China’s stimulus boosts PE, PP, domestic recycling

China polymers Dec09.JPGChina’s bank lending has rocketed this year, as the government attempts to maintain employment in the face of a major collapse in vital export volume. New figures show it had reached $1.35bn by the end of November. By comparison, lending in the whole of 2007 was just $0.5bn.

As the Wall Street Journal notes, this has been “one of the biggest credit expansions in history“. And it is all the more remarkable as a percentage of China’s GDP ($4.23trn). In addition, of course, China also launched a $580bn stimulus programme, aimed at speeding up construction of new refinery/petchem plants, and major infrastructure programmes.

Yet in terms of virgin polymers, the impact has been quite variable. As the chart shows, based on an excellent ICIS analysis by Becky Zhang of CBI, the main feature in 2009 has been a 27% rise in PE consumption (blue line) versus 2007, and a 22% rise in polypropylene (red line), both after a flat 2008. But PVC volumes (black line) were flat versus 2007, whilst polystyrene (green line) and ABS (purple line) were 4% higher.

Equally, CBI’s figures also show that China’s domestic recycling sector has been rising strongly over the past 2 years. 2009′s imports of recycled plastic at 6.95m tonnes were equal to 2007 levels, but domestic recycled volumes rose 24% to total 9.92m tonnes.

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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