The blog was very pleased to see the Nobel Prize awarded jointly to Robert Shiller, whose words of wisdom on housing and stock markets it has cited many times. Shiller’s key insight, in his book Irrational Expectations and since, has been to confirm Ben Graham’s famous saying: “In the short term, the market is a […]
Chemicals and the Economy
Aluminium warehouse changes threaten caustic soda sales
Strong aluminium markets have provided great support to caustic soda producers in recent years. PVC and construction markets have been weak, but volumes into aluminium mining have kept prices and overall chloralkali margins strong. Now this may be about to change. As the blog noted in March, aluminium prices have been supported by the behaviour of […]
Oil markets risk rapid repricing – Part 1
Since 1900, as the chart shows, oil prices have never been so high for so long as now. Until 2003, they had only been above $30/bbl for 4 years between 1979-1982, during the OPEC production cuts in the Iran crisis. But since 2004, they have been continuously above this level. The reason is the misguided […]
High frequency trading causes another mini-crash
Do any blog readers routinely trade on the basis of Twitter comments? Or more specifically, do any trade within milliseconds of receiving a tweet? The answer of course is “no”, as readers have no ability to trade in milliseconds. But last week the computers did just that. As the Financial Times chart shows, the US […]
Aluminium prices rise as stocks reach record levels
The blog was with the mining industry last week, when giving the keynote speech on The Impact of the ‘Demographic Cliff’ on Demand Patterns at the annual Metal-Pages conference. Mining is seeing similar demand patterns to those in chemicals, whilst the price performance of aluminium shows very similar influences to those at work in oil […]
Commodities supercycle myth enters the end-game
If something seems to be ‘too good to be true’, then it usually is. This may be the learning for the world’s largest pension funds, as they plan their next moves in commodity investment. Their involvement jumped from 2009 after central banks began stimulus programmes, as the blog discussed last month. The funds were looking […]
Polyester markets head for crisis as cotton prices crash
Cotton prices, as the chart shows, have returned to the 50c-70c/lb range that has dominated since 1982. This proves, once again, that ‘reversion to the mean’ is usually the best investment strategy. Sadly, however, it is the people who did not believe the hype around higher prices who will have to pick up the pieces, […]
US oil inventories remain near record levels
Once upon a time, financial markets reflected supply and demand balances. Some players, the speculators, would use them to try and anticipate changes in these balances. Some players, the producers and consumers, used them to help stabilise their margins. From time to time, the balance between the stabilisers and the speculators would be lost. Markets […]
Q3 results show companies cautious over the outlook
6 months ago, when reporting Q1 results, the blog strongly disagreed with the rosy outlook being offered by most analysts. It warned then that: “The history of the past 40 years shows high oil prices have always led to: • An initial boom in volumes/margin as buyers rush to secure supplies • Then a period […]
EU’s PE industry could benefit from cluster strategy
Europe’s polyethylene (PE) trade presents a fascinating patchwork, based on its geographic and historical trading position, overlaid with its multi-ownership structure. This is highlighted in the above chart (based based on trade data for the January-August period from Global Trade Information Services, the leading global supplier). It shows net trade (exports less imports) for the […]
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