Capacity growth of just 1.6m tonnes a year versus our base case of 5m tonnes a year would require substantial capacity closures in some regions. Closures are never easy and so take considerable time because of links with upstream refineries, environmental clean-up and redundancy costs – and the reluctance to be the “first plant out” in case markets suddenly recover.
Asian Chemical Connections
Petrochemicals after the Supercycle: Revised scenarios
LET ME AGAIN bang away on the same old drum which I’ve covered with a new skin: The above slide is an updated version of the slide I first published late last year. Note that there is a new scenario added to the original two, A Bi-polar World. Also note that I have this time included percentage weightings of my views on the likelihoods of the scenarios.
China’s petrochemicals capacity growth: A new normal of much greater uncertainty
UNDERSTANDING what was going to happen next with petrochemicals capacity additions in China used to be easy. Now we are in a world of muddle and ambiguity.
China’s ever-more sophisticated chemicals market could entirely serve itself
What’s your Plan B if China were to also become self-sufficient in specialities as well as commodities?
China could still become entirely petrochemicals self-sufficient despite the impact of EVs on its refineries
Petrochemical exporters to China need to ignore suggestions that lack of feedstocks will slow China’s push to complete petrochemicals self-sufficiency
China’s economic challenges continue to be made clear by PP spreads
Until average PP spreads recover by 149% from where they were up until 9 June, there will have been no return to the great markets we saw during the Supercycle. Meanwhile, too capacity will be chasing too little demand.
A Personal View of the New Petrochemicals World
What follows is, as always on the blog, a personal view of how I see the petrochemicals world developing. There are no right answers, and the debate is the thing. That’s how we move forward together.
China’s 96% Q1 surge in PP exports mirrors wider export push as trade tensions build
China’s Q1 2024 exports reach 619,367 tonnes versus 315,904 tonnes in the first quarter of last year.
As China volume growth is no longer guaranteed, focus on growing value
THE THREE EVENTS described are historic, meaning that the tremendous volume growth that the petrochemicals business has seen since 1992 could be largely over.
The focus therefore needs to switch to growing value
Global PE demand in 2024 could have been 74m tonnes lower if incomes and population drove the market
If population and incomes drove growth, global PE demand could have been just 52m tonne in 2024 versus the ICIS forecast of 126m tonnes. The China market could have been just 10m tonnes versus 43m tonnes; the Developing World ex-China 13m tonnes versus 44m tonnes and the Developed World 29m tonnes versus 38m tonnes.