BLOG: China’s HDPE prices recover but spreads tell the real story as prospects dim for next year

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

China’s polyethylene (PE) import prices went up last week, raising hopes thar the market had finally bottomed out.

But consider the long-term context. Despite last week’s rebound, spreads over feedstock costs remain startlingly low:

• The China HDPE injection grade price spread over naphtha feedstock cost was just $206/tonne between 1 January and 23 September 2022. The previous annual lowest spreads since our assessments began in 1990 was $288/tonne in 2002. Spreads between 1990 and 2021 averaged $496/tonne. Patterns are similar in the other grades of PE.

Period. This is the story. Until or unless spreads recover to their long-term averages, PE and other chemicals and polymers markets in China will remain in a historic trough, the deepest we’ve seen in 25 years of following the industry.

The slightly positive news is that the full-year 2022 China HDPE demand and import outlook picked up slightly in August versus July. But this was likely down to seasonal factors that could soon fade away.

And, sadly, and we hate to have to say this, the prospects for next year are not looking good.

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.