BLOG: China’s PP exports dip, but only temporary respite for other exporters

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SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

Let’s start, for a change, with some good news: China’s polypropylene (PP) exports have fallen every month since April this year due to weaker net overseas earnings.

Between April and August, as overseas prices fell, as my latest PP Injection Quality Index shows, prices in selected overseas markets moved closer to those in China. What applies to injection grade PP applies to other grades of PP.

But in September and October, as details of the release slip – including a separate analysis of India and Turkey’s price trends versus China – overseas premiums rose slightly.

And based on what we think is every reasonable demand for PP in China and every local operating scenario for 2023, China is expected to become a net exporter of PP for the first time in history.

This would be a remarkable turnaround because as recently as 2021, China accounted for 42% of total global PP net imports among countries and regions that imported more than they exported.

Next year, battleground countries are expected to be what ICIS forecasts will be the remaining large net PP import markets, in descending order of size, Turkey, Africa, Indonesia, l India, Europe, Pakistan and Vietnam.

As container freight rates continue to decline due to global economic weakness, what seems likely is this: the record price premiums of PP for injection overseas over the past 22 months will decline much closer from their longer-term averages.

India’s price premium from November 2002 to December 2020 over China averaged only $36/tonne, but increased to $210/tonne from January 2021 to October 2022. Turkey from July 2016 to December 2020 was $53/ton. Between January 2021 and October 2022, it was $389/tonne.

Once overseas price premiums over China fall to long-term averages, this could form the bottom of the market. Then we can start thinking about recovery.

Editor’s Note: This blog post is an opinion piece. The opinions expressed are those of the author and do not necessarily represent those of CIHI.

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