The average China PE spread between 1 January and 17 March this year was just $290, the lowest since our assessments began.
Between 2000 and 2021, before last year’s collapse, the annual spread averaged $532/tonne. This means that until spreads increase by 83% from their current levels, there will have been no recovery..
Asian Chemical Connections
China’s long-term PP demand growth may turn negative, shifting the focus to value from volumes
STRONG upside PP demand growth scenarios for the rest of the world might still not enough to cancel out negative growth in China
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,
China polyolefins in 2023: Demand and supply workshops crucial
This year is a great deal harder to predict than 2022,, hence my latest outlook for China’s PP demand (see the chart below), which includes the two extremes of our ICIS base case for 6% growth versus my worst-case downside of minus 5%.
A perfect global PP storm: China’s collapsing demand and rising capacity
THIS IS A POLYPROYPENE ((PP) world being turned upside down. China has entered a period of lower growth with capacity additions so big that imports are collapsing as China also starts to substantially increase exports.
China’s styrene demand in 2022 could be negative for the first time since 1990
China’s net styrene imports in 2022 could also fall to just 290,000 tonnes from 1.5m tonnes in 2021 and 2.8m tonnes in 2020.
If you think this is a typical chemicals downcycle, think again
THERE IS A FEELING out there that the chemicals and polymers industry is undergoing a typical downcycle that will last a few years, followed by yet another spectacular fly-up in margins. But I believe a great deal more is happening beyond the usual cycles of over-building followed by under-building.
China’s PP demand growth: A bubble that may have burst beyond repair
WAS IT JUST an almightily big bubble that cannot now be re-inflated, even if Beijing follows through on its plans to inject $148bn in loans into the country’s troubled real -estate sector? Once confidence has gone, such an intangible thing, there is a risk it cannot be restored.
China may this year become the Asia and Middle East third-biggest PP exporter, replacing Singapore. In 2020, China was nowhere in sight
AS RECENTLY AS 2020, China’s polypropylene (PP) exports totalled just 424,746 tonnes, causing what must have been barely a ripple of anxiety among the major Asian and Middle East exporters. But as the slide below shows, in 2021, China moved into the group of top exporters as its exports surged to 1.4m tonnes. This year, exports could be 1.7m tonnes or higher.
China’s post-lockdown economic rebound has yet to happen, according to the ICIS spreads data
At some point, polyolefins exporters to China and the local producers will regain pricing power. This will become apparent from a widening of spreads as economic activity returns to normal. It really is as simple as this. So, you need our data and analysis.
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