The strength of China’s post zero-COVID recovery in 2023 will be crucial, as will local operating rates as self-sufficiency further increases.
Another important factor: European gas supply next winter and the effect on local PE production.
AGAIN, PLEASE DON’T SAY I didn’t warn you. The chart below is an example of how PE prices have started to re-globalise. as I said they would when they began to de-globalise from March 2021 onwards.
What applies to the declining polyethylene (PE) price differentials between Europe and China applies to all the other countries and regions versus China. The pattern has been the same in polypropylene (PP) over recent months.
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?
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.
By John Richardson SECURITY OF SUPPLY is a critical concern for European polyolefins producers and buyers because of the risks of interrupted Russian oil and gas supplies. You cannot, of course, run polyolefins plants without sufficient energy supplies. So, in order to support European readers of the blog, let me start with some headline energy […]
By John Richardson WE NOW HAVE enough data to make some firm conclusions about what the Chinese polyethylene (PE) market will have looked like in 2021. We can also make some early estimates about the shape of the market in 2022. The slide below details what the ICIS apparent demand data for January-October 2021 (our […]