Once again, the chemical industry has performed its role as a reliable leading indicator of the global economy. On Friday, the IMF warned their next forecast: “Will be tilted to the downside and certainly lower than the forecast that was published three months ago” This will not be news to blog readers. As the chart […]
Chemicals and the Economy
Weak chemical markets suggest difficult times ahead
Over Christmas, the blog spent some time considering whether its IeC Downturn Alert had served its purpose. By luck, or possibly judgement, it had been launched at the exact market peak on 29 April. And hopefully it had helped to alert companies to the difficult times that lay ahead. But by December, most analysts and […]
Brazil’s PE exports increase as its economy slows
Brazil’s economy has soared in recent years, as its raw materials have supplied China’s infrastructure boom. China now accounts for 17% of total exports, and has replaced the USA as its largest trading partner. In turn, of course, this led to major growth in Brazil’s own chemical demand. Its polyethylene (PE) imports grew 78% from […]
China’s PE demand continues to weaken
China’s polyethylene (PE) demand continues to highlight the slowdown underway in the wider economy. As the chart shows for the January- May period, based on data from Global Trade Information Services: • Overall demand (red column) was down 5% versus 2010 (blue) • China’s production continued to increase, up 1% • Imports were down 9%, […]
Another Minsky Moment may be approaching
The global economy is now in the middle of its 3rd downturn in the past 4 years. The chart above shows how the blog’s benchmark products have acted as leading indicators on each occasion (yellow highlight): • In 2008, naphtha (red line) PTA (purple), benzene (green) and polyethylene (PE, blue) all peaked around the middle […]
Financial markets rally as real economy weakens
Petrochemical markets continue to provide plenty of warning signs about the deteriorating state of the global economy. As the above chart shows of price movements since January, even benzene is now weakening as supply disruptions fade. The obvious conclusion is that downstream users have simply been unable to pass through recent increases. Instead, these further […]
“A failure to stay ahead of events”
Petchem markets are doing an excellent job in their role as a leading indicator for the global economy. But as we warn in Boom, Gloom and the New Normal, policymakers remain in Denial about their message. The chart above spells it out clearly. Volume leads pricing. Since January, China’s demand growth has collapsed. So its […]
What goes up, comes down
Don’t panic is the blog’s suggestion, after last week’s market collapse. Instead, the important thing is to plan for what might happen next. Scenario planning is absolutely critical to survival over coming months. The blog’s advice is to assemble your management team as quickly as possible, and ask everyone to come prepared to be honest […]
PE demand decline highlights China risks
China’s slowdown is continuing to gather pace. Polyethylene (PE) demand has been a very reliable leading indicator for the economy. Its 50% growth between 2008-10 highlighted the overheating economy, as the government stoked a credit bubble, even whilst official GDP growth reports were reassuringly low. GDP numbers, however are merely targets. Likely future premier Li […]
Market volatility hits new peaks
Petchem markets provided a perfect case study of Volatility last week, confirming the blog’s view that we are heading into a VUCA world where Volatility, Uncertainty, Complexity and Ambiguity will dominate. This was also real volatility, where prices crashed downwards and surged upwards at the same time. And it involved 2 of the ‘building block’ […]
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