BLOG: China zero-COVID: 2022 impact on local and global demand for nine major polymers

John Richardson

13-May-2022

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

The global petrochemical industry’s dependence on China remains extraordinary as we discuss in today’s blog.

Zero-COVID policies seem likely to last most of the rest of this year, based on a new study that estimates the serious health implications of a sudden reversal of policies.

The charts in today’s post include scenarios for negative growth in China for nine major  polymers in 2022 – acrylonitrile butadiene styrene (ABS), high-density polyethylene (HDPE), (low-density PE), linear low-density PE (LLDPE), polyester fibre, polyester film, polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC).

This would result in global demand for the resins would grow at 2% versus our base case of 4%.

Our downsides see China’s demand for the nine resins contracting by 6m tonnes in 2022 over last year.

Too pessimistic? Quite possibly, yes,. But how long zero-COVID policies last is THE pivotal factor as:

  • The restrictions are making normal economic activity very difficult. Some factories remain closed and the rules governing delivery drivers are making delivery of internet sales very challenging. This is the opposite of what occurred in the West at the height of the pandemic when internet sales boomed – a major reason for strong polymers demand growth.
  • Until China’s factories fully get back to work and until zero-COVID logistics problems ease, there is little chance of a recovery in Chinese exports, which are an important driver of the country’s petrochemicals demand and imports.

Even when China’s manufacturing and logistic are back to normal, we need to consider the impact of the West’s cost-of-living crisis on the country’s export sales.

These are very difficult times as regards China’s demand. There is no getting away from it.

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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