Chemistry and the Economy: The Brexit, Challenges of Over

7/20/2016

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7/20/2016

Chemistry and the Economy: The Brexit, Challenges of Over-Supply and the End of Bank Stimulus

William Carroll

Paul Hodges

Adjunct Professor of Chemistry, Indiana University and Past President and Former Chair of the Board, ACS

Chairman, International eChem

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2016 Mid-Year Review Challenges of Over-Supply, the End of Stimulus and Brexit

21 July 2016

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About IeC: International eChem (IeC) is a London-based strategy consultancy advising Fortune 500 and FTSE 100 companies, investment banks and fund managers. Paul Hodges Paul Hodges is Chairman of IeC and publisher of ‘The pH Report’, whose clients include many of the world’s major companies and investors. IeC’s analysis highlights the influence of demographics and ageing populations on the economy, consumer demand and investment. For the past 2 years, they have focused on alerting clients to the likely impact of the Great Unwinding of policymaker stimulus programmes – highlighting the cumulative effects of a China slowdown, falling commodity prices and a rising dollar on debt sustainability. Paul is co-author of the influential new Study, ‘Demand – the New Direction for Profit’, which describes how demographic changes are taking global demand patterns in completely new directions. He speaks and writes regularly on these issues in the Financial Times and other media, and was recognised publicly for his foresight in warning of the 2008 financial crisis. Previously, Paul was an Executive Director of a $1bn global business for ICI, where he worked from 1978 - 1995. He has considerable global experience, having worked in Europe, the USA, Asia and the Middle East. He serves as a Global Expert for the World Economic Forum, and is a Freeman of the City of London.

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KEY THEMES

 “You can’t print babies”  Chemical industry over-capacity heads to record

 Market volatility is rising

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Audience Survey Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT

If you were residing in the UK how would have you voted concerning Brexit? • I would have voted "Stay“ • I would have voted "Go"

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VACCINATION, DISINFECTION, PHARMA AND NOW HEALTHIER LIFESTYLES HAVE CHANGED OUR LIVES

Dr Edward Jenner, 14 May 1796 Lady Mary Montagu 1718

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GLOBAL FERTILITY RATES HAVE HALVED SINCE 1950, WHILST LIFE EXPECTANCY HAS RISEN BY 50% Average life expectancy at age 65 is 15 – 20 years

EEN BELOW REPLACEMENT LEVEL SINCE 1970, LIFE EXPECTANCY AT AGE 65 IS NOW 20 YEARS

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THE G-20 CONTAINS ‘RICH BUT OLD’ GROUPS IN THE WEST: ‘POOR BUT YOUNG’ AND ‘POOR AND AGEING’ ELSEWHERE

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THE SUCCESSFUL SUPPLY-DRIVEN BUSINESS MODEL OF THE ECONOMIC SUPERCYCLE NO LONGER WORKS

The “demographic cliff” caused by ageing populations is creating a “demand cliff”    

A paradigm shift is underway in the global economy, and petchem markets China’s New Normal economy no longer needs ever-increasing import volumes Oil prices have returned to historical levels, and are close to parity with natural gas Stimulus hangover means many markets now have supply gluts and will lose pricing power Page 19

GLOBAL GDP FELL RECORD $3.8TN IN 2015, WORLD TRADE FELL 13.8%

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CONTINUED RISE IN CHEMICAL INDUSTRY SURPLUS CAPACITY IS WARNING SIGN FOR 2016 OUTLOOK

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“ASIA REMAINS AT THE BOTTOM OF THE CYCLE. WE’LL BE IN A CHALLENGING ENVIRONMENT FOR A WHILE, AND THE EXTENT TO WHICH THE SHALE PHENOMENON WILL ADD TO THAT CHALLENGE – THAT’S A FACT OF LIFE TOO.” Stephen Pryor, President, ExxonMobil Chemical, January 2014

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INTER-POLYMER COMPETITION IS LIKELY TO INTENSIFY AS OVER-CAPACITY INCREASES “China’s PE spot import prices dropped in the week, especially for HDPE injection grade. Local traders lamented that some garbage and tray factories replaced HDPE injection resins with PP copolymer resins due to lower feedstock costs. Hence, the HDPE injection grade prices dropped by about $50/tonne from the previous week.” ICIS PRICING, 13 November

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CENTRAL BANKS HAVE CREATED A DEBT-FUELLED ‘RING OF FIRE’ WITH MULTIPLE FAULT-LINES RECORD NYSE MARGIN DEBT

RECORD LONDON HOUSE PRICES

RUSSIA ENERGY SUPPLIES

EUROZONE DEBT

ARAB SPRING

CHINA PROPERTY/ BANKING

ABENOMICS

SEA UNREST

BRAZIL UNREST AUSTRALIA MINING S AFRICA MINING © International eChem 2015

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Audience Survey Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT

Which of the following aspects will Brexit affect MOST concerning the United States? (choose multiple answers) • Economy and Trade • Science and Technology • Security and Defense (NATO) • Political Relations • More EU countries will exit

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BREXIT – THE CATALYST FOR ACCELERATED RETURN TO SUPPLY/DEMAND FUNDAMENTALS?

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OIL MARKET VOLATILITY IS AT NEAR-RECORD LEVELS

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MEDIAN OIL PRICE HAS BEEN $23/BBL SINCE 1861 Co-products produced with each ton of ethylene

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RECORD LEVELS OF NYSE MARGIN DEBT LEAVE NO ROOM FOR ERROR

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OUR SERVICES BLOG & BOOK www.iec.eu.com

THE pH REPORT

KEYNOTE SPEECHES

Senior Management

Conferences

WORKSHOPS Strategy/Planning

PROJECTS Making It Happen

PAUL HODGES [email protected] +44 20 7700 6100

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Disclaimer Strictly Private & Confidential This Research Note has been prepared by IeC for general circulation at the ACS webinar on 21 July 2016. The information contained in this Research Note may be retained. It has not been prepared for the benefit of any particular company or client and may not be relied upon by any company or client or other third party. IeC do not give investment advice and are not regulated under the UK Financial Services Act. If, notwithstanding the foregoing, this Research Note is relied upon by any person, IeC does not accept, and disclaims, all liability for loss and damage suffered as a result. © International eChem 2016. All rights reserved

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CREATIVE ENERGY FOR IMPORTANT ISSUES


William Carroll

Paul Hodges





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William Carroll

Paul Hodges





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How has ACS Webinars benefited you?

®

ACS Member 12 Years Strong! "Excellent topic- would love to see more like these to understand trends in education in concert with the economic and political scene. Faculty at colleges and universities would benefit by knowing more about the current high school chemistry education experience." Quote in reference to: http://bit.ly/ChemEdu

Lisa Nogaj, Associate Professor, Chemistry Department, Gannon University

Be a featured fan on an upcoming webinar! Write to us @ [email protected]

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facebook.com/acswebinars @acswebinars youtube.com/acswebinars

Search for “acswebinars” and connect! 36

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7/20/2016

Benefits of ACS Membership Chemical & Engineering News (C&EN) The preeminent weekly news source.

NEW! Free Access to ACS Presentations on Demand® ACS Member only access to over 1,000 presentation recordings from recent ACS meetings and select events.

NEW! ACS Career Navigator Your source for leadership development, professional education, career services, and much more.

http://bit.ly/benefitsACS

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ACS Webinars does not endorse any products or services. The views expressed in this presentation are those of the presenter and do not necessarily reflect the views or policies of the American Chemical Society.


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Chemistry and the Economy: The Brexit, Challenges of Over

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