Northwest Europe PP price premiums over China averaged $161/tonne between November 2002 and December 2020. Between January 2021 and 16 September 2022, price premiums averaged $749/tonne. What would be the consequences for European PP pricing and profitability if price premiums returned much closer to their long-term averages?
Asian Chemical Connections
The chart shows European
dependence on Russian gas compared with country-by-country percentages of the region’s total PE capacity, Germany is the standout risk country as it has a nearly 50% reliance on Russia for its gas supplies with a total of more than 70% of Europe’s PE capacities across the three grades. In the case of the Netherlands, it is the location for just under 40% of capacities with its dependence on Russian gas at around 20%.
Will China, the world’s most important HDPE demand centre, and an increasingly important supply centre, drag Europe down to its levels? Or will the China market increase closer to today’s levels in Europe?
EUROPE’S NET HDPE imports could be as high as 4.1m tonnes in 2022 versus last year’s 1.1m tonnes.
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.
”. 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.
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