BLOG: China 2021 PE demand could be 1.9m tonnes lower than last year
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Here is your essential guide to China’s polyethylene (PE) market in 2021 and 2022. We will cover polypropylene (PP) in a post later this week.
In summary on China’s PE demand:
- This year’s total demand looks as if it could be 1.9m lower than in 2020 on pandemic-related supply chain constraints, the “Common Prosperity” economic slowdown, energy shortages in September-October and an inevitable cooling-off from bubble conditions in 2020.
- But demand in 2021 still looks likely to be around 1.5m tonnes more than in 2019, a pre-bubble year. In other words, no need to panic.
- The market should return to year-on-year growth in 2022. But we expect next year’s percentage growth to moderate from long-term historic trends on the government’s Common Prosperity policy focus. Economic growth will become less commodity intensive. A continued slowdown in the real estate sector will reduce growth in some PE end-use markets. Regulations restricting the consumption of single-use plastics will further cool expansion.
As for imports of all three grades, they could fall by 4m tonnes in 2021 over last year. A further 1.2m decline in 2022 over 2021 seems possible.
Moderating growth and falling imports in China are just two of many factors that will exert disinflationary or deflationary pressures on the global PE market in 2022. More on this in another post this week.
Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.