BLOG: A flood of PP no matter how what the 2023-2025 demand growth
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. Even if China’s 2023 polypropylene (PP) demand growth were to be 14% – double our forecast – followed by 8% and 5% increases in 2024 and 2025, respectively, and if demand growth was higher than we expect in other regions, we would still see:
- Global PP capacity in excess of demand at 18m tonnes this year and at a 2023-2025 annual average of 17m tonnes. This would compare with the 8m tonne/year average in 2000-2022.
- The global operating rate would be at 82% this year and a 2023-2025 average of 83%. This would compare with the 2000-2022 average of 87%.
The outcomes from our base-case growth forecasts would be, of course, be even worse:
- Capacity exceeding demand is forecast to be at 21m tonnes in 2023 and at a 2023-2025 average of 21m tonnes/year.
- This year’s operating rate would be at 79% and a 2023-2025 average of 80%.
It doesn’t take a rocket scientist to conclude the following: Our industry has built way too much PP capacity, regardless of the likely strength of the economic recovery.
We’ve been warning we would eventually be in this place since 2014.
What applies to oversupply in PP also applies to polyethylene (PE), as we shall discuss later.
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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