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China’s PE import market declines

Economic growth

China PE Mar13.pngChina’s polyethylene demand has proved an excellent forward indicator of economic policy. So far, however, the usual data on China’s own production has not been yet been published in 2013. Today, therefore, the blog is instead focusing on trade analysis, based on Global Trade Information Services data. This provides important insight into commercial developments:

The left hand chart shows net imports (red column) in January-February
• These have fallen 3% versus 2012 (green), with imports down 4% and exports down 18%
• ME net imports are down 7%, NAFTA down 28%; NEA are up 22%, SEA up 4%, EU up 15%

The right hand chart shows average prices in US$/tonne
• In the commodity market, NEA (red line) has held prices to gain volume; SEA prices (green) have increased in 2013 v 2012 to NEA levels, and ME prices (blue) have also increased
• NAFTA (brown) and Europe (purple) are meanwhile clearly abandoning the commodity market, to instead compete in higher margin niche areas

Individual country developments are also interesting. Iran’s volume is surging, up 9% over 2012 to 175kt. Saudi remains the leading importer with 210kt, but its volume has dropped 18% versus 2012. US volumes have been badly hit, down 34% v 2012 at 59kt.

This change in volume is clearly being driven by pricing policy. Saudi have supplied at an average $1359/t this year, and Qatar at $1364/t versus Iran at $1377/t. The US is meanwhile at $1736/t, whilst the Netherlands is at $1538/t.

The data highlights how China’s market is becoming much more competitive. It also confirms the blog’s February conclusion that overall market growth is likely to remain very low. This means US producers will face a tough battle with ME and Asian producers if they want to place their planned new volumes in China.