US BD producer nominates up 2 cts for Sep, others see flat

20 August 2010 21:16  [Source: ICIS news]

HOUSTON (ICIS)--A US butadiene (BD) producer on Friday nominated an increase of 2.00 cents/lb ($44/tonne, €34/tonne) for September, but sources this week predicted contracts were likely to roll over or drop amid looser supply in other regions.

US BD contracts in August settled at 94.00 cents/lb, unchanged from July.

“We are expecting a drop in BD prices since Asian prices are very low at this point in comparison to the US price. Worst case scenario will be to have a rollover,” astyrene butadiene rubber (SBR) producer said.

BD prices in Asia, a key supplier of BD to the US, have dropped by around 10% in the past four weeks, pressured by weak buying interest and ample supply.

BD in northeast Asia was assessed this week at $1,600-1,620/tonne CFR NE Asia (cost and freight Northeast Asia), down from an average of $1,800/tonne around mid-July.

One market participant also pointed to a softening in Europe, where BD prices have dropped by 7% in recent weeks amid weaker export demand and improved supply.

“Not a lot of factors supporting an increase so rollover may be best case,” the source said, referring to the US contract.

Spot prices in Europe were assessed this week at $1,870-1,940/tonne FOB Rdam (free on board Rotterdam), down from $2,000-2,100/tonne in the week ended 23 July.

Market participants have also pointed to spot prices in the US, saying a parity between spot and contract material was indicative of steady pricing moving forward.

BD spot prices in the US were assessed this week at 92-96 cents/lb, unchanged from a week earlier, but down from 95.00-97.00 cents/lb four weeks ago.

The outcome of the September BD settlement in the US will depend on nominations from three other suppliers, which are expected to step out with their initiatives in the coming days.

US BD usually settles at the lowest price nominated by the four main US producers.

Two of those producers are on allocation at 85% but buyers said supply from other sources, mostly imports, was filling the gap in the market.

BD contracts in the US rose by 49% in the first half of 2010 until a flat settlement in July capped the uptrend. The increase was due to tight supply and firm demand for the product.

US BD producers include ExxonMobil, INEOS, LyondellBasell, Shell and TPC Group. Buyers include Invista, International Specialty Products (ISP), Lanxess, Michelin and Negromex.

uploaded from: http://www.icis.com/Articles/2010/08/20/9387169/us-bd-producer-nominates-up-2-cts-for-sep-others-see-flat.html

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The Drawn-Out Downtrend phase of the Crisis begins

"Humankind cannot bear very much reality" TS Eliot, 4 Quartets, 1936

Who now remembers the stock market rally that followed 1929's initial collapse? By November 1929, the US Dow Jones Index had fallen to 195 from its September high of 386. But by April it had rallied 52% to 297.

At the time, this seemed as sensational as the Dow's recent rally, which took it up 74% from March 2009's low of 6469, to peak a year later at 11258. And it occurred without any co-ordinated G-20 stimulus packages around the world. It just happened.

But when the famous English poet (and former bank clerk) TS Eliot published in 1936 the first part of his major work 'The Four Quartets', quoted above, his tone reflects the weariness of the subsequent Downtrend, not the euphoria felt during the Rebound.

The chart above captures the textbook path of a major financial crisis, as first described by Merrill Lynch's guru, Bob Farrell. There is an initial Sharp Decline, as seen this time from September 2008. Then there is a Rebound. And finally, the Drawn-out Downtrend.

The chart also adds the 'Paradigm of Loss' model developed by famous psychologist Elizabeth Kübler-Ross. As first noted by the Financial Timeslast year, her model is potentially an excellent guide to the stages through which the current Crisis will likely pass.

The FT suggested that the world was slowly moving from Denial into Anger. Clearly some policy makers, and many bankers, still remain in the Denial phase. But the rise of the Tea Party protest movement in the USA, as well as the riots in Greece and elsewhere, supports the FT's argument.

This emphasises that after 2 years, we are still towards the beginning of the Crisis. Only a relatively few consumers or companies have moved towards the Bargaining phase, to focus on saving rather than borrowing. Most are convinced any cutbacks will impact others, and not themselves.

Equally, we are nowhere near the Depression and Acceptance stages, which would indicate that the world was getting ready to move on to accept the world in its post-Crisis form.

The blog hopes that its analysis is wrong, and that in a year's time it will be able to eat humble pie and admit it was too pessimistic. But if it was still running a major chemical business, it would by now have ensured that a detailed contingency plan was ready, in case its fears come true.

