Thoughts on Predicting Crude Oil, Ethylene and Propylene Prices for 2017

A very wise man once said that calculating future prices in the chemicals industry is 60% art and 60% science. Whilst this wise man clearly needed some help with his maths, he was right to say how difficult the process is.

To outsiders, trading industrial chemicals may seem like a straight forward business. But to those that know, it is an occupation fraught with challenging logistics and long lead times; complex with economics, politics, psychology and chemistry. It is a world where a deal that does manage to get completed is filled with so much secrecy over pricing that it is difficult to find out the value of a chemical trade made today, let alone six months from now.

When faced with such obstinate problems, it is usually best to consult someone who knows more about the subject that yourself. An expert such as Paulo Moretti, former Purchasing Director at Dow Chemical and a man who understands the important relationship between the value of crude oil and the price of many basic chemicals including ethylene and propylene. He recently wrote in his excellent blog, the following on why the price of crude oil had crashed since its relatively stable high of around $100 per barrel just a few years ago...

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