Latest data from the IMF shows that the EU remains the world’s largest economic unit. Its GDP in 2010 was $16.2tn, 26% of the global economy. The USA was next with $14.5tn, and China 3rd with GDP of $5.9tn. So what happens in Europe matters greatly to the global economy. Equally, petchems are one of […]
Chemicals and the Economy
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 […]
Sinopec adds capacity as China’s ethylene growth stalls
Sinopec is China’s leading petchem producer. Its H1 results, out this week, confirm the blog’s concern that China’s growth surge has stalled. The chart shows Sinopec’s view of domestic demand growth for ethylene (blue line). After falling to zero in 2008 as the Great Recession began, growth rebounded to ~10% in 2009-10. But in H1 […]
Goldman halves global ethylene growth estimate
Goldman Sachs today halved its estimate for global ethylene growth to ~2.5%, and slashed its earnings estimates for some major US companies. Analyst Robert Koort warns: “Our outlook for earnings growth has decelerated substantially in recent weeks … Our economists now expect US GDP to grow only 1.7% in 2011 and 2.1% in 2012 vs. […]
European cracker margins at ‘top of cycle levels’
European cracker margins are currently “at top of cycle levels” according to INEOS last week. But as the above chart shows (based on APPE data), they remain supported by supply issues rather than demand. Operating rates actually slipped to 81% in H1, a figure more normally associated with a downturn. Detailed output figures for Q2 […]
Petchem markets become more complex
Our annual Asian conference in Singapore (co-organised as always with ICIS) was very interesting this week. We had some fascinating presentations from major companies including Reliance and Thai Oil, and China insights from CICCC and Chemease. Shell’s GM for strategy, Alexander Farina, discussed changes in cost competitiveness between benzene (grey column) and propylene (red) over […]
Europe’s supply-led ethylene market continues
Q1 saw near record margins for European petchem producers. And there was also a scramble for product, as buyers rushed to secure product ahead of feedstock price-related increases. But this remained a supply-led market. As the chart above shows, based on APPE data, Q1 production (red triangle) was just 5.1 million tonnes. It was slightly […]
US crackers feast on ethane feeds
There has been a dramatic shift in cracker feedstocks in the USA over the past 2 years, as crude oil prices have risen. Many US producers have been able to switch to ethane feed, and as a result have become some of the lowest-cost ethylene producers in the world. As the chart* shows: • In […]
Ethylene derivative imports threaten European markets
The chart above is a flashing amber light for European cracker operators. Based on ICIS Pricing data, it shows the delta between (a) European and US ethylene contract prices (blue line), and (b) Europe and the North East Asian spot price (red line). Usually, these deltas range between -$50/t and $100/t. H2 2008 was clearly […]
Japan’s petchem exports focus on PX and styrene
The blog is still shocked by the terrible events in Japan. It would like to express its deepest sympathy to all those who have suffered loss. For those of us far away from the disaster, life has to go on. It will be some time before its full impact becomes clear. But in a crisis […]
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