PVC

Difficult times ahead for US polyethylene exports as business models change

This wasn’t the chart that companies and investors expected to see when they were busy finalising $bns of investment in new US ethylene and polyethylene (PE) capacity back in 2013-4.  They were working on 3 core assumptions, which they were sure would make these investments vastly profitable: Oil prices would always be above $100/bbl and […]

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4.5 million tonnes of new US polyethylene exports on front-line as War of Words hits US-China trade

“There isn’t anybody who knows what is going to happen in the next 12 months. We’ve never been here before. Things are out of control. I have never seen a situation like it.” This comment last month from former UK Finance Minister, Ken Clarke, aptly summarises the uncertainty facing the global economy. As I note in a new analysis, major policy changes are […]

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China’s polymer expansions make new US exports hard to place

China used to be the manufacturing capital of the world.  It would buy raw materials, and sell finished products to the West.  But these volumes are now in decline.  The West’s ageing populations already own most of what they need, and their incomes are reducing as they enter retirement. So China’s business model is changing. […]

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China becomes net exporter of PVC as property bubble bursts

China’s property bubble is collapsing, with average house prices now down 10% from their peak.  As agents Knight Frank note, “The developers have two to five years of stock to clear. So until that has been cleared, prices aren’t going up any time soon” We are also seeing more bankruptcies amongst property developers.  These began a […]

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Deflation gains: China’s plastics market sees over-capacity

More and more commentators are beginning to recognise that deflation is becoming inevitable in many major economies: China’s producer prices fell -4.3% last month, and its consumer prices rose just 0.8% Eurozone consumer prices fell in December to -0.2%, and are likely to have fallen further in January US prices rose just 0.8% in December and are […]

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The China middle class myth moves us closer to protectionism

Believing conventional wisdom can destroy your profits.  One example is playing out in the oil market before our eyes. Another example is the myth that China was about to become middle class.  Yet income levels always made this impossible: More than 9 out of 10 Chinese earn less than $20/day By comparison, the basic state pension in the UK is 25% higher, at over […]

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China becomes major PVC, PTA exporter for first time in history

Be very careful what you wish for.  That is the key message coming out of close analysis of China’s latest trade data. Recent media reports were upbeat at news that China’s exports had increased, as it appeared to suggest Western demand was returning.  But it seems nothing could be further from the truth. One major concern is that part […]

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Turkish plastics markets see imports fall for first time since 2008

Turkey is the blog’s “go-to” market when it wants to confirm trends in global markets.  The reason is that Turkey has a very successful downstream industry, but has failed to invest in upstream capacity.  This means it is essentially an opportunistic market from a sellers’ viewpoint. During good times, exporters will only divert product from […]

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US fracking demand creates price volatility for hydrochloric acid

Fracking has completely changed the outlook for US natural gas supplies, as the above chart from the latest Energy Information Agency 2014 annual report shows: It forecasts a 56% increase in total natural gas production from 2012 to 2040 This is largely due to growth in shale gas (green) and tight gas (brown) Shale gas output […]

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ExxonMobil Antwerp to spend $1bn boosting diesel capacity

When the world changes, companies either change with it or go out of business.  The market for stagecoaches was never the same once cars came along.  And not many students use slide rules today, now calculators are available. Usually, of course, these market changes are slow-moving.  So companies often fail to respond in the hope the old world […]

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China’s PTA, PVC exports jump as it moves to preserve jobs

To assume, as they say is “to make an ass out of u and me”.  That was certainly the case last week, when financial markets assumed that China’s slightly better PMI index was a sign that its domestic economy was stabilising.  They had temporarily forgotten the key message of February’s Research Note, namely that the government would aim to […]

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US polyethylene and PVC exporters focus on margin, not volume

2013 has seen 3 types of markets develop for the blog’s IeC Downturn Monitor portfolio as the chart above shows: Financial assets such as the S&P 500 (purple) have soared, as did the US$ against the yen (orange) Crude oil (blue) and naphtha (black) tried to follow, but found it difficult to pass though the higher prices Benzene (green) and […]

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EU, US caustic soda output slows as China’s exports rise

Chlorine and caustic soda are some of the most widely used chemicals.  Thus their performance is always a valuable leading indicator for the wider chemical industry and the economy itself.  So the chart above, based on Eurochlor data,  is a worrying sign: Chlorine production is down by 1.9% in 2013, after a 2.9% fall in 2012 Caustic […]

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