China’s PE market slows further

Chemical companies, Consumer demand, Economic growth

China PE Jun11.pngChina’s polyethylene (PE) demand in Q1 was down 1.6%. Now the blog’s analysis suggests Jan-May demand was down 4% versus 2010 at 7.1MT.

As the chart shows, based on data from Global Trade Information Services and ICIS:

• Domestic production (blue) was up 5.6% to 4.3MT
• Imports (red) were down 12% at 3MT
• Exports (green) doubled to 240KT

The rise in exports suggests that destocking is still continuing. This is no great surprise after the speculative mania seen on the Dalian futures market over the past 2 years. Many players had bet heavily that crude oil prices would continue rising along with PE prices.

The rise in domestic production is also no surprise. The blog’s Sinopec study shows it never cuts production to maintain margins. It acts as a utility, supplying raw materials to the factories to keep people employed.

Thus imports from NAFTA, NEA and Europe took the pain:

NAFTA and Europe saw net imports halved to 231KT and 71KT
NEA was down 25% to 589KT

• But the Middle East gained from its strategic relationship (energy for markets) and was up 16% to 1.25MT. Only Iran’s supply problems (it was down 16% at 320KT) stopped a bigger rise
SEA was also up 10% to 550KT, due to the free trade agreement

Volumes will probably remain under pressure as the government battles rising inflation, which could reach 6% this month. And although premier Wen claimed yesterday that “price rises will be firmly under control”, he made similar claims last December when it was only 4.6%.

Thus NEA and NAFTA producers are likely to continue to suffer during H2. And product not sold in China, will no doubt be exported somewhere else instead. In turn, this will pressure margins in other regions.

PREVIOUS POST

Wimbledon rain not a health and safety issue

24/06/2011

China’s polyethylene (PE) demand in Q1 was down 1.6%. Now the blog’s...

Learn more
NEXT POST

Downturn Alert shows markets still weakening

27/06/2011

China’s polyethylene (PE) demand in Q1 was down 1.6%. Now the blog’s...

Learn more
More posts
The End of “Business as Usual”
21/04/2019

In my interview for Real Vision earlier this month, (where the world’s most successful invest...

Read
Most businesses were nowhere near Ready for Brexit last Friday – we mustn’t make the same mistake again
14/04/2019

Thank goodness for backbench MPs and the European Union. Without their efforts, the UK would by now ...

Read
Don’t get carried away by Beijing’s stimulus
07/04/2019

Residential construction work in Qingdao, China. Government stimulus is unlikely to deliver the econ...

Read
Businesses thrilled by Brexit uncertainty: “It’s exhilarating” says small business owner
01/04/2019

With the European Commission saying that a No Deal is now “likely“, small businesses acr...

Read
Stormy weather ahead for chemicals
24/03/2019

Four serious challenges are on the horizon for the global petrochemical industry as I describe in my...

Read
$60bn opportunity opens up for plastics industry as need to eliminate single-use packaging grows
17/03/2019

150 businesses representing over 20% of the global plastic packaging market have now agreed to start...

Read
Ageing Perennials set to negate central bank stimulus as recession approaches
10/03/2019

The world’s best leading indicator for the global economy is still firmly signalling recession...

Read
BASF prepares its UK supply chain for Brexit
24/02/2019

BASF has been working with Ready for Brexit (the online platform I co-founded last year) as part of ...

Read

Market Intelligence

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

Learn more

Analytics

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