Environmental, social and political factors – along with integration into upstream petrochemicals – have held back plant closures. Now, things seems very different.
Asian Chemical Connections
THE US gains $296m in China HDPE sales as Asian and Middle East exporters lose $1.4bn.
I BELIEVE WE are heading for the biggest period of change in the global petrochemicals industry since the 1990s.
This was when globalisation took off with the formation of the World Trade Organisation (WTO), when China’s economic boom began, when the global population was more youthful and before climate change became a major threat to growth.
CHINA’S PP demand could grow by only 1% this year, while major producers saw their January-August 2023 sales in China decline by $796m versus the same months last year.
Total estimated losses by eight of the major HDPE exporting countries in sales to China was $1.1bn in H1 2023 versus H1 2022.
Flat 2023-2050 demand growth in China and the developed world would leave the global market for nine synthetic resins 1bn tonnes smaller than the ICIS base case.
China’s cumulative HDPE demand under the downside scenario would be 97m tonnes lower than our base case. in the above chart
During this downturn, razor-like focus on fluctuating netbacks and supply and demand among all the different countries and regions will allow producers to ensure that they don’t make product for markets where there is no demand, while ensuring that they take maximum advantage of many brief periods of stronger demand and pricing.
Capacity exceeding demand is forecast to reach 218m tonnes this year from a 1990-2022 annual average of 76m tonnes.
IF China had been a typical developing economy, as the above chart illustrates, its cumulative 1990-2022 could have been 300m tonnes smaller. As history moves forward,this suggests that China’s long-term demand growth could turn negative