The prices of petrochemicals, which are used to make a wide range of products from plastic bags to office chairs, have slumped to their lowest in more than a year as global demand slows.
The drop in demand in China, the world’s biggest importer of commodity plastics and a major exporter of plastic goods, has been particularly pronounced, suggesting industrial activity could be decelerating even more than reported. Government figures for November showed a slight contraction in China’s overall industrial activity – the first in nearly three years – and a slowdown in both export and import growth. But analysts believe the sharp fall in demand for naphtha, a byproduct of crude oil, suggests the slowdown has been especially pronounced in sectors that use plastics, such as light manufacturing and construction.
“Prices of petrochemicals are a leading indicator of the global economy,” said Shahrin Ismaiyatim, head of petrochemicals for Platts, the pricing agency. “Despite the strengthening in crude prices in the second half of this year, that has not corresponded to the same rise in petrochemicals prices.”