China’s polyethylene imports surge 63%

PE.JPGThe above chart, courtesy of trade data experts GTIS, shows the extraordinary leap in China’s polyethylene imports this year.

They have surged 63% January – October in 2009 (blue bar) to 6.7 million tonnes versus 4.2 MT in 2007 (green bar) and 2008 (orange bar). Many countries have seen massive rises. Iran exported 404kt vs just 48kt in 2008; S Korea 1.2MT vs 800kt; USA 830kt vs 510kt; Saudi Arabia 678kt vs 420kt; Russia 209kt vs 52kt, Japan 464kt vs 237kt; Brazil 151kt vs 6kt.

These are not ‘normal’ increases. Some volume compensated for the 6% fall in H1 production. Recycling also fell earlier this year due to low prices for virgin material. But China’s own production is now expanding as the major new integrated refining/petchem projects come online. The real support has come from the government’s stimulus efforts, and speculation linked to the rising price of crude oil.

Will this support continue? It seems unlikely that the government can afford to add a further $1.3trn of loans into its $4.3trn economy next year. Regulators are already worrying about the potential for rising levels of bad debts. And crude prices might well fall, once currency markets tire of the “correlation trade“.

The ‘China effect’ has been very positive for polymer sales this year. The blog worries next year may be more difficult.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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