BLOG: Record levels of oversupply and the “Doublespeak” of the old market language

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

Global polyolefins markets are such that the old phrases we use have become “Doublespeak”, hiding real meanings.

For example, recent mentions of “tight markets” on the Red Sea crisis and a wave of shutdowns should be read as “slightly less long markets”.

Stick with the data which always gives you the true perspective:

• Global polyethylene (PE) capacity exceeding demand is forecast to average 26m tonnes a year in 2024-2030, according to the ICIS Supply & Demand Database. This compares with just 7m tonnes a year in 1993-2023 (1993 marked the start of “China’s economic miracle”).
• Global polypropylene (PP) capacity exceeding demand is forecast to average 24m tonnes a year in 2024-2030 versus 6m tonnes a year in 1993-2023.

So far in 2024, average NEA PE integrated variable cost margins have fallen to minus 27 under the blog’s new margins index, a record low.

NEA integrated naphtha-based variable cost PP margins have so far this year been at minus 28 in another new index, equalling the previous record low in 2022.

The average China CFR PE price spread – weighted for the different grades – over CFR Japan naphtha costs has fallen to just $73/tonne so far this year, the lowest since our price assessments began in 1993.

And while you stick with the data, remember this essential context: China’s economy is undergoing a long-term structural slowdown.

Get used to it and come to us for advice about what you should do next.

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.