PE22May2012.png

 

By John Richardson

ANOTHER theme that emerged from last week’s Asia Petrochemical Industry Conference (APIC) in Kuala Lumpur, Malaysia, was the shock at the extent of the price declines in the key China market.

In polyolefins, the slump in pricing has been the most pronounced during a period when the consensus opinion was that both pricing, and demand, would be strong as a result of the “renewed fiscal stimulus” story. Asian polyethylene (PE) pricing was down by a further $10-40//tonne last week with polypropylene (PP) $20-40//tonne lower, according to ICIS pricing.

“The extent of demand weakness in the China market was unexpected. I have never known it as bad as this. We understand some of the reasons, but not all of them. We are still searching for a full explanation,” said a sales and marketing manager with one major polyolefin producer.

Some producers and traders claimed that demand would, however, soon come roaring back.

 “This is just a classic tactic by the Chinese. As usual, they have stopped buying and are waiting for pricing to bottom out. The second half of the year will be strong,” said a sales and marketing manager with a second polyolefin producer.

But when the producers and traders were asked to justify why H2 would be better than the first half, they were not able to offer any detailed explanations. The common belief was that the Chinese market had always been strong, in their memory at least, and would thus remain so.

We beg to differ. China is undergoing major economic structural changes and it more obviously confronts an exceptionally weak export environment for its manufactured goods.

It is time for some painful, but nevertheless essential, scenario planning.

It is not only China we have to worry about, of course. As fellow blogger Paul Hodges pointed out yesterday, global economic problems have put us in, potentially, a worse position than in 2008.

PREVIOUS POST

APIC: US Feedstock and Asia Optimism

21/05/2012

By John Richardson FEEDSTOCK advantages in the US and the continued economic ris...

Learn more
NEXT POST

No Big China Relief

23/05/2012

By John Richardson Wen Jiabao re-emphasised at the weekend that China’s ec...

Learn more
More posts
Coronavirus: Global polypropylene demand in 2020 could fall by 2.6m tonnes over last year
17/02/2020

By John Richardson SOME GOOD news might be that official Chinese state media announced that the numb...

Read
Coronavirus threatens 2.9m tonnes of China PP demand as uncertainties increase
14/02/2020

By John Richardson THE RUMOURS travelled around my contacts, and I am sure many of your contacts, fo...

Read
More than 3m tonnes of Chinese polyethylene demand at risk from coronavirus
08/02/2020

    By John Richardson THE GOOD news is that medical experts believe the novel coronavirus...

Read
Coronavirus: Global polyester chain faces major production cuts, shortages and cost increases
07/02/2020

By John Richardson A GREAT example of the extent to which global supply chains are exposed to China ...

Read
Coronavirus: Global polyolefins cutbacks seem inevitable on major China demand loss
05/02/2020

We all hope that the coronavirus outbreak will soon be brought under control, that’s the main ...

Read
Why coronavirus will be a much bigger deal for petrochemicals than SARS
02/02/2020

By John Richardson THE WORLD was very different in 2003 when SARS struck. Back then, China accounted...

Read
China 2020 polyethylene demand 4.1m tonnes lower on single-use plastics ban and coronavirus
27/01/2020

By John Richardson CHINA was supposed to be the one polyethylene (PE) market we could all depend on ...

Read
China single-use plastic bans: Polyethylene imports 68m tonnes lower in 2020-2030
24/01/2020

By John Richardson THE good news from a “business as usual” perspective is that China’...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more