BLOG: China PX net annual average imports may fall to 700,000 tonnes in 2024-2030

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: Only a few people thought that China would reach self-sufficiency in purified terephthalic acid (PTA). I was among the few. Now China is a major PTA exporter.

This followed China swinging from being the world’s biggest net importer of polyester fibres and polyethylene terephthalate (PET) resins (bottle and film grade) to being the biggest net exporter.

Paraxylene (PX) could be the next shoe to drop as today’s post discusses.

Given China’s total domination of global PX net imports – and the concentration of major PX exports in just a small number of countries and companies – the potential disruption to the global business is huge.

The ICIS Base Case assumes China’s PX demand growth will average 1% per annum in 2024-2030 with the local operating rate at 82%.

Such an outcome would lead to China’s net PX imports at annual average of 7.4m tonnes in 2024-2030. This would compare with 2023 net imports of 9.1m tonnes.

Downside Scenario 1 sees demand growth the same as in the base case.

But under Downside Scenario 1, I raise the local operating rate to 88%, the same as the 1993-2023 average. I also add 6.2m tonnes/year to China’s capacity, which comprises unconfirmed plants in our database.

Downside 1 would result in net imports dropping to a 2024-2030 annual average of just 1.5m tonnes/year.

Downside Scenario 2 again sees demand growth the same as in the base case, an operating rate of 90% and 6.2m tonnes/year of unconfirmed capacity Net imports would fall to an annual average of just 700,000 tonnes a year.

As an important 26 February 2024 Financial Times article explores, China continues to build free-trade agreements with Belt & Road Initiative (BRI) and non-BRI member countries as a hedge against growing geopolitical differences with the West.

We could thus see a significant shift in trading patterns as more Chinese apparel and non-apparel production moves offshore to these countries, with the overseas plants fed by China-made polyester fibres.

China could thus maintain its dominance of the global polyester value chain via this offshoring process, thereby compensating for its rising labour costs.

Offshoring to the developing world may also enable China to make up for any lost exports of finished polyester-products to the West due to increased trade tensions.

This shift in downstream investments and trade flows could provide economic justification for just about complete PX and mono-ethylene glycols (MEG) self-sufficiency, which will be the subject of a future post.

These are the only two missing pieces in China’s polyester jigsaw puzzle.

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.