Exports are the main factor driving polyolefin demand in 2021

In 2020, the demand for polyolefins will grow more than expected, largely due to the inflow of overseas orders. The factors affecting polyolefin demand in 2021 are more complex, and exports are still a more important aspect. The author below analyzes possible changes in the overseas economic environment to predict polyolefin exports.

　　The impact of the epidemic on polyolefin exports

　　 After the outbreak of the epidemic, the total domestic demand was suppressed, and the demand for epidemic prevention increased explosively. Later, with the advancement of domestic resumption of work and production and the spread of foreign epidemics, epidemic prevention demand and optional consumption formed a seesaw effect. Overseas epidemic prevention demand stimulated the export of medical and epidemic prevention materials, and domestic epidemic prevention demand declined while optional demand gradually recovered. By the third quarter, overseas optional demand has risen, and exports of epidemic prevention materials have dropped significantly.

Based on a complete industrial chain and a good epidemic prevention effect, my country is forming a supply substitute for many countries and regions. In 2020, my country's polyolefin trade will account for a rapid increase in global trade, from an average of 14% in recent years to 17%. Exports throughout the year It is expected to achieve positive growth.

　　 The downstream demand of polyolefins in 2020 will be greatly affected by exports, which are mainly reflected in the exports of epidemic prevention materials, household appliances, packaging materials and plastic products. The export of masks alone has driven the growth of nearly one million tons of domestic demand for PP fiber materials. From May to July, the export growth rate of anti-epidemic materials reached 7% year-on-year; the export growth rate of household appliances is expected to increase by 12.2% year-on-year. The export performance of plastic products is even brighter, and the annual export growth rate is expected to reach 70%. Based on the demand structure of synthetic resins, the increase in exports drove the demand for PP and PE to grow by 4.6 million tons during the year, equivalent to a 6%-7% apparent demand growth rate.

　　 A qualitative deduction for future exports

　　 The core factor affecting exports in 2021 is the degree of control of overseas epidemics. The corresponding main changes are the continuity of supply substitution, the degree of overseas economic recovery and the demand for epidemic prevention materials. It is certain that the supply substitution of "Made in China" will still be effective in 2021, but with the prevention and control of the epidemic and the recovery of production capacity in various countries, the demand for epidemic prevention will decrease and the degree of supply substitution will be weakened. In general, my country's export share in global trade The proportion of will drop.

　　 Based on the time when the epidemic is under control, qualitative deductions can be made for different situations.

Scenario 1: Vaccines were fully used in developed economies in the first quarter, and epidemics in Europe and the United States were basically under control from the end of the second quarter to the beginning of the third quarter. The use of vaccines in emerging economies lags behind that of developed economies, causing demand to rebound faster than supply. In the first half of the year, domestic and foreign exports were good. In the second half of the year, the substitution effect weakened and the export growth rate fell. The annual export growth rate is expected to be 8%-9%. Among them, the first quarter maintained positive growth compared to the previous quarter, the second and third quarters turned to negative growth, and in the fourth quarter benefited from the growth of global demand, exports turned positive again.

　　 Situation 2: Vaccine promotion is not as expected, overseas demand has not recovered as expected, and production capacity has not recovered as expected. This has a relatively limited impact on my country's exports. The total export volume is expected to be basically stable, but the growth rate may drop to 6%.

　　The impact of export changes on demand

　　 Regardless of the deduction, what is certain is that there will eventually be a point in the future when the vaccine will be used on a large scale, and economic activity will then jump to a relatively normal level. From the perspective of vaccine research and development and promotion progress, this time point has a great probability of appearing in 2021. If you are optimistic, it will be as early as the second quarter. The impact of overseas economic activities in 2021 on domestic demand cannot be ignored.

　　 Back to the polyolefin market, after the general promotion of vaccines, the demand for epidemic prevention will fall off a cliff. The decline in the amount of masks is equivalent to the apparent demand for PP, which is expected to decrease by 2%-3%. Because vaccine promotion is phased and country-specific, it is conservatively estimated that it will affect 1.5%-2% of polypropylene demand in the short term. Over time, this part of the demand will decrease in the second half of 2021. The demand for plastic products is relatively rigid. Before the economic recovery of emerging economies, the export boom of plastic products continued to improve. However, due to the base effect, the annual export growth rate will decline, which is expected to be 16%-23%. The demand for home appliances corresponds to the cycle of overseas replenishment and real estate. Due to the durable properties of home appliances, some of the demand has already been fulfilled in 2020. The export growth rate of home appliances in 2021 is likely to be slower than in the second half of 2020.

　　In terms of total volume, the author has made a rough estimate. In 2021, the apparent demand for domestic polyolefins will be driven by exports at 5.5%-7.5%.