China's 2023-2024 net HDPE imports:

NOBODY IN the petrochemicals industry really knows what’s happening inside any government and how that translates to policies for our industry, no matter how well connected they believe they are.

This makes understanding policy direction essentially a guessing game, based on always imperfect access to policy details and – here is the key – interpretations of how policies might be applied. It is one thing to set a new direction for petrochemicals, but on-the-ground implementation of that direction is almost an entirely separate thing.

This is not me talking, but instead some “wise old hands” who work, or have worked, at very senior levels in petrochemical companies. I’ve known some of these guys (and its mainly guys, unfortunately) for more than 20 years.

China’s percentage shares of global capacities in higher-value products are forecast by ICIS to substantially increase in 2024 compared with 2022.

For example, China’s share of global capacities of acrylic acid esters is expected to jump to 13% in 2024 from 1% in 2022. China’s share of ethylene vinyl acetate (EVA) copolymers, some of which can be high value, is forecast to rise to 17% in 2024 from 8% in 2022.

China 2024-2034 HDPE net imports at either 105m tonnes or 19m tonnes

For illustration purposes only, let me show you what can be done with our data to produce scenarios for China’s net imports of high-density polyethylene (HDPE) in 2024-2034, factoring in the variables detailed above.

These scenarios need refining in the context of, as I said, workshops with the support of our excellent analytics team in China and our global consulting team.

You always need to start with a base case. The ICIS base for China’s net HDPE imports in 2024-2034 assumes that capacity will grow by 5.7m tonnes/year as demand increases by an average of 3% per year with the operating rate averaging 73%.

This would compare with 2000-2023 annual average demand growth of 9% and an operating rate of 93%.

Scenario 2 involves only 3.7m tonnes/year capacity growth between 2024 and 2025. I have also assumed that 1.1m tonnes/year of HDPE plants, each with capacities of less than 100,000 tonnes/year, will shut down from 2025 onwards as part of China’s drive to improve economic efficiency and lower carbon output.

Under Scenario 2, I have kept demand growth and the operating rate unchanged from our base case at 3% and 73% respectively.

Scenario 3 involves the same capacity growth and shutdowns as Scenario 2. But I raise the operating rate to 93% while keeping demand growth at 3%.

Scenario 4 involves the same capacity growth and shutdowns as Scenarios 2 and 3. The operating rate is again 93%, but I lower demand growth to just 1%.

The chart below shows these four different outcomes in terms of net imports for selected years between 2024 and 2034.

Source:John Richardson,ICIS

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