shale gas

Contingency planning is essential in 2020 as “synchronised slowdown” continues

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I forecast here a year ago. Its analysis also confirms the importance of the issues highlighted then, including “rising trade barriers and increasing geopolitical tensions”, a sharp decline in manufacturing, contraction in the auto industry and structural forces such

Contingency planning is essential in 2020 as “synchronised slowdown” continues Read More

Stormy weather ahead for chemicals

Four serious challenges are on the horizon for the global petrochemical industry as I describe in my latest analysis for ICIS Chemical Business and in a podcast interview with Will Beacham of ICIS. The first is the growing risk of recession, with key markets such as autos, electronics and housing all showing signs of major

Stormy weather ahead for chemicals Read More

US ethylene prices near all-time lows as over-capacity arrives

US ethylene spot prices are tumbling as the major new shale gas expansions come on line, as the chart based on ICIS pricing data confirms: They began the year at $617/t, but have since more than halved to $270/t on Friday They are only around 10% higher than their all-time low of $240/t in September […]

The post US ethylene prices near all-time lows as over-capacity arrives appeared first on Chemicals & The Economy.

US ethylene prices near all-time lows as over-capacity arrives Read More

US PE exports on front line as Trump changes trade policies

It is almost a year since Donald Trump became President.  And whilst he has not followed through on many of his promises, he has indeed introduced the major policy changes that I began to discuss in September 2015, when I first suggested he could win the election and that the Republicans could control Congress: “In the […]

The post US PE exports on front line as Trump changes trade policies appeared first on Chemicals & The Economy.

US PE exports on front line as Trump changes trade policies Read More

No conspiracy on raw materials pricing – the business model has changed

The Financial Times kindly prints my letter this morning on pricing policies for polyethylene. Sir, Conspiracy theories are always good fun, and Robert Bateman’s views on the polyethylene market are no exception (Letters, December 29). But there is a much more prosaic explanation for the pricing structures he describes. The key issue is that until […]

No conspiracy on raw materials pricing – the business model has changed Read More

Wrong assumptions on China growth and oil prices mean danger lies ahead for refiners and polymer producers

It could be a very difficult H2 for anyone involved in the Asian oil and polymer markets.  And given the global importance of these markets, everyone around the world will also feel the impact.  The issue is that most business strategies have been based on 2 increasingly unlikely assumptions:   Companies all assumed that oil […]

Wrong assumptions on China growth and oil prices mean danger lies ahead for refiners and polymer producers Read More

US producers face uphill battle to increase PE sales in China

China is the world’s largest polyethylene market.  One-third of the way through the year, it  is therefore interesting to analyse the ratio of its own production versus imports, and look at relative import market shares.  The chart shows annual data since 2005, with 2015 data to April, based on trade data from Global Trade Information […]

US producers face uphill battle to increase PE sales in China Read More

Chemical companies highlight increased uncertainty and volatility in Q1 results

Volatility creates uncertainty.  And uncertainty can easily lead to paralysis, if a company hasn’t planned ahead for the range of potential scenarios that might develop.  This is the risk highlighted in my usual analysis of quarterly results. A key warning sign is the divide that has developed recently in performance in different regions and industry sectors, […]

Chemical companies highlight increased uncertainty and volatility in Q1 results Read More

US Marcellus gas output trebles as drilling rig count halves

Simple stories aren’t always true.  That’s certainly the case with the fiction that the fall in the number of US oil drilling rigs will soon reduce US oil production. Exxon Mobil CEO Rex Tillerson recently reminded us of this critical point: “Clearly a significant decline in rig activity did not diminish the continued growth of […]

US Marcellus gas output trebles as drilling rig count halves Read More

China’s PE imports tumble as market slows, local output rises

The above chart is a major wake-up call for anyone who still believes that China will continue to import ever-increasing volumes of major commodities such as polyethylene (PE).  It suggests demand and import growth are now at much lower levels than in the past, and may even have begun to peak. The chart shows cumulative volumes in […]

