China's annual PE demand to grow by 8-9% in 2011 down from 19% in 2010

China's annual PE demand is expected to grow by 8-9% in 2011 down from 19% in 2010, but new capacity will reduce imports by up to 14% from the 7.4 mln tons imported in 2009, a sper a report by BMI. BMI believes this will be more at the expense of neighboring Asian states while Qatari suppliers will be less affected and should benefit from low domestic ethane feedstock costs. In terms of polymer capacities, it is estimated that China's polymer market self-sufficiency should approach 75% PE and exceed 100% PP in 2011. Given that Qatari polymer production is oriented towards PE with no PP production, it is unlikely to be affected by China's expected PP surplus. Competitive ethane-based production will lead to the shuttering of undersized petrochemical facilities in places like Japan, North America, and Western Europe with rationalization already under way and likely to accelerate in coming years. BMI also expect a rationalization of the Chinese petrochemicals industry, which will have to address the problems of overstocking, lower than expected demand growth and a drastic increase in volumes from Qatar.
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