Commentary: Discount China demand growth at your peril

Concerns about China’s economy abound, with constant fears of a credit bust looming over investment decisions. For the chemical sector, while there are certainly areas of massive overcapacity, demand is still growing decently and opportunities exist in select product lines.

Delegates at the 2016 Asia Petrochemical Industry Conference (APIC) were more bullish on China and Asia demand than many players in the Western world.

Demand is not surging, but nowhere near as weak as many believe for products such as paraxylene (PX), polyester, styrene, polyethylene (PE) and glycols. One major distributor in the region described China growth as “flat to positive”, depending on the product.

For PE, greater demand for food packaging amid food safety concerns; the need for plastic irrigation pipes; and the surge in internet retailing, which requires plastic packaging, are lifting demand.

“Mobile internet sales and growth of the mobile economy will be a big theme for petrochemicals,” said John Richardson, senior consultant with ICIS Analytics & Consulting, at the event.

Chemical companies will need to realign their strategy with key demographic drivers and greater domestic consumption of certain products in emerging economies.