As regular readers know, the blog regards benzene as an excellent leading indicator for petchem markets and the global economy. Its track record since the start of the crisis in 2008 has continued to be strong. The reason is probably two-fold: • It is one of the oldest, and widely used, chemicals. In many ways […]
Chemicals and the Economy
Markets wait for oil price lead
The March IeC Boom/Gloom Index confirms the blog’s sense that markets are sitting on a fence, waiting for something to happen. As the chart shows (blue column), it has risen back to 4.1, just at the point which divides strong from weak markets. Similarly the US S&P 500 Index (red line) is stuck at 1369, […]
Demand declines as Federal Reserve fuels oil price rise
The Wall Street Journal carried an interesting opinion piece on Friday, assessing current market conditions from the viewpoint of the film character, Forrest Gump. Gump’s key insight is that “Stupid is as stupid does”. Thus the Journal noted: “Oil staged its last price surge along with other commodity prices when the Fed revved up its […]
Déjà vu all over again in petchem markets
This time last year, the petchem industry stood on the edge of an unseen precipice. Life seemed good. Prices were racing ahead and demand appeared buoyant. But in reality the buyers were only buying forward to protect margins, whilst end-user demand was slowing fast. This year, the blog fears, we may be about to take […]
IEA forecasts show high oil prices destroy demand
Over the past 18 months, the main investment analysts have argued that high oil prices would have no impact on the global economy. Now, new forecasts suggest their optimism has been misplaced. The chart above gives the International Energy Agency’s latest forecast of likely oil demand growth this year: • It has been reduced by […]
Financial markets jump, but petchems remain slow
Dow Chemical is usually optimistic. 6 months ago, for example, it reported that “our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is now performing at a new level.” Last week, however, Dow reported that Q4 operating rates were down from 81% in 2010 to 72%, and warned it faced “headwinds” in all segments […]
Markets wait to see what happens next
‘Would you buy, or would you sell?’ is always an interesting question in any market. Petchems provide a particularly balanced answer today. • Buy arguments include – China’s buyers will return from holiday, and will need to restock; gasoline markets are tightening after the Petroplus bankruptcy; bad weather is causing some disruption • Sell arguments […]
“All news is good news” for China’s GDP slowdown
There is no arguing with markets when they are being driven by sentiment, either positive or negative. Last week’s news of China’s slower GDP growth gave rise to opposite interpretations in Asia and the West – but news media reported both were seen as firmly positive: • In Asia, markets “jumped… after news that Q4 […]
Supply shortages drive olefin market profitability
The above chart would have seemed unbelievable at any time in the past 30 years. It shows the performance of propylene and butadiene relative to ethylene. Not because it shows butadiene prices racing ahead relative to ethylene (green line). This happens routinely during a downturn, as tyre demand is more robust than for polymers. If […]
Uncertainty grips New Year trading
Markets are worryingly quiet for the start of a New Year. There is some restocking underway, but the main interest lies in the crude oil market. Since Brent peaked in April, there has been a clear pattern each month: • Prices have peaked at the start of almost every month • The only exceptions have […]
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