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Demographics, sustainability and 1bn tonne less global polymers demand

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By John Richardson on 18-Jun-2023

By John Richardson

THE CHEMICALS PLANTS are built, the steel is in the ground and the vast oversupply has happened. But as the new paradigm develops, some late adopters might search for reasons why the Old Normal still applies.

“Sure,” they could say, “We now accept that China is slowing down more sharply than we had expected, but this doesn’t matter because there are billions of people in the rest of the developing world who are going to need a lot more chemicals and polymers over the next 30 years”.

Possibly, but the laws of mathematics must be considered. Look again at the chart below, from last Tuesday’s blog post, which shows the extent to which China’s per capita polymers demand diverged from the rest of the developing world from 1992 onwards.

Annual average per capita polymers growth in China between 1992 and 2022 was 9%, was 5% in the developing world ex-China and 1% in the developed world. This disparity resulted in the following, converted into millions of tonnes and in the context of populations:

  • In 2022, China’s demand for the nine synthetic resins detailed in the above chart totalled 107m tonnes from a population of 1.4bn.
  • The developing world ex-China demand was some 84m tonnes from a population of 5.2bn.
  • And the developed world’s demand was 82m tonnes from 1.1bn.

Given the size of the gap with China and the environmental challenges, we need to be cautious about growth in the rest of the developing world. As I discussed in my 20 April post on India:

Some three-fourths of India’s workers work in heat-exposed jobs like construction and mining, wrote the BBC in this 19 April 2023 article.

“Workers are losing the ability to safely and efficiently work outside as the planet warms. It’s becoming too hot and humid for them to cool themselves enough when they generate a large amount of body heat when conducting heavy labour,” the BBC quoted climate researcher Luke Parsons of Duke University, North Carolina, as saying.

“Climate change is impacting India’s natural environment, economy and society with increased frequency and intensity. Heatwaves, floods, monsoons and declining groundwater reserves are some of the extreme challenges that India is facing today. Heatwave risks to wellbeing and GDP have been particularly costly,” wrote the Grantham Research Institute on Climate Change and the Environment in this 2 November 2022 article.

What applies to India applies to many other developing countries. How many day labourers work outdoors in Africa, Latin America and the rest of Asia and Pacific? Hundred of millions, of course.

Many of the poorer developing countries lack resources to cope with climate change, assuming there aren’t big transfers of wealth and technologies from the West. And assuming that both will be transferred in the quantities required seems a big presumption.

The late adopters to the major economic, social and political changes underway may also argue that because developed world demand is very big for chemicals and polymers, even growth of say 0.5-1% per year will deliver many more hundreds of millions of tonnes of new consumption.

Combine this with the developing world ex-China picking up the slack of lower-than expected growth in China and one could contend that everything will be fine. You may say that beyond today’s oversupply, lots more crackers, reformers and propane dehydrogenation (PDH) plants will need to be built.

But as Paul Hodges wrote in the 13 January edition of ICIS Chemical Business:

Back in 1950, the world was seeing a major increase in population as the Baby Boom began. This had a major impact on the economy. By the 1970s, the Boomers were settling down and having children. They created a massive increase in demand for housing, autos, electronics and other key elements of today’s consumer-based economy. The numbers confirm their impact. In the developed world, the number of these Wealth Creators aged 25-54 rose from 321m to peak at 520m by 2010.

But today, this core segment is in long-term decline. Instead, the ageing Boomers are joining the ranks of the Perennials 55+ generation. This is now the only growth segment of the population. They are lovely people, but they already own most of what they need. And their incomes usually reduce as they enter retirement.

Ageing populations and growing concerns over plastic waste and carbon emissions – the “less is more pushback against consumerism about the Millenials – suggest that we will see less than 0.5-1% polymers demand growth in the developed world over the next 30 years.

This circles back to demand growth prospects in the developing world outside China. Another aspect of the “business as usual but for different reasons than we had expected” school of thought seems to be the continued drift of manufacturing to other developing countries from China.

But can the rest of developing world echo China’s export-focused growth story, given what’s happening in the developed world?

Nobody has the faintest clue about the answers to all the above, of course.

But events in China are a clear warning about the need for solid and wide-ranging scenario planning. Only three years ago, the widespread consensus view I was hearing was that China’s chemicals growth would be at 6-7% per year. Now, as I said, we should 1-2% and even minus growth during some years.

If consensus thinking was wrong over China, why shouldn’t it be wrong about the developing world ex-China and the developed world?

In order to give you a taster of the long-term scenario planning we can provide you with at ICIS, here are some global polymer demand-growth scenarios for 2023-2025.

Three scenarios for global polymers demand in 2023-2025

Let’s start with our base case for 2023-2050 global growth for the same nine of the major synthetic resins referred to in the above chart.

For refence here, the polymers are high-density polyethylene (HDPE), low-density PE (LDPE), linear-low density PE (LLDPE), polypropylene (PP), general-purpose polystyrene (GPPS), high-impact PS (HIP), expandable PS EPS) and acrylonitrile butadiene styrene (ABS).

The ICIS Base Case sees China’s annual per capita demand growth for the nine resins falling to annual average in the low single digits in 2023-2050. This would compare with the 9% annual average between 1990 and 2022.

Growth in the developing world ex-China is expected to drop to the same level as China during the forecast period. The region grew at annual average at 5% in 1990-2022.

Growth in the developed world is expected to remain unchanged during the forecast period compared with 1990-2022 – at around 1% per year.

But because China’s demand has perhaps grown too quickly relative to an average per capita income of just $13,000 in 2022 compared with $48,000 in the developed world, could we see China’s demand fall over the next 30 years?

China’s growth seems to have been temporarily inflated by the three events listed in the first chart in today’s post. These events are now history.

My assumption in the next scenario is negative growth in China during 12 of the years from 2023 until 2050, with flat or very low growth during the remainder of the years. This would leave annual average growth at zero during the whole of this period.

I assume, however, that there will be a “growth transfer” to the developing world ex-China. I assume the region’s growth will be double our base case.

But because of ageing populations and increasing sustainability concerns, Alternative Scenario 1, in the chart below, takes growth in the developed world down to zero in 2023-2050.

Under Alternative Scenario 1, cumulative global polymers demand in 2023-2050 would be 500m tonnes lower than our base case.

But what if growth in China and the developed world was flat? And what if there was no “breakout growth” in the developing world ex-China? What if the region grew in line with our base case?

Under Alternative Scenario 2, cumulative global demand would be no less than around 1bn tonnes lower than our base case.


Obviously, many of the numbers are missing from the above charts. If you need the data and the analysis in detail, contact me at john.richardson@icis.com and we can discuss how ICIS can support your long-term planning.

The chemicals world has changed irrevocably, I believe. But this is a good thing as the absence of the kind of easy volume growth we’ve seen in the past will better preserve the environment. And the future for our industry lies in environmental protection and restoration, through the approach of treating sustainability as a service.