China’s polyethylene demand disappoints, again

China PE Aug12.pngTrade statistics present an awkward problem for the cheerleaders in financial markets. They show what is really happening in China’s economy, rather than what the analysts would like to happen.

Polyethylene is the bellwether product for the economy. And latest trade data from Global Trade Information Services suggest caution over H2 prospects. As the chart shows for the January – July period:

• Overall demand in 2012 (red column) has been flat since 2010 (blue)
• China has increased its own production by 3% over the period
• Imports are thus down 1%

On the positive side, the data does show a modest 1.7% increase in overall 2012 demand versus last year. But this raises further questions, as it is well below Q2′s reported 7.6% GDP growth. Normally, PE demand grows in line with GDP.

Import patterns also continue to show contrasting trends:

• Middle East imports are up 40%
• SEA imports are up 27%
• NEA are down 32%; NAFTA down 53%; Europe down 64%

The big winners are Thailand (up 131% due to its new capacity), Iran (up 24%) and Saudi (up 23%). The main losers are the USA (down 56%); Taiwan, Germany, Benelux (all down 47%); and S Korea (down 21%).

No doubt those promoting China as the investment opportunity of a lifetime will continue to promise great things by the end of the year. But the blog will continue to keep its own money in the JUUGS for the moment.

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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