Chinese PE growth in 2013 to be low or negative, driven by overall increase in GDP; cost-advantaged global producers still expected to have profit with flat PE growth, and additional PE capacity slated to come on stream

Allison Oesterle

June 7, 2013 (ICIS Chemical Business (CBNB Abstracts) ) – Reports say that the growth of polyethylene (PE) demand in China will be bleak or negative in 2013. The overall increase in GDP will probably result to the reduction of PE growth. It is believed that China can no longer be the growth engine of the world because the government aimed to eliminate the corruption, decrease the property bubble and slow down the economy. Even if China has a flat PE growth, cost-advantaged global producers still make income. It is also expected that additional PE capacity will come onstream. The economic slowdown of China affects the economies in Southeast Asia, and in Northeast Asia, because these regions are heavily reliant on trade with China. For example, Taiwan has stated that its year-on-year 1Q 2013 GDP growth had dropped to just 1.5%. A bar chart, entitled global integrated HDPE variable margins, shows Northeast Asia and Northwest Europe integrated HDPE variable margins with naphtha and US integrated HDPE variable margins with ethane in $/tonne from 2000 to 2013. Original Source: ICIS Chemical Business, http://www.icis.com/, Copyright Reed Business Information Limited 2013.

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