During this downturn, razor-like focus on fluctuating netbacks and supply and demand among all the different countries and regions will allow producers to ensure that they don’t make product for markets where there is no demand, while ensuring that they take maximum advantage of many brief periods of stronger demand and pricing.
Asian Chemical Connections
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
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!
Interest rate “lag effect” and the risks for China’s ethylene glycols market
IT ALL CHAOS AND MUDDLE out there: China’s ethylene glycols demand could either grow by 10% in 2023 or contract by 5%.
A flood of PP no matter how what the 2023-2025 demand growth
EVEN if China’s PP demand growth is 14% this year – double our forecast – and growth in other regions is higher than we expect:
Global capacity in excess of demand would be 18m tonnes in 2023 compared with a 8m tonne/year average in 2000-2022,
Global PE new supply and China spreads tell the real story
Global PE capacity in excess of demand is forecast to average 24m tonnes/year in 2022-2025, and to reach 26m tonnes this year
Operating rates are expected to average 81% in 2022-2025. This would compare with a 10m tonnes annual average capacityexceeding demand in 2000-2021 and an operating rate of 85%.
Your complete and updated outlook for global polyethylene in 2023
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.
Assessing confidence and the China PE demand recovery: More scenarios are needed
Scenario 2, my preferred scenario, would see China 2023 PE demand at approximately 38.5m tonnes – an average of 2% higher across the three grades than in 2022.