China Petrochemicals In 2015: Five More Predictions

Business, China, Company Strategy, Economics


By John Richardson

HERE are five more predictions for China’s petrochemicals markets during 2015:

1.) Polyethylene, polypropylene (PP), phenol, purified terephthalic acid (PTA) and polyvinyl chloride (PVC) will be just some of the products that will see declines in imports on rising self-sufficiency and a further slowdown in the local economy. As  an example, the above chart shows our estimates for the 2012-2020 increases in local PP production.

2.) Meanwhile, China will increase its exports of PTA. China has built lots of state-of-the-art  plants that without the 2008-2013 explosion might not have been built. But you can make a strategy out of a mistake. These plants will be run at operating rates higher than market conditions appear to merit in order to maintain local employment. And here is another thought: As lower value apparel and non-apparel manufacturers continue to move out of China because of rising labour costs, might China start building more and more polyester-chain investments in less-developed economies? For example, it could decide to supply PTA to polyester fibre plants in Vietnam, or even in years to come in Myanmar. These polyester fibre plants would then supply end-users who would make clothing, sheets and pillowcases etc. that would be shipped back to China and to international retailers. Trade flows in other petrochemicals could be similarly affected.

3.) China will also increase its exports of polyvinyl chloride (PVC). It has again built a strategy around a mistake. Too many PVC plants were built because of easy credit – and because of the connected boom in the real-estate sector. But wholesale closure of these plants is simply not an option because of the need to preserve jobs – particularly in less-developed regions of China where many of these plants are located. Once again, trade flows of other petrochemicals could be similarly affected.

4.) This will be another year when credit availability will drive all of China’s petrochemicals markets. Growth in overall lending will once again be reduced. Controlling the growth and the direction of credit is not just about tackling China’s bad debt problem, but are also essential elements of economic reform. So expect the further, deliberate closure of lower-value petrochemicals end-users as China tries to move further up the manufacturing value chains. You should therefore carry out more audits of your customers to find out what which ones are likely to go bust and which ones will prosper.

5.) But as China pushes further up the manufacturing value chains, the main opportunity will not involve the luxury end of consumer goods markets. As credit growth further contracts and as the anti-corruption campaign continues, cheap higher value goods, such as locally-made smartphones, will be where the biggest opportunity lies. What does the final point mean for the petrochemicals business? Watch this space….


US Petrochemicals: Three Predictions For 2015


By John Richardson AS you can see from the table below, there are  no less than...

Learn more

Oil Markets In One Word: China


By John Richardson A COMMENT I have heard so many times over the last two months...

Learn more
More posts
Global polyethylene oversupply, the highest in 19 years, hasn’t gone away

By John Richardson BRENT crude futures surged by 80% during the second quarter and enjoyed their bes...

China could be in complete polypropylene self-sufficiency by 2022

By John Richardson SORRY to labour the point but this comes from a genuine concern for the readers o...

Asian polyethylene price recovery faces multiple challenges

By John Richardson THERE are reports of significant cuts in Middle East polyethylene (PE) operating ...

China’s long-term ambition for paraxylene self-sufficiency seems close to being realised

On Friday, I examined how China’s paraxylene (PX) net imports could fall to as little 8m tonne...

China’s big declines in 2020 PX and PP imports: the impact on its major trading partners

By John Richardson CHINA’S refineries and petrochemicals plants came roaring back to almost fu...

Paraxylene demand collapses as higher China production threatens 6m tonne fall in imports

By John Richardson DON’T SAY I didn’t tell you that a decline in stock markets would happen. The...

Coronavirus will severely damage the developing world unless we take the right steps

By John Richardson IT IS a fantastic achievement. “Over the last 25 years, more than a billion peo...

Main Street versus Wall Street and the crisis in the developing world

By John Richardson RISING equity and oil markets do not necessarily point to a V-shaped recovery. I ...


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

Uncover exclusive industry upates from ICIS

Interested to uncover more articles related to this topic? Explore additional news, insights and intelligence, tailored to the markets you are interested in by accessing exclusive content from