BLOG: The US is winning in China in today’s HDPE world but what about tomorrow?

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

The world as it stands today tells us that US doing extremely well in the key China HDPE import market. Using trade data and ICIS price benchmarks:

• In 2023 over 2022, US sales turnover in soared by $500m as its exports in tonnes to China also increased. In January-June 2024 over the same period last year, its turnover was up by another $106m.
• Meanwhile in 2023 over 2022 as their shipments to China dipped – and because of lower pricing – Iran’s turnover was down by $468m, Saudi Arabia by $449m, the UAE by $412m and South Korea by $176m.
• But the January-June 2024 data show the UAE and South Korea clawing back some ground.

“In H1 2024, US [total] PE exports were 46.5% of total sales and operating rates above 90% – a far cry from 21% in 2017 when operating rates were also much lower in the mid-80% range,” wrote my colleague Joe Chang in a15 August ICIS news article.

This suggests that the US, because of its feedstock advantages, gained sales turnover in markets other than just China in H1 2024 – and in the other grades of PE.

The comprehensive nature of ICIS price benchmark and trade data means that it is possible to produce charts like the ones in today’s post for other countries and regions such as Europe, Latin America, Africa, Turkey and India.

But this familiar world of trade flows driven by feedstock costs is rapidly changing.

If the US-China geopolitical split continues, this raises the question of where China will in future source most of its chemicals import volumes.

Demographics will also shape demand, and so trade flows, in China and elsewhere.

A later blog post will discuss demographic analysis which suggests that China’s population in 2020 could have been 130-250m lower than the 1.42bn official number.  This would obviously have major implications for historic and future chemicals demand in China.

But perhaps China’s cap on refinery capacity from 2028 onwards, due to the electrification of vehicles, will limit its capacity growth, thereby creating a bigger opportunity for exporters.

Geopolitics, demographics, debts and sustainability will, I believe, be the new defining shapers of chemicals and polymers trade flows. The world as it stands today, represented by most of the analysis in today’s post, is coming to an end.

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.