CHINA’S POLYETHYLENE (PE) market has performed in a very mixed fashion so far in 2023, as the above chart tells us.
The annualised January-March 2023 data suggest a 3% fall in high-density PE (HDPE) full-year demand over 2022, a 3% in increase in low-density PE (LDPE) demand and a 4% increase in linear-low density PE (LLDPE) consumption.
BECAUSE the old certainties of strong demand growth in China and elsewhere are over, sustainability must be at the core of new petrochemicals growth models.
China’s PP net exports could be more than 2m tonnes in both 2024 and 2025. This would likely make China the fourth biggest exporter in Asia and the Middle East.
Early data suggest China PE demand growth in 2023 will follow the trend since 2021 of much, much lower growth.
The average China PE spread between 1 January and 17 March this year was just $290, the lowest since our assessments began.
Between 2000 and 2021, before last year’s collapse, the annual spread averaged $532/tonne. This means that until spreads increase by 83% from their current levels, there will have been no recovery..
STRONG upside PP demand growth scenarios for the rest of the world might still not enough to cancel out negative growth in China
A SCENARIO-BASED approach is essential to understand US PE exports in 2023, based on non-plant economic factors
China’s cumulative HDPE demand under the downside scenario would be 97m tonnes lower than our base case. in the above chart
During this downturn, razor-like focus on fluctuating netbacks and supply and demand among all the different countries and regions will allow producers to ensure that they don’t make product for markets where there is no demand, while ensuring that they take maximum advantage of many brief periods of stronger demand and pricing.
Capacity exceeding demand is forecast to reach 218m tonnes this year from a 1990-2022 annual average of 76m tonnes.
