China's important polyethylene market (PE) showed little sign of any major upturn in October. Trade data from Global Trade Information Services shows:
• Demand was up just 4% versus 2010 levels
• Production was up 3%, as China's refinery operating rates slowed
• Imports were up 8%, and exports up 57%
These figures are virtually unchanged over the past few months.
Yet as fellow-blogger John Richardson noted last week, some in the industry still seem to assume we are about to see a repeat of China's 2008-10 panic stimulus measures. They thus ignore the policy statements being made by the new leadership about the need for slower growth. The official GDP target to 2020 is now just 7%, compared to an achieved 10.5% per annum over the past decade.
Equally, it is clear that domestic consumption is the key priority, not exports. This means the 1bn Chinese (89%) with incomes between $2-$20/day will be the main focus. Only 4% of the population has incomes over this amount. So their needs will be for very basic and affordable products. Anyone waiting for a return to 2009's boom is thus likely to be waiting for a very long time.