Some minor relief may be at hand for hard-pressed cracker operators, particularly those in Asia. Sinopec announced today that it will reduce ethylene output by 65 KT in June (the equivalent of 1 cracker’s output), in order to allow it to boost fuel production by 200 KT. This will be done by bringing forward planned […]
Chemicals and the Economy
Interest rates start to rise
Last month, I noted the suggestion by leading bankers that interest rates would probably rise by the end of May. The rationale for this view was that the bigger, stronger banks seemed to have got fed up with subsidising the rates being charged via LIBOR (London Inter-Bank Offer Rate) to weaker banks. And sure enough, […]
Dow raises prices by up to 20%
Dow today announced that it is raising prices for ‘all of its products by up to 20 percent – depending on their exposure to rising energy, feedstock and transportation costs – and will review all terms to all customers’. Dow CEO, Andrew Liveris, said that Dow’s ‘first quarter feedstock and energy bill leapt a staggering […]
US house prices carry on falling
Every month, it seems, the US housing market gets worse. Spring should have provided some respite, as it is the peak time for sales. But instead, as the chart shows, the benchmark S&P/Case-Shiller house price index fell again to a new record low, and is now 14% below this time last year. ‘There are very […]
Sinopec receives $1bn subsidy in April
Sinopec is now losing 3000 yuan ($425) on every tonne of oil product sold, due to China’s price freeze, according to Sinopec spokesman Chen Ge yesterday. And this is on top of official government subsidies paid to Sinopec, which rocketed to $1bn in April. This was more that the entire subsidy paid in 2007. And […]
PE margins back to 2003 levels
The excellent ‘ICIS Weekly Margin Report – PE’ is starting to tell a very sad story about polymer margins. The chart (above) shows that the ethylene margin, in yellow, has been falling steadily since the start of the year. The same is true for the HDPE margin, in blue. And the Report notes that if […]
Airlines and the chemical industry
There are some close parallels between the airline and chemical industries. Both are very capital intensive, use oil as a key raw material, and are heavily dependent on operating rates as a driver of profitability. Therefore one probably needs to pay close attention to news that American, historically the strongest US airline, has announced it […]
The impact of $200/bbl oil?
I am in Tallinn, Estonia, where the Petrochemicals Feedstocks Association has kindly invited me to talk about ‘Feedstocks for Profit’, our forthcoming Study on feedstocks supply and demand. Much discussion, as you wouild expect amongst oil and naphtha traders, centred around the potential for $200/bbl oil. None of them thought it unlikely, and many thought […]
Oil hits $140/bbl
Chemical companies are still getting used to the idea that crude is trading above $100/bbl. For many of them, this was a complete shock, as many had believed the consensus view and budgeted for a $70/bbl average in 2008. Now, however, worse news is in prospect as forward prices have been racing away this week. […]
Russia’s oil trader
Increases in Russian oil supply have played a major role in balancing world oil markets, at a time when other non-OPEC sources such as the N Sea have been declining. Production rose from 6.2mbd in 1999 to 9.6mbd by 2006. But as I noted last month, there are signs it may now have peaked. The […]
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