But it has also been the focus of the massive speculation on China’s Dalian futures exchange.

Equally, China’s supply/demand balances mean that in normal times, it should always be an importer of both ethylene and polyethylene. In 2010, it was the world’s largest PE importer at 4.9 million tonnes, according to Global Trade Information Services data.

It is probably still too early to be sure that today’s ‘pause’ will continue. But if the blog was still running a major business, it would certainly be updating its ideas on how to mitigate a Downside Scenario, just in case.


US house starts remain at all-time lows


Changes in US housing values continue to exert a larger and more important impac...

Learn more

US Fed's QE2 programme hits consumer confidence, raises mortgage rates


Last November, the Chairman of the US Federal Reserve justified his $600bn QE2 p...

Learn more
More posts
Plastics producers need to move to recycled feedstocks as Western refineries start to close

Plastics producers are now being squeezed from both ends of the value chain. Upstream, the growing d...

‘Watch out below!’ as supply chain chaos comes to an end

“What goes up, comes down” is usually a good motto when prices start to reach for the sk...

Smartphone sales decline highlights need to move to a more service-based business model

Global smartphone sales took a hit in Q3, disappointing those who had hoped the economy might be mov...

Industry now needs to step up, if Net Zero is to be achieved

Net Zero is clearly the key issue of our time. With COP26 about to start, 3 key elements need to com...

The Fed’s stock market bubble is at risk as China bursts its real estate bubble

The US stock market bubble just keeps rising. And every investor “knows” that the US Fed...

EU patience starts to run out as UK threatens to break the N Ireland Protocol

Unsurprisingly, it turns out that Brexit still isn’t “oven-ready”, despite the UK ...

An end to the China bubble would risk a Minsky moment

My letter in today’s Financial Times warning of the risk to Western financial markets from the bur...

Xi aims to “bring order out of chaos” by bursting China’s property bubble

China is at the start of its biggest economic shake-up since 1978, when Deng Xiaoping launched his p...


Market Intelligence

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

Learn more


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