BLOG: China phenol self-sufficiency: another one could bite the dust

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

Another One Bites The Dust by Queen may turn out to be an apt description for China’s phenol imports. They could very easily almost disappear, as may also be the case with polypropylene (PP) and styrene monomer (SM).

Only minor adjustments to our base case assumptions for phenol demand growth and operating rates compared with two years ago makes self-sufficiency a realistic prospect. This is the result of a big surge in local capacity and lower demand growth because of Common Prosperity.

High operating rates are likely because of greater availability of feedstocks and another set of government policies – Dual Circulation – which prioritises increased self-reliance.

The impact on the global phenol market would be devastating – and this is no exaggeration. Middle East and North American producers would have no choice but to restructure their businesses.

Take the Middle East as an example. Our base case assumes it will be a net exporter of 2.7m tonnes in 2021-2031. Under one of our downsides for China’s net import during this period, TOTAL GLOBAL NET IMPORTS WOULD FALL TO JUST 920,000 tonnes. Go figure.

Regular readers of the blog should be fine. They should be not the slightest bit surprised by this – and will have hopefully restructured their businesses accordingly – because we have been warning of greater China petrochemicals self-sufficiency since 2014.

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.