Financial markets are telling us something important about the outlook. Profitable themes over the past month have been expectations of weakness in crude oil prices, in China’s economy, and in the financial sector; plus positive views on long-dated government bonds in the JUUGS (Japan, UK, US, Germany, Switzerland). 90% of market players probably dismiss most, […]
Chemicals and the Economy
Buyers disappear as oil prices fall
Petchem markets continue to fulfill their role as leading indicators for the global economy. The chart shows the benchmark products in the IeC Downturn Monitor since January 2011: • PTA prices in Asia (red line) have remained weak throughout, clearly signaling the major slowdown that is now underway • US polyethylene export (purple) prices managed […]
Cash-flow fears rise as the ‘storm’ gets nearer
The blog fears the storm discussed last month is getting closer. Oil prices have weakened, with Brent falling $7/bbl last week to $113/bbl as Iran worries reduced. Attention is thus refocusing on the fundamentals, where US oil inventories are now at 21-year highs. We may therefore be about to discover that high oil prices have […]
Downturn Monitor approaches its anniversary
It is almost a year since the blog launched its IeC Downturn Monitor. The aim was to try and avoid the problems seen in H2 2008, when operating rates remained high down the value chain whilst demand fell. The above chart shows the weekly changes in its 4 benchmark products from 1 January, with movements […]
Financial markets rally on false rumour
Last week saw yet another example of the damage being caused to financial markets by the computerised high-frequency traders (HFTs). As the chart shows, the S&P 500 jumped 20 points on Thursday (1.5%), whilst the Dow Jones Industrial average jumped over 200 points. The cause was a rumour that China’s GDP would come in at […]
Markets weaken as real problems remain unsolved
It is hard to be very optimistic about the demand outlook for Q2. Demand in Q1 was lacklustre, even though it should have been the strongest quarter of the year. H1 is seasonally strong, and Q1 also benefited from Easter being in Q2. Equally, the Chinese holidays fell in January, so February and March should […]
Oil prices near Q2 2008’s record level
Finally, and far too late, policy makers are waking up to the damage that today’s high oil prices are doing to the global economy. Q1’s oil price averaged $119/bbl, just 7% below Q2 2008’s record $127/bbl ($2012). Thus Saudi Oil Minister, Ali Naimi, last week told the Financial Times: “High international oil prices are bad […]
Why benzene trumps traditional economic indicators
The blog is very pleased to have been invited to contribute to the Financial Times’ new FT Data blog. Its first post looks at benzene’s excellent forecasting record during the current crisis. It also looks at what PTA may be telling us about the strength of China’s economy. Please click here if you would like […]
Petchems ‘sailing towards a storm’
Q1 should have been a strong quarter for global petchem demand: • Buyers had to restock in the New Year, as CFOs had cut working capital for year-end reasons • In the West, Easter is delayed until April, and the USA has benefited from the warmest winter in 50 years • China’s holidays took place […]
Financial and petchem markets differ on the outlook
“Two roads diverged in a yellow wood,And sorry I could not travel both“ The opening of Robert Frost’s famous poem ‘The road not taken’ aptly sums up today’s market situation:•Financial markets continue to be supported by the Fed’s Operation Twist•Petchem markets are slowing in reaction to weaker consumer spendingBoth of them cannot be right. Either […]
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