D'turn 3Feb12.pngDow 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 apart from agriculture. Dow added that “times like these demand a focused approach and strong resolve, and Dow’s firm operating discipline, cost control and productivity will continue throughout 2012.”

Yet next day, financial markets turned euphoric, with the S&P 500 and oil prices jumping 1.5% in response to the monthly US jobs report.

Demand, as always, will determine whether markets are right to climb today’s ‘wall of worry’. So far this year, it has been relatively subdued, and gives no indication that either Western or Asian consumers are feeling full of confidence about the year ahead.

The chart shows market developments over the past year. Product price changes since the 29 April peak, with ICIS pricing comments, are below:

HDPE USA export (purple), down 14%. “US spot export prices are too high for most markets”
Naphtha Europe (brown dash), down 11%. “Demand from both the petrochemical industry and the gasoline sector have declined”
PTA China (red), down 10%. “Chinese fibre market has yet to resume full production after the holiday”
Brent crude oil (blue dash), down 10%
Benzene NWE (green), down 5%. “There had been an expectation that buyers would enter the market, but this has so far failed to materialise”
S&P 500 Index (pink dot), down 1%