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Global appetite for plastics key to China’s polyolefins demand growth in 2020

 Chemical Weekly 2020-06-11

Much of China’s polyolefins demand growth in 2020 will depend on global appetite for plastic end-products, according to an analysis by leading consulting firm, Wood Mackenzie. Wood Mackenzie projects demand growth for Chinese polyethylene and polypropylene at 3.1% and 2.8%, respectively, for 2020 compared to 2019. The assumptions under this ‘shock’ scenario include a prolonged period of global lockdowns, followed by a sharp rise in unemployment, against the backdrop of a global recession with GDP growth at -4.0% this year.

Mr. William Liu, Wood Mackenzie’s senior consultant commented, “Since restarting in mid-February, China’s polyolefins downstream operating rate began to rebound from its trough when the country was forced into lockdown. With demand within China recovering and policies encouraging infrastructure investment, domestic demand for polyolefins is expected to be robust. However, the downstream operation rate stablised in April due to deficient export orders. Almost 60% of Chinese downstream converters had export orders cancelled in April.”

Varying demand trends

Half of polyethylene end-products are film applications used in daily essentials. The global lockdown has stimulated demand for packaging in food delivery and online shopping, translating to substantial demand rebound. Meanwhile, polypropylene demand is weaker as its major application is injection moulding, typically used in automobiles and home appliances, areas which have been hit by coronavirus. Fibre-grade polypropylene demand will be enhanced by the surge in consumption of medical-related products, but will not be able to offset the demand loss in other applications.

These different consumption patterns are also apparent in export markets. Chinese exports of polyolefifi ns end-products fell in the first three months of 2020. Though exports of film increased 7% year-on-year (YoY) in Q1 2020, pipe and profiles exports fell by 12% and 7%, respectively, in the same period. Q1 exports of heavy-duty sacks declined 29% YoY, while exports of TVs decreased by 20% and refrigerators 2%.

“As domestic demand is almost back to normal, the future of China’s polyolefifi ns demand growth in 2020 will rest on the shoulders of export markets,” Mr. Liu noted.

polyolefin

Plastics

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Global appetite for plastics key to China’s polyolefins demand growth in 2020

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