By John Richardson
LET'S put this into context: China's polyethylene (PE) demand grew by 53 percent in 2008-2010.
Growth during the first seven months of this year was just 1.7 percent over Januuary-July 2011, according to Global Trade Information Services (GTIS).
And when compared with the same seven months in 2010 growth was flat, as the above chart illustrates.
Also compared with 2010:
*Middle East shipments to China surged by 40 percent, The big winners in the region included Iran (up 24 percent as more ethylene has been polymerised to avoid sanctions) and Saudi Arabia (23 percent higher). Saudi production has increased on greater availability of associated gas.
*New capacity in Thailand resulted in a 131 percent rise in the country's exports, as Southeast Asia as a whole gained 27 percent.
*South Korean exports were down by 21%, which further underlines the problems confronted by the region's higher-cost exporters. Overall Northeast Asian exports were down by 32%.
There is something seriously wrong when demand is so much below GDP growth, which was 7.6 percent in Q2.
This reflects lingering inventory problems in all the synthetic resins (the demand growth story is likely to be very similar for the other resins).
And, as we discussed on Monday, stockpiles of finished goods are increasing as the economy slows down.
A further problem for the poylolefins business is that supply is set to increase next month, when the first on-spec shipments from the Saudi Polymers plant in Saudi Arabia are expected. The facility includes two 550,000 tonnes/year high-density PE (HDPE) units and one 400,000 tonne/year polypropylene (PP) plant.