PODCAST: Evergrande debt crisis signals major reset for China, global chemical markets

BARCELONA (ICIS)–The potential default by China’s massive Evergrande property group shows a government shift to lower debt and redistribution of wealth, with important implications for chemicals markets there and around the world.

• Evergrande employs 200,000 people, its debt is greater than Portugal’s GDP
• Most of China’s growth has been based on borrowing
• Bubble may be about to burst
• Domestic consumption in China may fall
• President Xi introducing socialism through Common Prosperity philosophy
• China slowdown could force closure of US plants relying on exports
• Polyurethanes, expandable polystyrene (EPS), polyvinyl chloride (PVC), phenolic resins could see negative China growth this year
• Longer term, China’s economy may grow more slowly but sustainably
• Europe acylonitrile butadiene styrene (ABS), polystyrene (PS), expandable PS (EPS) hit by soaring logistics costs, delays
• Sky high container rates, road logistics also affected
• End-use demand remains strong from automotive, construction

In this Think Tank podcast, Will Beacham interviews Europe ABS, PS and EPS editor Stephanie Wix, John Richardson, ICIS senior consultant Asia, and Paul Hodges, chairman of New Normal Consulting.

Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS.

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Read Paul Hodges and John Richardson’s ICIS blogs.