For most of 2015, oil prices traded in the range of US$40-60/bbl. However, post-Christmas of 2015, Brent as well as WTI crude oil futures fell to levels seen in 2008-2009, as there is no end in sight for oversupply concerns. Brent traded at US$37.74 a barrel, while U.S. West Texas Intermediate (WTI) futures dipped to US$37.73 per barrel. As we approach 2016, some market observers are forecasting another year of distress and bearishness for oil futures. A significant part of oil’s problems in 2015 can be attributed to refusal by Organization of Petroleum Exporting Countries (OPEC) to reduce production to maintain market share and squeeze out high-cost shale gas producers in USA. Lower oil prices are beginning to take a toll on rich OPEC members. Saudi Arabia has announced massive subsidy cuts after falling oil prices for 18 months caused a record deficit, announcing prices would rise on fuel, electricity, water, plane tickets and cigarettes. The Kingdom recorded a 2015 budget deficit of US$98 bln. Oil prices began to fall because of a glut in the market caused largely by new production in North America- US drillers relied on hydraulic fracturing to get oil from shale and Canadians extracted oil from its western tar sands. Both processes are expensive, and have seen a fall in production levels as profits narrowed. Supply is expected to ramp up in the next quarter when supply will resume from Iran, where a lifting of Western sanctions over its nuclear program frees it to resume production.
US naphtha exports increased in 2015, as refiners continue to seek new outlets for increased production, but growing condensate exports could impact naphtha output. The end of 2015 saw naphtha prices in Asia sink to six-and-half-year low of around US$384/ton CFR Japan, triggered by the sell-off in financial markets and steep losses in overnight crude futures, as per ICIS.
Unlike the fluctuations in spot ethylene prices in Asia and Europe, the spot ethylene market in the US continued to fall for the most part of 2015. At the end of the year, spot ethylene hit its lowest levels seen since early 2009, widening the gap between other regions to record highs. As per Chemorbis, Asian ethylene has been rather tight for most of 2015 due to a heavy maintenance season in South Korea and Japan, which paved the way for a record high spread between spot ethylene and naphtha from April to July 2015. Although spot ethylene prices tanked from July to mid-September, the same tightness factor has been helping Asian ethylene gain steadily since then despite the record low crude oil prices. The news that Shell declared force majeure from its cracker in Singapore in early December expected to last for 3-6 months added to tight supply concerns in Asia. The strength of the spot ethylene market was so visible that import HDPE and LLDPE prices to China traded below ethylene prices in December .
China continued to add more coal based capacity in 2015 as new plants came onstream. This was particularly evident in the PP market, which pushed domestic PP prices to the same levels with or even below import offers in China for the most part of 2015. The same factor caused PP prices to post a larger decrease than that of PE both in Asia and the Middle East in the second half of the year. Accordingly, Chinese coal based PP showed up occasionally in Southeast Asia while overseas suppliers to China also started to seek new export outlets . China’s homo PP imports for January-November also suggest a 7% decrease on a yearly basis, according to ChemOrbis Import Statistics, affirming the reduced appetite of China for PP imports.
European polyolefins markets were hit by a significant number of production outages in H1-2015. Force majeure declarations were seen for both for olefins and polyolefins from many major producers including Ineos, Borealis, Sabic, LyondellBasell, Total and Versalis. Severe production issues stemming from the absence of these suppliers caused triple digit hikes in the region for several consecutive months until July. In the following three months, a downturn was in place, which was arrested by renewed production issues again in November. These also paved the way for price increases in Europe for November and December. The numerous force majeure declarations in Europe attracted more imports to the region as traders in Turkey reported shifting their allocations to Europe due to better netbacks. Italy’s polymer imports gained 5% in the first three quarters of 2015 vs 2014, according to ChemOrbis Import Statistics, confirming the region’s increased need for imports owing to long-lasting supply constraints. As per ICIS, polyethylene (PE) and polypropylene (PP) buyers in Europe are under strong pressure to accept revised conditions from their sellers in 2016 when discussing volumes and pricing, strongly influenced by the 2015 situation, when force majeures led to extreme volatility and price hikes. A change in the euro/USD exchange rate and the collapse in crude and naphtha prices were principally responsible changes in supply, with the lack of imports exacerbated by an increase in duties. Producers are generally very confident for 2016, in spite of the arrival of material from some new production units. Borouge 3, with 1mln tons of PP and PE each, has not made much of an impact so far in Europe, and Sadara’s new LDPE/LLDPE plant is not expected to have much effect before H2-2016.

The petrochemical and polymer industry witnessed several mergers & acquisitions in 2015. Some of them are:
* The Board of Directors at DuPont and Dow Chemical Company unanimously approved a definitive agreement under which the companies will combine in an all-stock merger valued at US$130 mln. The combined company will be named DowDuPont. The merger transaction is expected to close in H2-2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders
* INEOS and Solvay announced the launch of their INOVYN joint venture on July 1 that has led to developments in the formation of the PVC market in Europe.
