Chemical price falls could signal slowdown
on May 29, 2010

The blog’s White Paper, Budgeting for a New Normal, has proved extraordinarily popular since it was published earlier this year. As a result, ICIS have asked me to produce a mid-year Update, to review developments over the past 6 months. This will appear shortly.
In the meantime, ICIS’ Will Beacham interviewed me in London’s Trafalgar Square, on the implications of recent falls in chemical prices and other key issues. Please click here for the highlights, and on the screen above for the full interview.

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  • Pierpaolo Ferluga
    May 31, 2010

    in this pessimistic vision of high inventories and prices drop, Europe looks like an exception in an aligned world…; is it really like that?
    how can we explain that in Europe C2 is still going up?? and benzene looks firmer again?
    is the global trading rule no more running??
    how do you see European availability of main commodities in 3-6 months? still tight??
    When European price will start to drop?
    my best regards
    Pierpaolo Ferluga
    Market analyst

  • Paul Hodges
    May 31, 2010

    Pierpaolo
    Many thanks for your comment. As I said in the interview, I am being cautious at the moment. Equally, as I noted in my post on Asian prices last Wednesday, the picture is still mixed, as always at turning points.
    Europe’s current strength is a good sign, and it is certainly possible to argue that the falls in Asia and the USA are just a reaction to unsustainable highs caused by earlier shortages. So this could be a ‘pause that refreshes’.
    But the reason for my caution is that I see few signs of a lasting recovery in consumer demand. And I worry about what happens as the stimulus programmes come to an end. And of course, one has to worry about sovereign risk in certain parts of the developed world as well – can governments afford to repay their debts?
    Q3 will be key. By then supply should be back to normal in most markets. And either demand will show signs of full recovery, or not. My caution is based on a concern that we may then find that we have seen the highs of the year already in terms of demand, and that in this scenario, H2 will disappoint.
    I hope this helps.
    Paul

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