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.
Asian Chemical Connections
FEW PEOPLE HAVE made money out of shorting China. Time and time again, brief periods of weak economic growth have been followed by roaring, eye-wateringly big recoveries.
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.
Reductions in production seem to have been forced by the logistics and demand challenges caused by Zero-COVID.
Lower refinery operating rates on a lack of Russian oil and naphtha -– and reduced electricity supply to refineries and petrochemicals plants -– may be more than offset by weaker European petrochemicals demand.
WE HAVE BEEN here before, of course. In April 2020, pessimism abounded about China’s growth prospects that turned out to be unfounded because of the extraordinary strength of its post peak-pandemic recovery. But circumstances that led to the economic rebound in the second half of 2020 were very different.
”. Manufacturing cost pressures and the climate change and plastic -waste clean-up imperatives have created a new chemicals business model. No longer is financial success driven by sales-volume growth in chemicals.
How on earth does one respond to the daily news flow? The answer must be headline scenarios – best, – medium and worst-case scenarios
I hope what follows helps as a first pass at describing the new environment in which our industry is operating as a result of the Ukraine-Russia conflict.
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.