30 November 2009 05:00 [Source: ICIS news]
By John Richardson and Malini Hariharan
SINGAPORE (ICIS news)--China’s polyethylene (PE) and polypropylene (PP) virgin resin demand will rise by as much as 38% in 2009 from a year ago on the back of robust domestic consumption, Shanghai-based commodity information service CBI said on Monday.
High-density polyethylene (HDPE) demand was expected to grow by 38% to around ?xml:namespace>
PP demand would grow by 24% to 13m tonnes, he added.
A drop in demand for recycling material also helped pushed demand to fresh highs, said CBI and a Shanghai-based source with a major polyolefin producer.
This follows either dips in demand during 2008 or modest increases, depending on the grade of polyolefin. LLDPE fell by 4.5% and PP by 1.4% with LDPE rising by 2.2% and HDPE by 1% last year, he said
“We estimate that overall PE demand will grow by around 31.5% and PP by about 24%,” said Longston.
“A big factor behind the strong recovery is a big drop in the use of recycled material.”
Virgin resin prices had remained too low to justify converters using scrap material so far this year, said the source with the polyolefin producer.
“In September, though, the delta or gap between recycled and virgin material was getting very close to its minimum level - $400/tonne,” he added.
A fall in exports of finished goods - delivered wrapped in plastic film which is shipped back to
Imports of waste and scrap of polymers of ethylene were down 11% in January-October over the same months last year to 1.73m tonnes, according to a study by International Trader Publications (ITP) based on China Customs data. ITP is a US-based analysis service of global chemicals-trade data.
“I would agree that demand has grown very strongly this year. In the case of PP we think it’s grown by about 20-25%.,” he continued.
Domestic polyolefin demand had also surged on huge government economic stimulus, including a rise in bank lending, he said.
“This has led to a steep rise in automobile and real-estate sales with the resulting rise in property prices triggering a construction boom.”
Government vouchers providing discounts off the price of white goods such as washing machines and refrigerators were also behind the recovery in polyolefins, he said.
Information service provider ICIS owns a minority stake in CBI.
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