BLOG: Why China’s PP demand may only grow by 1% per year in 2022-2032

John Richardson

17-Jan-2022

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

Being part of a crowd can feel great as we are very social animals. But big crowds don’t always head in the right direction.

One big crowd (conventional thinking) accepts that China’s real estate deflation matters to petrochemicals growth. But the crowd believes it is not a significant deal because existing demand is already so big that even low percentage increases will deliver lots more consumption.

BUT, as we discuss in today’s post:

  1. It is going to be difficult to generate big growth because the property engine was so important for demand and because much of the rest of China – outside where the property bubble took place – is older. Older populations buy less things. China is also grappling with the overall challenge of a rapidly ageing population.
  2. China would be very happy with very low levels of petrochemicals growth because it wants to hit its international carbon reduction agreements – and because it wants to make further big strides in cleaning up the local air, water and soil. China intends to reduce the overall commodity intensity of its GDP for environmental, debt and demographic reasons.

An economically strong China (we think China will remain economically strong) doesn’t necessarily equal strong petrochemicals growth. China will succeed because of a new growth model built on sustainability.

And remember that when China wants to do something, it very often gets it done.

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.

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