BLOG: China polyolefins demand declines accelerate as supply chains remain the key challenge

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

The surge in the Delta variant means that we might never reach global herd immunity, as this would require up to 95% of the global population to be fully vaccinated.

Good luck with that given developing countries have achieved vaccination rates in the low single digits – and because vaccine hesitancy has stalled immunisation programmes in rich countries.

This means that until or unless the global container freight system is adapted to handle frequent port disruptions caused by lockdowns, we may be stuck with permanently tight and volatile supply of container space.

Lack of container space – along with the semiconductor shortage – explains slowing Chinese exports and the fall in the country’s polyolefins demand. ICIS data for H1 2021 shows declines in demand have accelerated.

China’s polyethylene (PE) demand in 2021 is set to be 3.2m tonnes lower than our base case forecast with polypropylene 2.2m tonnes lower. Negative growth over 2020 also looks increasingly likely unless Beijing launches new economic stimulus.

In PE, local demand will receive a lot of support, though, from Golden Week in October and Single’s Day in November.

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.