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China to be principal driver for global PE and PP demand to 2020, PVC to continue growing

China to be principal driver for global PE and PP demand to 2020, PVC to continue growing

29-Jun-09
Techno - commercial information on plastics Industry - News on Plastics Industry - Plastemart.com
 
China To Be Principal Driver For Global Polyethylene And Polypropylene Demand To 2020, Pvc To Continue Growing

China to be principal driver for global PE and PP demand to 2020, PVC to continue growing

 

The Chinese polyethylene market size was US$13,865 mln in 2008 and is forecast to grow by more than 8%, accounting for nearly 17% of the global polyethylene demand in 2020, as per a report by Global Markets Direct. China has emerged as the principal manufacturing and export location for low value plastic products in the world due to low cost manpower and significant government support. The rapid increase in downstream processing capacity additions, primarily geared towards export markets, will be the main driver of polyethylene and polypropylene demand in the future. With over 40% of the demand dependent on imports, China will continue to remain the largest importer of polyethylene in the world in spite of the many polyethylene capacity additions expected to come on-stream in the next few years. The Middle East region will see more than 7 mln tons of polyethylene capacity additions in the next few years. With over 30% of the demand dependent on imports, China will continue to remain the largest importer of polypropylene in the world despite the many polypropylene capacity additions expected to come on-stream in the next few years. The Chinese polypropylene market size was US$14,439 mln in 2008 and is forecast to grow by more than 10%, accounting for 41% of the global polypropylene demand in 2020.
Production of polypropylene and polyethylene in most countries will be unable to compete with the Middle East production as feedstock costs of the Middle East producers are barely 20% of the cost of feedstock available to Asian and European producers. The Middle Eastern countries, in their need to diversify from dependence on oil revenues, support the growth of petrochemical industries to add value to their exports and also to generate employment for local citizens. The Middle East region will see more than 3 million tons of polypropylene capacity additions in the next few years. Accounting for more than 50% of the global planned PE and PP capacity additions, the Middle East region will emerge as the largest exporter of PP and PE in the world.
A new market study from Ceresana Research shows that PVC can expect to see continued growth. As one of the oldest and most used products of the plastics industry, PVC came under attack 20 years ago by environmentalist groups. After numerous scientific investigations and improvement measures, the industry calmed the situation down: The environmental aspects of this durable and fireproof material are now often looked upon positively, the relatively minimal need for oil is also considered to be advantageous. In 2008, the PVC world market reached a volume of 34 mln tons, whereas in the year 2000 demand had barely amounted to 24 mln tons. However, the 5% annual rate of growth seen in the past will probably not continue. Nevertheless, Ceresana Research expects global PVC demand to increase by an average of 2% pa, despite the precarious financial crisis. The comprehensive study explains through individual regions and countries, why PVC demand is forecasted to total more than 40 million tons by the year 2016.  
While Middle Eastern nations are implementing enormous expansions in production capacity for many other plastics, such as polypropylene and polyethylene (HDPE, LDPE, LLDPE), with PVC they are not able to profit as much from their abundance of raw materials. This is because PVC consists of only 43% of the petroleum/natural gas derivative ethylene. PVC is mostly made up of chlorine, which can be obtained in a multitude of regions from the extensive supply of salt. PVC is particularly interesting to other world regions for this very reason.
The majority of PVC manufacturers are located in China , whereby these often represent small, aged acetylene-based factories. Nevertheless, an increased number of modern production facilities with capacities of 400,000 tons or more are being constructed throughout the People's Republic. Correspondingly, the trade balance is also changing: China is constantly becoming less dependent upon imports, and by 2009 PVC export amounts are expected to surpass import totals. PVC manufacturers in India are profiting from rising domestic demand. In contrast, the United States is dealing with excess capacity: Production capacity decreases in the amount of 2 mln tons are anticipated over the next several years, because otherwise no economical degree of efficiency will be reached. Of the nine primary application areas, majority of global PVC demand currently originates from building construction and civil engineering, that is to say demand for pipes (38%) and for window profiles (20%). Other important areas of application include films and sheeting, cable insulation, flooring, and shoes, as well as medical products, such as intravenous drip lines. However, substantial differences exist between the various regions. Demand for windows is rising considerably in Russia , for example, while in Asia pipe production is playing a vital role for PVC.

 
 
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