Polyolefin demand follows GDP/capita

Polymer v GDP.pngThe blog was in Vienna this week for a World Refining Association conference on the Global Petrochemical outlook. It had the privilege of chairing a very distinguished panel of industry leaders in a discussion about managing through the downturn.

One of the key inputs came from Anton de Vries, LyondellBasell SVP, who had earlier shown the above slide illustrating the close relationship between polyolefins demand and GDP/capita. The vertical axis shows consumption of polyolefins/capita, and the horizontal axis GDP/capita. It highlights a number of key factors:

• The developed Regions (eg EU, USA, Japan) have GDP/capita of over $40k, and use over 40kg/capita of polyolefin.
• Emerging countries (China, India) have GDP/capita of less than $5k, and use only c10kg/capita.
• Total demand (the size of the circle) in emerging countries is therefore much less than in the developed world, even though they have much larger populations.

The blog has added a trendline to the chart, in order to highlight the relatively gradual way in which higher GDP/capita leads to higher polyolefin consumption. As Anton noted, the emerging countries can expect to see major increases in demand as their populations become richer. But it will probably take decades for them to reach the current level of per capita demand in developed economies.

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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2 Responses to Polyolefin demand follows GDP/capita

  1. Jim Wilson 15 February, 2010 at 6:49 pm #

    I see the IMF as the source for the GDP value. I suspect this is the International Monetary Fund. In his talk did DV say if this was the GDP calculated using the PPP method? This is important as PPP method produces higher GDP values for poorer countries than traditional methods.

  2. Paul Hodges 15 February, 2010 at 7:46 pm #

    Jim

    Many thanks for your comment. The GDP figures are from the International Monetary Fund.

    I agree with you that adjusted PPP (Purchaisng Power Parity) would give a distorted view of affordability for polyolfins. China, for example, would have PPP/capta of $6546, nearly double the reported figure of $3566 under the traditional method.

    Looking at the positioning of the centre of the circles, I therefore believe the chart uses the traditional basis.

    Paul

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