China’s PE market goes ex-growth

China PE Nov11.pngChina has been the motor of the chemical industry’s recovery since the dark days of Q4 2008.

Polyethylene (PE), the largest of the polymer markets, saw volumes rise 53% between then and 2010. But the party has now come to an end, as the government battles the inflation that followed its 2008 decision to double bank lending to 1/3rd of total GDP.

PE demand has actually fallen 0.5% in the January-September period versus 2010, as the chart shows (based on trade data from leading provider Global Trade Information Services). Equally, very different trade patterns are emerging:

• China’s own production continues to rise, up 3%
• Overall imports fell 2%, whilst exports rose 78% to 429kt
• Middle East net imports rose 21% with Saudi Arabia, Iran key suppliers
• SEA net imports rose 15%, with Thailand up 64%
• NEA net imports fell 22% with Taiwan down 28%, S Korea down 11%
• NAFTA net imports fell 42%, with the USA down 44% to 339kt
• EU net imports fell 44% with Benelux down 70%, Germany down 39%

These are quite dramatic changes over such a short time. And they raise a number of important issues:

• China’s production is still rising, so its import needs will be even smaller in future years unless demand growth suddenly recovers
• The ‘strategic corridor’ between the Middle East and China looks set to grow in importance, as China needs energy and the ME needs markets
• SEA, particularly Thailand, is clearly benefiting from its free trade agreement with China
• NEA has few other sales options if its exports to China do not recover

The data also highlights the difficulties facing both the USA and EU. The blog will discuss these in more detail on Wednesday and Thursday.

The above analysis also demonstrates the criticality of trade data in today’s difficult and fast-changing world. As always, the blog will be very happy to help companies better understand the reported data, and maximise their benefit from it.