Over Christmas, the blog spent some time considering whether its IeC Downturn Alert had served its purpose. By luck, or possibly judgement, it had been launched at the exact market peak on 29 April. And hopefully it had helped to alert companies to the difficult times that lay ahead. But by December, most analysts and […]
Chemicals and the Economy
Another Minsky Moment may be approaching
The global economy is now in the middle of its 3rd downturn in the past 4 years. The chart above shows how the blog’s benchmark products have acted as leading indicators on each occasion (yellow highlight): • In 2008, naphtha (red line) PTA (purple), benzene (green) and polyethylene (PE, blue) all peaked around the middle […]
Financial markets rally as real economy weakens
Petrochemical markets continue to provide plenty of warning signs about the deteriorating state of the global economy. As the above chart shows of price movements since January, even benzene is now weakening as supply disruptions fade. The obvious conclusion is that downstream users have simply been unable to pass through recent increases. Instead, these further […]
“A failure to stay ahead of events”
Petchem markets are doing an excellent job in their role as a leading indicator for the global economy. But as we warn in Boom, Gloom and the New Normal, policymakers remain in Denial about their message. The chart above spells it out clearly. Volume leads pricing. Since January, China’s demand growth has collapsed. So its […]
What goes up, comes down
Don’t panic is the blog’s suggestion, after last week’s market collapse. Instead, the important thing is to plan for what might happen next. Scenario planning is absolutely critical to survival over coming months. The blog’s advice is to assemble your management team as quickly as possible, and ask everyone to come prepared to be honest […]
Market volatility hits new peaks
Petchem markets provided a perfect case study of Volatility last week, confirming the blog’s view that we are heading into a VUCA world where Volatility, Uncertainty, Complexity and Ambiguity will dominate. This was also real volatility, where prices crashed downwards and surged upwards at the same time. And it involved 2 of the ‘building block’ […]
Complacency rises as markets fall
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, […]
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 […]
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