SHORT-TERM tactics should involve maximising returns within regions along with a greater focus on exports anywhere in the world
Asian Chemical Connections
THE BIG PE exporters to China saw their sales to country decline by a further $1bn year-on-year in January-July 2023 versus January-June 2023.
CHINA’S PP net imports could total 5m tonnes in 2040, or the country may instead be in a net export position of 9m tonnes.
NINE OUT OF CHINA’S top 10 high density polyethylene (HDPE) import partners saw their sales to China fall by an estimated total of $1.8bn in January-July 2023 versus the same period last year. Meanwhile, the remaining member of the top 10, the US, saw its sales increase by $233m.
GLOBAL PE capacity in 2023-2030 may have to be 23m tonnes/year lower than the ICIS base case to bring markets back into balance
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.
The ICIS Base Case is already very conservative, assuming an annual average China PE demsnd growth of just 2% per year between 2023 and 2025 compared with 11% in 2000-2022. But I see average growth of only 1% or even minus 2% as perfectly possible.
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.