SINGAPORE (ICIS)--Click here to see the latest blog post on Asian Chemical Connections by John Richardson.
The disconnect between GDP and petrochemicals growth means that even if the third wave of the pandemic is a big deal economically, consumption of petrochemicals seems unlikely to be negatively affected. So, the recent sell-off in petrochemical stocks may well have been overdone.
But we should not think that a “Roaring 20s” demand is on the way if developed economies continue to open up. History tells us that the extra money sloshing around developed economies is likely to be saved.
The blog does not therefore see reasons to change our 2021-2025 global demand forecasts.
The wild card, though, are supply shortages that have already led to a decline in China’s manufacturing exports and its petrochemical demand relative to H2 last year. And the developing world looks set for a second year of negative growth.
But barring the supply chain shortages undermining everything, stronger hygiene end-use demand and booming internet sales look set to provide continued support to consumption.
This further underlines the need for new demand forecasting models because, as we said, using GDP as a starting point does not work.
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.