* Bayer has announced the new name of its MaterialScience business - Covestro, with effect from September 1, 2015.
* Solvay has completed the acquisition of the Ryton® PPS (polyphenylene sulphide) business from U.S.-based Chevron Phillips Chemical Company for US$220 mln, enlarging its high-performance polymers offering and entering a solid growth market. 
* Indorama Ventures (IVL) completed 100% acquisition of the PTA business of CEPSA Chimie Montreal. The 600,000 ton PTA plant will provide Indorama Ventures with feedstock security.
* Indorama Ventures Public Company Limited (IVL), a world-leading producer of intermediate petrochemicals, has acquired Indian Polyethylene Terephthalate (PET) manufacturer Micro Polypet Private Ltd. (MicroPet), subject to necessary legal approvals. Situated in Panipat district, the plant has capacity of 216,000 tons.
* With the acquisition of an additional 17.5% stake in Polief, Russian petrochemicals producer Sibur has completed acquisition of 100% stake in the Bashkortostan polyethylene terephthalate (PET) producer. Polief modernized its existing PET production lines last year and built and additional line, scaling up its PET capacity to 210,000 tpa. 
* The Samsung group will sell its stakes in petrochemical affiliates to the Lotte group, in a deal, worth an estimated 3 trillion South Korean won ($2.66 billion), exiting the industry to focus on mainstay businesses such as electronics and finance. Lotte Chemical Corp., a petrochemical company controlled by Korean-Japanese conglomerate Lotte, will acquire a 90% stake in Samsung SDi Co.'s chemical business, a 31.5% stake in Samsung Fine Chemicals Co. and a 49% in Samsung BP Chemicals Co.
* Solvay has successfully completed the acquisition of Cytec and will begin the integration of Cytec’s businesses to deliver cost synergies and capture significant business opportunities in advanced lightweighting materials for the aerospace and automotive industries and in specialty chemicals for mining. Cytec will be fully consolidated within the Solvay Group as from Jan 1st, 2016. 
* A. Schulman, Inc. has executed a definitive agreement to acquire all of the issued and outstanding capital stock of privately held Citadel Plastics Holdings, Inc. for US$800 mln. Citadel is a leading North American specialty engineered plastics company that produces thermoset composites and thermoplastic compounds for specialty product applications.
* The RadiciGroup Plastics Business Area has strengthened its production capacity in the North American market by acquiring the polyamide engineering plastics division of Resinas TB, a Mexican manufacturer with over 40 years’ experience in the plastics industry,
* Total has acquired a majority 68% interest in Germany's Polyblend. Polyblend produces compounds, which are blends of polymers (polyethylene and polypropylene) and other ingredients such as mineral fillers, glass fibres, elastomers and additives, formulated to customer specifications. Total recently began building two polypropylene compounding lines at the Carling Platform as part of its project to secure the French site's future. The lines are scheduled to start up in mid 2016.
* Clariant has acquired the black pigment preparations portfolio of Lanxess in Nagda, Madhya Pradesh.
*Evonik Industries AG successfully completed acquisition of India's Monarch Catalyst Pvt. Ltd. All of Evonik’s future catalyst activities in India will be operated through the newly acquired company.
* Thermoplastics supplier RTP Company has acquired Polymer Partners LLC, a manufacturer of black concentrates and specialty compounds.
* LyondellBasell has entered into a definitive agreement for the acquisition of SJS Plastiblends Pvt. Ltd. (SJS), a polypropylene compounds (PPC) manufacturer, located in Aurangabad, India. This strategic acquisition will expand LyondellBasell's existing footprint in India and further enhance the Company's position in India's growing automotive market.
* LyondellBasell is to acquire the polypropylene compounds assets of local company Zylog Plastalloys to increase its access to the Indian market.
* Davis-Standard, LLC announced today the acquisition of blown film leader Gloucester Engineering of Gloucester, Mass. The purchase of Gloucester strengthens Davis-Standard’s blown film offering by adding experienced design and process engineering capabilities, a large installed base and greater aftermarket capabilities worldwide.
*Mumbai-based polymer products manufacturer Time Technoplast Ltd has sold its Poland-based subsidiary Novo Tech SP Z O.O. to an unnamed Polish private equity fund at an enterprise value of €11 mln (US$12 mln).
* Time Technoplast Ltd divested 50% of its holding in a JV with a Chinese partner in South China in a deal valued at around US$1.3 mln to Mauser.

