AS RECENTLY AS 2020, China’s polypropylene (PP) exports totalled just 424,746 tonnes, causing what must have been barely a ripple of anxiety among the major Asian and Middle East exporters. But as the slide below shows, in 2021, China moved into the group of top exporters as its exports surged to 1.4m tonnes. This year, exports could be 1.7m tonnes or higher.
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%.
RECOVERY? WHAT RECOVERY? Some market players are talking about a rebound in the Chinese economy, and, therefore, polyolefins demand, but the critically important spreads data continue to tell a different story. Nothing has changed from last week.
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.
Every tonne you don’t produce, when you correctly assess that the demand isn’t there in a particular market, will be important in preserving cashflow. Cashflow could once again be king, as it was just during the 2008-2009 Global Financial Crisis; and every tonne that you do produce, when you accurately assess that demand is there will, of course, support your revenues.
Reductions in production seem to have been forced by the logistics and demand challenges caused by Zero-COVID.
How on earth does one respond to the daily news flow? The answer must be headline scenarios – best, – medium and worst-case scenarios
THE GLOBAL FOOD crisis is first and foremost a potential humanitarian disaster that must be avoided. But “must” doesn’t mean “will”, of course. Nobody should underestimate the scale of the challenges in front of us.
THE HEADLINE IN the above slide has always been the case. But why it was forgotten could be because many of us spent most, if not all, of our professional careers in the benign period between the end of the Cold War in 1991 and the pivot in the US approach to China, which happened some four years ago.