OPEC today decided to hold oil production at current levels, even though prices are at a level which clearly threaten economic growth. They even recognised this risk in their statement, ‘highlighting the economic slowdown in the USA, which together with the deepening credit crisis in financial markets, is increasing the downside risks for world economic […]
Chemicals and the Economy
Buffett says US is in recession
‘If it walks like a duck, and quacks like a duck, then its a duck’. This simple logic probably best sums up Warren Buffett’s position on the current state of the US economy. ‘By any commonsense definition’, said Buffett yesterday, ‘the US is in recession’. Buffett is the world’s leading investor. And key evidence from […]
Traders sell $, buy oil
‘ ‘A vicious circle now seems to be in place again, where a lower dollar inspires raw material prices to rally, which in turn increases worries about inflation’. This was how strategists at BNP Paribas summed up the US Fed Chairman’s two days of testimony to Congress last week. For the last 20 years, every […]
Japan’s factory output weakens
The blog has been following the debate over ‘decoupling’ with some interest. With the US going into a downturn, it is critical to understand whether Asian chemical markets will follow. Until recently, they have been buoyant, allowing US companies to make up for some of the decline in their domestic markets via exports. But I […]
‘Largest ever peacetime liquidity crisis’ says Bank of England
Its not often that one gets clear statements from central bankers. Today’s comment from the Bank of England’s Deputy Governor that the credit crunch was ‘an accident waiting to happen’ is truly remarkable for its clarity. She also gives the best one sentence summary that I have seen on the background to today’s credit crunch. […]
Wheat prices add to CFO concerns
Wheat prices rose 25% yesterday, the biggest one-day rise ever, as Kazakhstan imposed restrictions on wheat exports. The rationale for today’s rising prices is three-fold: • US farmers have shifted land over to corn, to meet increased ethanol demand, and US wheat inventories are forecast to hit 60 year lows • Emerging countries are now […]
BASF – the oil and gas company
BASF Chairman Jürgen Hambrecht sounded confident last week, following their annual results. 2007 sales were €58bn (up 10% on 2006), and income from operations was €7.3bn (up 8%). However, Q4 saw sales up just 1.6% at €14.7bn, and income actually down 3.4% at €1.6bn. The main culprit in Q4 was chemicals. Sales were marginally down […]
4 issues driving today’s oil price
Quietly, oil has moved back to the $100/bbl level. This is quite different from January, when it first hit the magic $100/bbl number. Financial players had jumped on the trend from November as crude rose above $80/bbl, and then wanted to ‘get out at the top’. Their thinking was that a US recession would reduce […]
The law of unintended consequences
There’s an interesting article on Bloomberg, suggesting that the US Fed’s dramatic interest rates reductions are ‘driving Asia’s governments back to controlled economies’. Its argument is that by cutting rates, Bernanke is ‘limiting his Asian counterparts’ ability to curb inflation’. It goes on to argue that Asian banks cannot now raise domestic interest rates to […]
China exports inflation
China has been a major source of price deflation for the past decade. It is now the world’s leading manufacturer of a whole range of products from microwaves to DVDs. And the rest of the world has benefited from the lower prices that it has provided. But not any more. The attached chart from the […]
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