BLOG: Polyolefins pricing data suggest China still hasn’t recovered

John Richardson

22-Jun-2022

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

Read one set of macro-economic statistics and it is easy to be persuaded that China is booming again; read another set of numbers and the gloom continues.

This has always been the problem with macro-economic data on the world’s most important petrochemicals market, probably more so today than ever before because of the confusion created by the stop, start relaxation of zero-COVID policies.

But fortunately, in our view ICIS polyolefins data offers clarity (see today’s blog post. The numbers suggest to us that the recovery has yet to happen:

  • Premiums for southeast Asian polyethylene (PE) and polypropylene (PP) pricing over Vietnam pricing remained at or close to record highs up until the week ending 17 June 2022. This was said to be the result of increased shipments to Vietnam in response to weak Chinese demand.
  • The gap or “spread” between CFR China PE and PP prices and CFR Japan naphtha costs was still the lowest it had been since the ICIS price assessments began in November 2002. This was not just because of the rapid rise in oil prices, as during the other periods of rapid oil-price rises the numbers show that PE and PP producers were more successful in passing on their extra costs to converters. The record squeeze suggested that demand remained weak with supply lengthened by major Chinese and South Korean capacity additions.
  • Average CFR China PE and PP spreads in 2022 – again up until 17 June – were just $268/tonne, The previous annual low was $374/tonne in 2003. Spreads between 2003 and 2021 averaged $553/tonne – 107% higher than the spread so far in 2022.

So, we believe there is no need to be confused by the macroeconomic data, whether you operate in the chemicals industry or in any other industrial or financial sector. Instead, just follow the polyolefins and other petrochemicals data.

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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