PE and PP demand in China estimated to rise by about 38% in 2009 from a year ago

01-Dec-09

Driven by robust domestic consumption, polyethylene (PE) and polypropylene (PP) demand in China is estimated to rise by as much as 38% in 2009 from a year ago levels as per a report by CBI as reported by ICIS news. High-density polyethylene (HDPE) demand is expected to grow by 38% to around 7 mln tons, demand for linear-low density polyethylene (LLDPE) would rise by 30% to 4.6 mln tons, demand for low-density polyethylene (LDPE) would increase by 20% to 3.4 mln tons, PP demand would grow by 24% to 13 mln tons. Overall PE demand will grow by around 31.5% and PP by about 24%. A drop in demand for recycling material also helped pushed demand to fresh highs, said CBI and a Shanghai-based source with a major polyolefin producer. In 2008 demand for LLDPE fell by 4.5% and PP by 1.4% while demand for LDPE rose by 2.2% and HDPE by 1%. A major factor behind the strong recovery is a big drop in the use of recycled material as virgin material prices seen this year, were too low to justify converters using scrap material. But with the recent price hike, the markets witnessed in September, that the delta between recycled and virgin material was getting very close to its minimum level of US$400/ton. A fall in exports of finished goods - delivered wrapped in plastic film which is shipped back to China for recycling - led to reduced availability of recycled material.