China’s PE imports tumble as market slows, local output rises Read More

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 […]

China becomes net exporter of PVC as property bubble bursts Read More

US housing markets weaken as home ownership levels fade

Data over the past month continues to confirm my fears that the US housing recovery is going into reverse.  The argument was summed up yesterday by S&P’s chairman, when reporting Case/Shiller housing price data for December: “The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home […]

US housing markets weaken as home ownership levels fade Read More

Oil prices at $50/bbl, China slowdown – the New Normal arrives

Welcome to the New Normal. The Great Unwinding of policymaker stimulus has led global oil prices to drop back to $50/bbl.  Meanwhile China, the major source of demand growth since 2009, is now seeing a major slowdown. And, of course, this is still only the beginning of the great transformation that is now underway as we enter […]

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Companies see confidence ebb away as China slows, US cost advantage weakens

It feels like the end of an era, as we survey the usual quarterly update of chemical company results.  For several years, there have been 3 or 4 key dimensions: US companies have been very profitable due to shale gas Asian companies have done well with volume, due to Chinese demand Middle Eastern companies have done well due to […]

Companies see confidence ebb away as China slows, US cost advantage weakens Read More

The real challenge is a lack of challenge

We all remember the Hans Christian Andersen story about the Emperor with no clothes.  His subjects were told that only those who were stupid or incompetent would be unable to see his wonderful new suit. Of course, nobody wanted to appear stupid or incompetent.  So when the Emperor paraded in his new clothes, nobody wanted to tell him the obvious.  It was left to a child […]

The real challenge is a lack of challenge Read More

US PVC exports tumble as demand weakens in key markets

The US PVC industry is hitting new problems, to add to the post-2006 collapse of the US housing market. Yet only 10 years ago, it was riding high.  Demand into housing (the main outlet) was at record levels thanks to subprime lending, and PVC production had just hit a record 7.3 million tonnes. Even after the financial Crisis, global […]

US PVC exports tumble as demand weakens in key markets Read More

Next ACS webinar on Thursday 5 June

“Not with a bang but with a whimper”. The blog’s 6-monthly webinar for the American Chemical Society (ACS) takes place next Thursday, 5 June, at 14.00 Eastern Summer Time.  And once again, the ACS has kindly arranged for blog readers to register for it free of charge. As feared in last December’s Year-end Review, the promised economic […]

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Q4 results show companies still waiting for something to turn up

We all live in hope.  That seems to be the underlying message from the blog’s quarterly survey of company results. Nothing has changed since last quarter or indeed Q2, when BASF noted that “achieving our earnings target is significantly more challenging today than we had expected”. Yet this latest quarter was, of course, supposed to be […]

Q4 results show companies still waiting for something to turn up Read More

A day in the life of an “activist” fund

A prominent “activist” fund in New York has told Dow Chemical to spin off its performance plastics, performance materials and feedstocks-and-energy units.  The news led the blog to imagine a fictional scene in the offices of Activists-R-Us fund last Tuesday morning, as the news came through.  Any resemblance to actual events is purely coincidental, as they say in movies. […]

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US shale revolution puts squeeze on European chemicals groups

The Financial Times has carried an excellent analysis this week of the key shale gas issues facing the European chemical industry.  It includes comments from a number of CEOs, as well as from the blog.  Its key points are as follows: THE STRATEGIC DILEMMA “European petrochemical makers risk being squeezed between low-cost producers in the Middle East […]

US shale revolution puts squeeze on European chemicals groups Read More

V is for Volatility

Unilever CEO Paul Polman suggests we are living in a VUCA world, as we discuss in chapter 11 of Boom, Gloom and the New Normal. Volatility, Uncertainty, Complexity and Ambiguity make planning for the future more difficult than for a generation.

Th…

V is for Volatility Read More