China PE Demand Down 4 Percent

Business, China, Company Strategy, Economics, Europe, Polyolefins, US


ChinaPEdemandQ12012.jpgBy John Richardson

CHEMICALS analysts, and some senior company executives, are telling us that growth in China will bounce back in the second half of 2012. 

To give these forecasts some historical context, the recovery was supposed to happen in January, then February, then March, then April and now at some point in the second half of the year (most commentators and company executives now believe that the second quarter, as a whole, will be difficult).

The longer that the recovery is delayed the more that 2012 earnings forecasts will be under pressure for downward revisions.

We think that the structural changes taking place in China’s economy, and the weak external environment, make these revisions highly likely.

Petrochemicals markets point to a very weak first quarter. Our colleagues at ICIS pricing have detected no signs of a recovery since the end of Q1.

In the case of polyethylene (PE), as the chart above illustrates, Q1 demand was down 4% (red column) versus 2010 (blue). Contrary to popular belief, PE demand is not growing at 1.5 or 2 times GDP, but has actually gone ex-growth.

North American PE exports to China have fallen 61% since 2010.

“China’s ruling communist party does not care that the US cost base is the second cheapest in the world, due to shale gas,” says fellow blogger, Paul Hodges.

“Instead, it knows it must maximise job creation to remain in power. It therefore continues to increase China’s own production, up 7% over the period.”


A Road Map For Success


  By John Richardson CHEMICALS analysts, and some senior company executives...

Learn more

North America Manufacturing Rebound


  By John Richardson CHEMICALS analysts, and some senior company executives...

Learn more
More posts
China’s dominant role in global PE demand just got even bigger

By John Richardson WE WERE already living in an incredibly lopsided PE world even before last year...

US PE margins have further to fall on higher production, China weakness

By John Richardson THE WORST is over for the margin depletion that’s been experienced by US PE pro...

China slowdown: Loss of 7m tonnes of global PP demand points to new investment model

By John Richardson CHINA’S influence on the world economy has grown to such an extent over the las...

China autos and polypropylene: Growth has peaked and will decline

By John Richardson WHAT if the number of new vehicle sales in China reached a long term peak of 28.9...

Oil at $58-69 over next year as focus switches to demand

Guest blogger today is again Ajay Parmar in the second his posts. He is a chemical engineering profe...

Trade war dangers for US polyethylene re-emerge as talks appear to flounder

          By John Richardson ONLY YESTERDAY just about everyone I spoke to ...

China purified terephthalic net exports to reach 2.7m tonnes by 2025

By John Richardson LET’S START with the good news first. ICIS Data and Analytics had expected ...

China propylene: 6.7m tonne demand hole threatens to swallow-up new projects

By John Richardson CONVENTIONAL opinion is that the global propylene market is moving from a balance...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more