BLOG: China 2024 PP exports could reach 2.6m tonnes as markets turn more complex

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: China’s polypropylene (PP) exports in 2024, based on the January-May trends, could reach 2.6m tonnes. That would be double the level of 2023.

And as exports surge, China’s self-sufficiency in PP looks set to see a similar dramatic increase. As recently as 2019, China’s PP net imports (imports minus exports) totalled 4.8m tonnes. If the January-May 2024 again continued, we would see full-year net imports of just 900,000 tonnes.

Don’t say I didn’t warn you. In September 2021, the blog started to flag up the declines in Chinese PP demand growth combined with the surge in local capacity that created the very real prospect of China becoming a net exporter.

And don’t assume that if China’s exports won’t remain in lower value homopolymer grades. China is said to be tripling its number of grades as it broadens its licensing of technologies.

But in this ever-more muddle world, now that the Petrochemicals Supercycle is over, what is described above is just one scenario.

In the short term, rising container freight rates might limit Chinese exports over the next few months. Or at the very least, we could see China’s exports focused more on southeast Asia because of higher freight rates to other destinations such as south Asia, South America and Africa.

Another feature of a PP world turned upside down is that since 2020, China’s PP exports have been sent to a far wider range of destinations.

We must also consider the impact of rising protectionism on China’s exports both in the short -and long-term.

Confused? You should be, as this is the only sensible response.

How do we see through the muddle? What recent history teaches us is that to understand petrochemicals markets, you must follow debts, demographics and geopolitics.

Equally important, now that the Petrochemical Supercycle is over, are the effects of sustainability and climate change on demand and trade flows. The old ways of looking at markets no longer work.

In the absence of a 100% accurate crystal ball, and with all these variables in play, the only sensible approach is broader and deeper scenario planning.

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.