THE EARLY DATA suggest that China’s polypropylene (PP) demand could grow by 3% in 2023. This would be in line with the base case forecast I provided in February.
Asian Chemical Connections
China PE demand growth in 2023 could be only 1% versus forecasts of 5%
Early data suggest China PE demand growth in 2023 will follow the trend since 2021 of much, much lower growth.
China PE and PP downcycle a long, long way from being over
The average China PE spread between 1 January and 17 March this year was just $290, the lowest since our assessments began.
Between 2000 and 2021, before last year’s collapse, the annual spread averaged $532/tonne. This means that until spreads increase by 83% from their current levels, there will have been no recovery..
China’s long-term PP demand growth may turn negative, shifting the focus to value from volumes
STRONG upside PP demand growth scenarios for the rest of the world might still not enough to cancel out negative growth in China
US PE exports in 2023 are not inevitably going to increase
A SCENARIO-BASED approach is essential to understand US PE exports in 2023, based on non-plant economic factors
Global oversupply of petrochemicals to hit 218m tonnes in 2023 – the highest in any other year since 1990
Capacity exceeding demand is forecast to reach 218m tonnes this year from a 1990-2022 annual average of 76m tonnes.
Why China’s 1990-2022 PP consumption could have been 300m tonnes lower without the benefit of “one off” historical trends
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
SEA Asia PE market dragged lower by China now container freight rates have fallen.
The decline in container freight rates has opened the SEA PE market to more competition – pulling the region’s spreads closer to the record-low China levels
Diversification to other markets in 2023 crucial for PP producers because of China risks
China could be net exporter of 900,000 tonnes of PP this year, down from 2022 net imports of 3.2m tonnes This makes the other import markets more important for producers.
Collective wishful thinking could be behind the global polyethylene crisis
EVEN IF CHINA’S PE demand grows at 10% in 2023, with very strong growth in other regions, this year’s global capacity would still be 22m tonnes more than demand!