Posted by Paul Hodges on August 16, 2010 6:49 AM

source; http://www.icis.com/blogs/chemicals-and-the-economy/2010/08/the-drawn-out-downtrend-phase.html 

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Baby-Boomers cut spending, start saving

Consumer spending is 70% of US GDP. And because US GDP is so large, this means the US consumer is 17% of global GDP. This is the same as the combined GDP of China and Japan, who rank 2 and 3 after the USA.

So a change in US consumer spending matters. And it particularly matters to the chemical industry, as our products are focused on consumer needs. Thus the blog is taking very seriously indeed comments from major US consumer companies, who suggest we can no longer rely on the "shop-till-you-drop American consumer" to support global demand. For example:

• Wal-Mart, the world's leading retailer, has seen its US same store sales drop for the last 5 quarters. This has not happened before. Wal-Mart also warned they expect consumers to "remain cautious about spending".
• Target, the leading discount store, confirmed the blog's view thatMarch was the peak of the cycle, with CEO Gregg Steinhafel saying "its clear Q2 marked a change in trend. GDP growth softened considerably, and our sales trends levelled off as well".
• Procter & Gamble, the world's largest consumer products company, gave the same message. "Consumers day-to-day spending reflects an entrenched frugality that often means leaving P&G's relatively inexpensive products on the shelf."

This is serious stuff. And it links with major demographic changes taking place in the USA. The boom in chemical demand over the past 40 years is closely tied to demand from the 'baby boomer" generation (born between 1946 - 1964). They now own 80% of all US personal financial assets and are responsible for over 50% of discretionary spending power.

But they are getting closer to retirement, with a median age of 54 years. And so their need for 'new things' is reducing, as is their ability to afford them. Equally, as the above chart from thechartstore.com shows, their savings rate is starting to shoot up. They were let down by the stock market after the dot-com boom; then the housing market disappointed.

So now we seem to be seeing the start of a generational switch from spending to saving in the world's most important market. From close to zero, the savings rate has already jumped to 6%, as baby-boomers worry about how to afford their retirement, especially as they can expect to live longer than any generation in history.

Of course, if stock market and housing prices began to recover, then this trend might reverse again. But there is clearly a danger of a vicious circle developing, where fear replaces greed as the prime driver in financial markets, and drives a growing demand for yield.

The back-to-school season, now underway in the USA, is the second most important shopping period of the year. It will therefore be even more critical than usual for those wishing to forecast chemical demand.

If Wal-Mart, Target and P&G are right, then the US economy could easily see US GDP growth of below 2% in Q4.

This would not be good news for everyone in the chemical industry, dependent on the US consumer to drive future demand.

Posted by Paul Hodges on August 21, 2010 8:20 AM

sumber. http://www.icis.com/blogs/chemicals-and-the-economy/ 

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SAGIA EYES USD 100 BILLION TRANSPORT SPEND BY 2020

Saudi Arabia is poised to invest $100bn over the next 10 years to transform the kingdom into one of the world's leading transport and logistics hubs, a new report has said.

The Saudi Arabian General Investment Authority (SAGIA), the investment arm of the government, has identified 19 priority investment opportunities for transportation projects, it said in the report.

It added that the "strategic location and large-scale infrastructure development" will position the kingdom as one of the world's leading logistics hubs by 2020.

SAGIA said 15 of the projects would be based in the planned Economic Cities and overall, a $100 billion investment was anticipated over 10 years, Saudi Press Agency reported.

Of the projects, five would be ports, three would be aviation-related, three would be rail-based while another three would be roads-related, the report said. It added that five logistics centres were also planned for the kingdom.

"Studies indicate several opportunities for capacity expansions and operational enhancements with attractive opportunities for qualified port operators," the report said, adding that Jeddah Islamic Port alone could increase capacity by 30-50 percent.

SAGIA added that air operators would be sought to drive expansions to Saudi Arabia's air transport infrastructure, with significant upgrades already underway at Jeddah Airport and a new cargo village has been planned.

The rail infrastructure in Saudi Arabia is in need of major expansion, SAGIA said, with planned projects including the 950km Jeddah-Dammam Land Bridge and a 2,000km Mineral Line running north to south.

Arabian Business

source: http://www.sagia.gov.sa/en/SAGIA/Media-centre/News/SAGIA-eyes-USD-/

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