MORE THAN 70% of global polyethylene demand is at risk from ageing populations, climate change and geopolitics.
Asian Chemical Connections
China events suggest no global petchems recovery until 2026
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.
China PP exports could reach 2.6m tonnes in 2024 as markets become ever-more complex
As recently as 2020, China’s PP exports for the whole year were just 424,746 tonnes. Between 2021 and 2023 they ranged between 1.3m to 1.4m tonnes. If the January-May 2024 export momentum were to continue for the rest of this year, full-year 2024 exports would reach 2.6m tonnes, double last year’s level.
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.
Scenarios for China PP trade flows underline the end of the Supercycle and many more new complexities
A MUCH MORE complex world requires better scenario-planning.
Global demographics shape polyethylene demand yesterday, today and tomorrow
DEMOGRAPHICS SHAPE petrochemicals demand. As we consider the future, evaluate the different challenges of the G20’s Rich but Old, Poor & Old and Poor & Young G2O groups of countries.
China’s demographic crisis and the impact on global PP
If we are to see a repeat of 87% in 2024-2030 (the green line in the chart) and assuming my forecast of 2% demand growth is correct, the increase in global capacity would need to average just 154,000 tonnes/year during each year between 2024 and 2030. This is versus our base case of 4.5m tonnes/year of annual increases.
The “National Champions” in the New Petrochemicals Landscape
SHORT-TERM tactics should involve maximising returns within regions along with a greater focus on exports anywhere in the world
Details of how Saudi Aramco COTC and other advantaged feedstock projects could redraw the petrochemicals map
There is a big new wave of lower-carbon and very advantaged cracker projects on the way, including Saudi Aramco’s crude-oil-to-chemicals investments.
The China debate seems to be over so let’s move on to other markets
With China’s demand growth at 1-2% and with complete self-sufficiency possible, PP exports must look to break their China dependence.