BLOG: China’s HDPE market weakest since at least 1990


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

Even if you go back to 1990, China’s high-density polyethylene (HDPE) market has never been weaker than it is this year. It takes us right back to 90s Italy and football great John Barnes’ brilliant conclusion to New Order’s World in Motion song for the England team campaign. It was also the year the blog got married.

But seriously, as all the slides in today’s article clearly demonstrate, these are historically difficult times:

  • The latest data suggests that Chinese demand for HDPE will contract by 4% in 2022. It would be the second consecutive year that demand fell by 4%. Every year, from 1990 to 2020, growth has been positive.
  • Net import data from China Customs from January to July suggests net imports for the year 2022 will fall to 5.5 million tonnes from 6.4 million tonnes in 2021.
  • The ICIS estimate of Chinese production in January-July indicates a full-year exploitation rate of 79%. This would set another record as it would be the lowest annual exploitation rate since 1990. The lowest rate since 1990 was 82% in 2015.
  • But despite this apparent producer discipline, spread data indicates that the desired effect is not occurring. The market still appears to be heavily oversupplied.
  • From January 1 to August 26, 2022, embedded variable cost margins based on Northeast Asian naphtha averaged minus $192/tonne. The margins based on the GPL were exactly zero. This compares to average naphtha-based margins of $410/tonne in 2014-2021 and $465/tonne for LPG-based margins.

This kind of integrated data processing will remain so important for many years to come as older business models are retired. They need to be removed because the way forward is not the steady volume growth we’ve all become addicted to. Rather, it is by providing services to customers that sustainability is redefining our industry.

Editor’s Note: This blog post is an opinion piece. The opinions expressed are those of the author and do not necessarily represent those of CIHI.


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