BLOG: Why China’s HDPE demand could decline in 2023-2040

SINGAPORE (ICIS)–China’s remarkable growth story is threatened by perhaps the world’s biggest ever demographic crisis and the debt bubble, as we have been highlighting on the blog for more than a decade.

Conventional thinking is now moving in line with our thinking. We see this as being the result of a growing awareness that China’s recovery from the zero-COVID restrictions will be muted – because of the above two challenges.

One of our contacts wrote on LinkedIn last Sunday, “This is a cheerful way to start to the week”, commenting on my post that global petrochemicals capacity exceeding demand had hit a record high.

In all seriousness, yes, we agree. As the old assumptions about growth are unpicked and stitched back together with a new thread, this will focus everyone’s attention on the two biggest routes to revenue growth: Tackling the carbon and plastic waste challenges.

Now that chasing volume growth is no longer the No1 revenue growth opportunity as more value lies in environmental solutions, this is clearly an incredibly positive and optimistic outcome. There is a strong financial motive to do the right thing.

Sustainability will be the subject for other blog posts. Meanwhile, in today’s blog post, we unpick the old China growth story using high-density polyethylene (HDPE) demand as an example:

• If China had been like the rest of the developing world, its HDPE demand between 1990 and 2022 would have been 119m tonnes lower.
• But the temporary support to China’s demand from a youthful population and the debt bubble is over.
• This means that China’s HDPE demand growth could go negative as China becomes more like a normal developing economy. In the scenario we present, its HDPE demand in 2023-2040 could be a cumulative 97m tonnes lower than the ICIS base case forecast.

Remodelling your company’s approach to China is as important as building a sustainability strategy.

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.