SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.
Prices for polyethylene (PE) imports into China rose last week, raising hopes that the market had finally bottomed out.
But consider the long-term context. Despite last week’s rebound, commodity cost spreads remain surprisingly low:
- China’s HDPE injection grade price allocated to naphtha feedstock cost was only $206/ton between Jan 1 and Sept 23, 2022. The previous lowest annual spreads since the beginning of our assessments in 1990 were $288/tonne in 2002. The differences between 1990 and 2021 averaged $496/tonne. Patterns are similar in other PE grades.
Period. It’s history. Until or unless spreads return to their long-term averages, markets for PE and other chemicals and polymers in China will remain at historic lows, the deepest we’ve seen in 25 years of tracking industry.
The slightly positive news is that China’s HDPE import demand and outlook for the year 2022 recovered slightly in August compared to July. But this was probably due to seasonal factors that may soon disappear.
And, unfortunately, and we hate to say it, the outlook for next year is not good.
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.