Will shale gas decimate China’s toy makers?
March 29, 2013 Leave a comment
By Clyde Russell Reuters
LAUNCESTON, Australia (Reuters) – Such is the impact of the shale gas revolution in the United States that it’s quite possible that babies born today will no longer play with plastic dolls and cars made in China.
It’s almost become a fait accompli that China is the world’s factory, but the early warning signs that this may be changing are starting to show.
The advent of cheap natural gas in the U.S. is threatening to displace expensive naphtha in the production of petrochemicals, the key building blocks for plastics, synthetic fibres and solvents and cleaners.
While the shale gas boom is certainly no longer a secret, up to now its main impact has been in displacing coal in power generation in the U.S., and making inroads as both a heating and transport fuel.
While the U.S. is planning to export some of its shale bounty as liquefied natural gas, in effect it is already exporting more energy in the form of coal, which has helped keep Asian prices soft even in the face of record Chinese and Indian imports.
The same sort of dynamic is likely to start hitting the Asian petrochemical sector in the next few years, as U.S. output ramps up on the back of cheap natural gas and producers from India to China struggle to compete given their reliance on oil-derived naphtha.
