NEW YORK (ICIS)--China’s crackdown on pollution and ban on imported waste plastics will create a tailwind for the global polyolefins market, the CEO of LyondellBasell said on Monday.
“Certainly we’re seeing recycling plants being shut down and demand for recycled plastics down significantly, so virgin polymer demand is generally increasing. Directionally, it bodes well for the cycle, and we’re seeing prices respond,” said Bob Patel, CEO of LyondellBasell, in an interview with ICIS.
“We think this will play out more prominently in the first and second quarter of 2018 as regulations go into effect,” he added.
China plans to ban the import of certain waste plastics, along with other waste materials, by the end of 2017. This includes waste and scrap of ethylene polymers (such as polyethylene), styrene polymers, vinyl chloride polymers (polyvinyl chloride), and polyethylene terephthalate (PET).
China’s crackdown on pollution is also expected to slow the pace of coal-to-olefins (CTO) plants, said Patel.
These CTO plants typically have downstream polyethylene (PE) and polypropylene (PP) units.
Plans for a number of new naphtha crackers in China, mostly by non-traditional petrochemical players, is not a source for concern, he noted.
“It bears watching, but I don’t think these will all come at one time. And for PE, it won’t change the import needs long term. We see China requiring significant imports for the foreseeable future,” said Patel.
And new crackers being planned in China to run on imported US ethane are not economical at today’s oil prices, he said.
“If a producer in China wanted to build, a naphtha cracker would be more economical to build – and also because of the need for the co-products,” said Patel.
“Most forecasts suggest an oil/natural gas ratio in the mid-to-upper teens range while today we are above 20x. The economics become more compelling to import ethane if the ratio rises over 40x, like what we saw in 2013 and 2014,” he added.
Interview article by Joseph Chang