Financial markets are telling us something important about the outlook. Profitable themes over the past month have been expectations of weakness in crude oil prices, in China’s economy, and in the financial sector; plus positive views on long-dated government bonds in the JUUGS (Japan, UK, US, Germany, Switzerland). 90% of market players probably dismiss most, […]
Chemicals and the Economy
Why plastics signal problems ahead for the US shale gas bonanza
The blog’s latest post for the new Financial Times FT Data blog has just been published, and is reprinted below. Please click here for the FT site. Shale gas developments in the US have sparked a wave of euphoria about the opportunity for a renaissance of its domestic manufacturing base. Petrochemicals should be one of […]
Buyers disappear as oil prices fall
Petchem markets continue to fulfill their role as leading indicators for the global economy. The chart shows the benchmark products in the IeC Downturn Monitor since January 2011: • PTA prices in Asia (red line) have remained weak throughout, clearly signaling the major slowdown that is now underway • US polyethylene export (purple) prices managed […]
Cash-flow fears rise as the ‘storm’ gets nearer
The blog fears the storm discussed last month is getting closer. Oil prices have weakened, with Brent falling $7/bbl last week to $113/bbl as Iran worries reduced. Attention is thus refocusing on the fundamentals, where US oil inventories are now at 21-year highs. We may therefore be about to discover that high oil prices have […]
China’s Q1 PE demand down 4% versus 2010
The story of the past 5 years has been how global economic growth moved from a dependency on the West’s housing boom to a dependency on China’s housing boom. Today’s only problem is that history suggests such booms are unlikely to have a happy ending. But who hasn’t indulged in a little wishful thinking, from […]
Downturn Monitor approaches its anniversary
It is almost a year since the blog launched its IeC Downturn Monitor. The aim was to try and avoid the problems seen in H2 2008, when operating rates remained high down the value chain whilst demand fell. The above chart shows the weekly changes in its 4 benchmark products from 1 January, with movements […]
Financial markets rally on false rumour
Last week saw yet another example of the damage being caused to financial markets by the computerised high-frequency traders (HFTs). As the chart shows, the S&P 500 jumped 20 points on Thursday (1.5%), whilst the Dow Jones Industrial average jumped over 200 points. The cause was a rumour that China’s GDP would come in at […]
Markets weaken as real problems remain unsolved
It is hard to be very optimistic about the demand outlook for Q2. Demand in Q1 was lacklustre, even though it should have been the strongest quarter of the year. H1 is seasonally strong, and Q1 also benefited from Easter being in Q2. Equally, the Chinese holidays fell in January, so February and March should […]
US PE exports down 39% despite shale gas
Globalisation had a golden age between 1982-2007. Trade barriers fell almost everywhere. Companies focused on achieving a ‘lowest cost’ position, in order to maximise their competitive advantage. Today, however, the world is starting to look quite different. The chart above summarises the changes underway. It shows US polyethylene net trade (PE) since 2009, based on […]
Oil prices near Q2 2008’s record level
Finally, and far too late, policy makers are waking up to the damage that today’s high oil prices are doing to the global economy. Q1’s oil price averaged $119/bbl, just 7% below Q2 2008’s record $127/bbl ($2012). Thus Saudi Oil Minister, Ali Naimi, last week told the Financial Times: “High international oil prices are bad […]
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