Comparative PE and PP pricing data between Vietnam and southeast asia – and the “spreads” numbers between China PE and PP prices and naphtha costs – suggest the China economy has yet to recover.
Asian Chemical Connections
High-density polyethylene (HDPE) demand in the developing world in 2023 could contract by 300,000 tonnes, rather than, as in our base case, grow by 800,000 tonnes because of the food crisis.
Assuming all the other regions grew as under our base case, global growth would be 2% in 2023 rather than our base case of 4%.
At some point, polyolefins exporters to China and the local producers will regain pricing power. This will become apparent from a widening of spreads as economic activity returns to normal. It really is as simple as this. So, you need our data and analysis.
EFFICIENT SUPPLY CHAINS were something that we used to take for granted. They hummed away in the background, making petrochemicals just one of many globalised industries where products and services flowed almost seamlessly across borders. We didn’t have to think about supply chains because they worked so well.
China’s polyethylene (PE) demand in 2022 could fall by 3% over last year. Net imports may be as much as 3.9m tonnes lower
THERE IS NOT MUCH point in carrying out economic stimulus if people can’t spend the extra money. This is the dilemma China faces as it maintains its Zero-COVID policy that it is now affecting some 400m citizens. This makes all the talk in recent weeks of a stimulus-led economic turnaround largely irrelevant.
US PE exports could be restricted in 2022 by local logistics challenges as China’s imports decline as its economy suffers a recession. The centre of attention for Asian and Middle exporters may therefore be Europe.
EUROPE’S NET HDPE imports could be as high as 4.1m tonnes in 2022 versus last year’s 1.1m tonnes.
I AM JUST about clinging to a base case of positive China polyethylene (PE) demand growth in 2022 because China has a great track record of turning its economy around after short periods of weaker growth. But this time could be different.
IT WILL NOT be easy to estimate what could be higher-than-expected levels of European petrochemicals imports during the rest of 2022. But in the context of a China that might even be in recession, the extra effort necessary to figure calculate shifts in European trade flows is very, very worthwhile.