UNDER all the scenarios, growth set to decline to the low single digits from 10% in 1992-2023.
Asian Chemical Connections
Record levels of oversupply and the “Doublespeak” of the old market language
China CFR PE price spreads hit new record low in 2024
China PP price spreads over naphtha hit new low as the long-term shift in markets continues
China block copolymer and raffia-grade price spreads between 2022 and 26 January this year were 144% lower than their long-term average with injection grade spreads 145% lower.
CFR China PE spreads hit a new record low because of all-time high oversupply
So far in 2024, despite supply tighter than it was in December last year, the average per tonne CFR China PE price spread over CFR Japan naphtha costs has fallen to its lowest annual level since we began our price assessments way back in 1993. 2022 and 2023 were the previous record lows.
China’s demographic crisis and the impact on global PP
If we are to see a repeat of 87% in 2024-2030 (the green line in the chart) and assuming my forecast of 2% demand growth is correct, the increase in global capacity would need to average just 154,000 tonnes/year during each year between 2024 and 2030. This is versus our base case of 4.5m tonnes/year of annual increases.
Global ethylene capacity growth would need to be 90% lower than the ICIS base case for healthy 2024-2030 operating rates
The blue line in the above chart involves annual average capacity growing at just 800,000 tonnes/year in each of the years between 2024 and 2030. This is versus our base case assumption of 7m tonnes/year of capacity growth during each of the years.
China’s 2023-2030 polyolefins demand growth and the new mood music
I think that China’s polyethylene (PE) demand growth averaged 2% across the three grades in 2023. I see this year’s growth at between 1-3%, and at the same levels up until 2030.
The scale of plans to turn oil into petrochemicals may radically reshape this industry
A petrochemicals world dominated by Supermajors, especially those running COTC plants, or one where greater regional cooperation (more on this in later posts) and increased protectionism allow older, smaller and less carbon efficient plants to survive.
The “National Champions” in the New Petrochemicals Landscape
SHORT-TERM tactics should involve maximising returns within regions along with a greater focus on exports anywhere in the world
China self-sufficiency drive expected to accelerate in PE, PP, EG and PX
You might think it impossible for China to reach complete self-sufficiency in PE, PP, EG and PX. History suggests otherwise.
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