In November 2021, the premium for overseas PP injection grade prices over prices in China reached a historic peak of $408/tonne. But in 1-18 November 2022, the premium was $113/tonne. Premiums have fallen in every month since April this year, resulting in a decline in China exports.
Asian Chemical Connections
CFR China PP injection grade price spreads over CFR Japan naphtha costs averaged $546/tonne in 2003-2021 compared wit $251/tonne so far this year – a 118% difference. When you consider China’s economic fundamentals, it is unrealistic to expect a recovery to the long-term historic average in 2023.
China’s real estate rescue only involves shoring-up lenders. The property bubble will not and cannot be reflated. Most of the zero-COVID rules remain in place, and will likely stay in place well into 2023
China’s HDPE in demand in 2023 could fall by as much as 4% over 2022. Next year’s net imports may slip to as low as 3.8m tonnes from around 5.7m tonnes in 2022.
The January-September data suggested full-year China PP exports to these top ten destinations 75,543 tonnes fewer than the January-August numbers. And the January-September numbers implied total 2021 China exports to all destinations of 1.47m tonnes compared with January-August that indicated 1.58m tonnes.
HDPE film grade price premiums for selected countries and regions over China recovered in September and October of this year. In 2020, premiums averaged just $36/tonne compared with $248/tonne in January 2021-October 2022.
China[s PP demand growth in 2023 could be as low as minus 3% as it swings into a 2.6m tonnes net export position from this year’s likely net imports of around 3.4m tonnes.
CHINA HDPE injection grade prices over naphtha feedstock costs are the lowest this year since our price assessments began in 1990
SUPPLY-CHAIN problems continue to disrupt the global chemicals and polymer industries more than two years since the pandemic began.
Right now, the centre of attention of supply-chain anxiety is China.
China’s polyethylene (PE) demand in 2022 could fall by 3% over last year. Net imports may be as much as 3.9m tonnes lower