China PE Demand Down 3 Percent

Business, China, Company Strategy, Economics, Europe, Polyolefins, US


 By John Richardson

GROUND level economic conditions in China are still a lot weaker than headline GDP (gross domestic product) numbers suggest.

For example, a polyvinyl chloride (PVC) sales and marketing executive said: “PVC demand growth is going to be in minus territory this year. Carbide-based producers are likely to continue to have to run their plants at operating rates below 60 percent.”

And in polyethylene (PE), as the chart above illustrates, demand in the first half of this year was down 1 percent (red column) versus H1 2011 (green) and down 3 percent versus H1 2010 (blue).

Imports were also down 9 percent and exports up 82 percent versus 2010.

This is from data provided by Global Trade Information Services.

A Zhejiang provincial government report, which fellow blogger Paul Hodges referred to in this post yesterday, neatly summarised some of the ground level economic problems we have been discussing all year.

“Weak demand, rising labour costs and strained liquidity are ravaging enterprises in East China’s Zhejiang province, a traditional stronghold of China’s entrepreneurship,” said the report.

Synthetic resin demand is no longer expanding in line with that of overall GDP because:

*Small and medium-sized companies, as the Zhejiang report underlines, continue to struggle with lack of credit, have been badly hurt by the slowdown in exports and are more exposed to higher labour costs than the state-owned enterprises. The SMEs make up the bulk of China’s polymer and chemicals buyers.

*Inventories of synthetic resins remain high because of the economic distortions left over from the 2009-2010 economic stimulus.

Commodity markets in general, including chemicals, may well take cheer from a recovery in GDP growth during the second half of this year.

But the chemicals sector would need to ask itself two questions when assessing the value of a rebound in growth, which are:

1.) How much of the new stimulus has found its way through to the SMEs, given that a lot of the stimulus will go to big infrastructure projects executed by the larger companies?

2.) Will this type of investment-led growth be good for the economy in the longer term? China already faces major bad-debt problems and needs to wean itself off investments as the main driver of growth.


Global Polyethylene Margin Picture


By John Richardson ASIAN high-density polyethylene (HDPE) margins have improved ...

Learn more

Chemicals Demand Shift Will Not Be Smooth


  By John Richardson ADIDAS recently announced that it is to close its...

Learn more
More posts
Rate of recovery hugely reliant on effectiveness of government policies

By John Richardson UNLESS MORE action is taken by developed countries to help counter the impact of ...

China bans on single-use plastics move forward with major recycling investments likely

By John Richardson THIS EVENT slipped under most people’s radar in the midst of the pandemic crisi...

Developing world polymers demand unlikely to see quick rebound

By John Richardson THIS IS a tragedy in the genuine sense of the word, not just in the so-often misu...

China’s policy dilemma: raising local demand while protecting exports

  By John Richardson IN THIS Western-centric world, a huge amount of ink is split over the cons...

China’s polyethylene demand good so far in 2020 but beware of risks ahead

Note that all the comparisons in this post are on a year-on-year basis unless otherwise stated By Jo...

Ah, I see: China’s booming demand mystery a little closer to being solved

  Note that all the data comparisons below are on a year-on-year basis By John Richardson THE P...

The China polyester mystery continues in a world turned upside down

By John Richardson SOMETHING very strange is happening in China’s polyester industry which has eno...

China will struggle to boost local retail sales during rest of 2020 with export outlook uncertain

By John Richardson IF IT were easy, then there would be an oversupply of owners of large yachts in M...


Market Intelligence

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

Learn more


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