Polymers demand slumps in Europe, China

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ICIS news reports that polymer demand is falling sharply in two key markets, China and Europe. This is a bad omen for demand in other chemical markets, as polymers are closely tied to GDP growth. Linda Naylor reports that PE volumes in Europe may be down 7% in 2008. Meanwhile, John Richardson and Malini Hariharan report that PE and PP demand in China ‘could be flat or even negative’.

The cause is almost certainly the distortions caused by the run-up in crude prices since 2006. The blog has warned many times that 2007-8 was likely to prove a repeat of 1979-80, when oil prices also rose sharply. Last October, it suggested that the ‘apparent boom in demand’ was in fact just downstream consumers rushing ‘to cover themselves before product prices moved higher’. The rest of 2008 and 2009 could be very difficult indeed, as consumers destock down the value chain.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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