07 February 2011 00:41 [Source: ICB]
Strong demand for polyolefins in China and India are expected to keep momentum going
Polyolefins demand in China and India registered strong growth in 2010, fueling optimism among market players that the trend will continue this year.
Chinese polyethylene (PE) demand (measured as local production plus imports minus exports) rose by 13% to 17.4m tonnes last year, while polypropylene (PP) demand increased by 6% to 13.9m tonnes, cementing the country's position as the largest polyolefins consumer and importer in the world.
Polymer consumption was boosted as the Chinese economy expanded by 10.3% in 2010 - up from 9.2% in 2009.
Data from Chinese customs showed that it imported 1.384m tonnes of low density polyethylene (LDPE), 2.478m tonnes of linear low density polyethylene (LLDPE), 3.495m tonnes of high-density polyethylene (HDPE) and 4.8m tonnes of PP in 2010.
Imports of LDPE and LLDPE increased by 3% and 13% respectively, while inflows of HDPE dropped by 9% and PP by 6% as local producers expanded their market share following the commissioning of new plants. This also helped China to improve self-sufficiency and its share of imports declined to 35% from 39% in 2009.
In India, the other key Asian market, PP continued to shine, with demand (measured as local sales plus imports minus exports) rising by 18% to around 2m tonnes during April-December 2010, according to local industry estimates.
Demand for the fiscal year 2010-2011 (ending March) is expected to touch 2.6m tonnes - up from 2.2m tonnes in 2009-2010.
"Raffia and biaxally oriented PP [BOPP] film were the key drivers. PP consumption in each of these two sectors has gone up by over 20% in 2010. New BOPP lines were commissioned; additionally, polyester film prices doubled during the year, helping BOPP film makers," explained a source from an Indian producer.
The auto and appliances segment also supported demand for PP copolymer, he added.
The raffia sector was the largest end-use segment, absorbing nearly 650,000 tonnes of PP during April-December 2010, mainly for packaging of food grains and cement. Usage of raffia bags was boosted by a shortage of jute fiber, which prompted the government to relax a regulation on packaging of food grains only in jute bags.
The rapid expansion of the local Indian PP market and the introduction of antidumping measures on product from Saudi Arabia, Singapore and Oman resulted in a decline in exports and imports. PP exports for April-December 2010 were down by 2% to 475,000 tonnes, while imports dropped by about 18% to 250,000 tonnes.
The year also saw an expansion in Indian PE consumption that drove up HDPE demand by about 7% at 1.1m tonnes, while LLDPE demand rose by 9% to 760,000 tonnes.
Additional reporting by Bee Lin Chow in Singapore
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