New Plant start ups that have added to polymer capacity include:
* Borouge 3 in Ruwais, Abu Dhabi, that comprises a 1.5 mln tpa ethae cracker and derivative plants, including two high density PE (HDPE)/linear low density PE (LLDPE) units with a combined capacity of 1.08 mln tpa, a 350,000 tpa LDPE unit, and two polypropylene (PP) units with a combined capacity of 960,000 tpa. 
* Sadara Chemical started up a linear low density polyethylene (LLDPE) plant at its Jubail complex in Saudi Arabia to produce 375,000 tpa of products used in specialty applications.
* SABIC SK Nexlene, a 50:50 joint venture between SABIC and SK Corp have launched operation at its 230,000 tpa high performance polyethylene plant. Located in Ulsan, 
*The Dow Chemical Company has announced its new world-scale propane dehydrogenation unit (PDH) located at the Company’s Oyster Creek site in Freeport, Texas, has begun commercial operations. Capacity for the new propylene production facility is 750,000 tpa, making it the largest on demand propylene facility of its kind.

As per Chemorbis, the constant depreciation of currencies, particularly in emerging economies, was a buzz word in petrochemical markets as it has had a considerable impact on trade. Players in financial markets spent most of the year anticipating a rate hike from the US Federal Reserve, which finally materialized in December. The euro has ended 2015 with a depreciation of 9% against the US dollar before rebounding from a loss of 12%. The Turkish lira recorded a much larger depreciation of 33% against the US dollar before ending 2015 with a relatively smaller depreciation of 27%. China’s Central Bank also devaluated the yuan for 3 days in a row in August in a surprising move, which was interpreted as a strong sign of the weakness of the economy. In October, more depressing news came from China, where GDP for Q3 fell below 7% for the first time since Q1-2009. This was followed by the decision of China’s Central Bank to lower interest rates to fresh lows in an attempt to tackle the slowing economy. Plunging crude oil as well as China’s slowing imports have also made themselves felt on the freight rates from Asia as players reported rates as low as US$5-10/ton from Asia to Turkey in the second half of the year.
The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting. The IMF on Oct. 6 lowered its 2015 global gross domestic product forecast to 3.1% from 3.3% previously, citing a slowdown in emerging markets driven by weak commodity prices. Forecast for 2016 was also cut to 3.6% from 3.8%. The Organization for Economic Cooperation and Development  lowered its forecasts for the global economy, saying that GDP will grow 2.9% in 2015 and 3.3% in 2016.
The mainstream outlook in a nutshell, as per Peter Coy in Bloomberg:
China will continue to decelerate and U.S. will continue to outperform its rich-nation peers. With global demand soft, the price of money (interest rates) and the prices of oil and other commodities are likely to remain low. Central bankers Janet Yellen, Mario Draghi, and Haruhiko Kuroda will be in the spotlight as the Federal Reserve attempts to nudge rates higher and the European Central Bank and Bank of Japan look for ways to stimulate growth. The most important variable for 2016 is China, where the annual gross domestic product growth rate dipped below 7% in Q3-2015 for the first time since the 2008-09 financial crisis. Developing nations that have come to depend heavily on China as a customer for their resources include Brazil, Chile, Indonesia, Malaysia, the Philippines, South Africa, Thailand, and Vietnam. Demand for Chinese goods has slowed down globally, and the pace of infrastructure projects is slowing down in China. This is pushing China to guide the economy toward domestic consumption as a new source of growth. With Russia and Brazil already in recession, a sharp slowdown in China would drag other emerging markets down.
Anders Borg, Sweden’s former Finance Minister's perspective of 2016 in a nutshell: 2016 will be a challenging and difficult year for the global economy. In the Eurozone, expansionary policy is still called for and further steps to support growth could be expected. In the U.S. and Europe investments levels are low, productivity growth is very weak and the export sector is only providing a small contribution to the recovery. At the same time growth is slowing in Asia and world trade is likely to grow at a slower rate than GDP. In 2016, weak economic activity and low productivity growth mean that real wages and consumption are likely to continue to be disappointing. U.S. presidential elections will be a major political event of 2016. From a global perspective, the key issue is whether the next president will be able to restore the U.S. as a global force for stability. The refugee crises in Europe will remain a major factor during 2016. UN estimates indicate that over one million people have entered Europe with the intention of claiming asylum during 2015. A key factor shaping Europe’s political future in the decades to come is the referendum on the UK’s membership of the EU. Another political factor contributing to financial uncertainty is Russia. At the end of 2015, President Putin has rapidly repositioned Russia from being the outsider rocking the boat to a constructive force dealing with ISIS in Syria and Iraq. Along with weak global growth in 2016, substantial turmoil is expected in financial markets. The key factor deciding the degree of turbulence will be inflation in the U.S. and reforms in China. If China is able to gradually move forward with rebalancing the economy from investments to consumption, that could open a path towards more sustainable growth and a gradual return of optimism in the Chinese business sector.