BLOG - Petrochemicals markets complexity is only going to grow and grow

Author: John Richardson

2021/05/14

SINGAPORE (ICIS)--Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

If you thought global petrochemicals markets were already complicated enough, yesterday arrived with reports of the highest US inflation in 13 years. But the base effect of collapsing prices in 2020 might have distorted the US number, as could be the case with the increase in China’s April factory gate prices to a three-year high.

Supply chain chaos is a big factor behind today's levels of complexity and uncertainty. It is not just the shortages of stuff we have to worry about, from container space to wooden pallets, but also people to occupy jobs. Truck drivers in Texas can earn $14,000 a week.

Will the Chinese slowdown, now confirmed by the data, continue? Will more dangerous strains of the pandemic spread from the largely unvaccinated developing world to rich countries? Will container-freight difficulties, made worse by India’s terrible pandemic, perpetuate very high European PE and PP prices relative to other regions that make arbitrage almost theoretical?

We must admit we do not have a clue. We should pool our market intelligence and watch for petrochemical pricing direction. But abnormal markets have become the New Normal.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.