Robust demand growth in China helping drive domestic capacity investments in plastics

22-Apr-14

A robust demand for consumer products, housing and durable goods in China, which includes electronics, appliances, construction materials and autos, combined with an improving economy there, is driving increased domestic demand for plastics and synthetic rubbers to produce these goods. “In just the next five years, from 2013 to 2018, China is going to add 9 mln metric tons (MMT) of domestic polyethylene capacity alone, which is significant,” said Nick Vafiadis, senior director, global olefins and plastics at IHS Chemical. “Equally significant is the fact that much of this new production capacity will be quite competitive on a cash-cost basis due to advances in coal-to-olefins technologies.” According to IHS, during the period 2000 to 2020, China will grow its basic chemicals capacity production (which includes benzene, chlorine, methanol, propylene and ethanol), by nearly 170 MMT. “In other words, China will add 47% of the estimated global total additions expected for basic chemical production during the period,” the agency said. “The two next largest producing countries for expected capacity additions in basic chemicals during the same period are Saudi Arabia, at 7% capacity additions, followed by the U.S. at 6%.