Polyethylene and polypropylene production surged in January-June 2010 in China

Polyethylene (PE) and polypropylene (PP) production surged in the period of January-June 2010 in China, amid robust imports and declining demand growth, according to the Shanghai-based commodity information service, CBI, as reported in ICIS. In January-June, apparent demand growth (domestic production plus imports) for polyolefins was 20%, while actual demand growth (minus stock building) was no higher than 10%. Hopes of pricing having bottomed-out seem a little premature - especially as Asian cracker run rates are reported to still be at 90-100%. The graph below shows the steep increase in polyolefin production as new Chinese capacity came on-stream.

Domestic production was up by 30% with total polyolefin imports rising by only 1%. 2009 saw imports surge in China, reflecting an exceptionally strong market, as PE demand growth was 30.3% and PP 26%. These extraordinary increases were the result of a temporary boost given to demand by re-stocking, decline in recycling and huge and unsustainable government economic stimulus. Clearly, growth in bank lending in China was signaled to be reduced as well as restrictions introduced since Jan 2010 have successfully cooled-down the real-estate sector. Despite very strong imports in the context of higher local production, overseas shipments have fallen for three consecutive months since they peaked in March - a clear indication of inventory indigestion. Low-density PE (LDPE) imports fell to 91,000 tons in June from 116,000 tons in May, linear-low density PE (LLDPE) shipments slipped to 151,000 tons from 162,000 tons, High-density PE (HDPE) imports declined to 245,000 tons from 267,000 tons, while PP imports, rose slightly to 303,000 tons from 292,000 tons. This suggests that a long-term decline in propylene availability could have helped to prop up the market slightly.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha