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China’s Polyethylene Imports Reach 10 Million Tonnes in 2014 - How the trade patterns have changed in the last 5 years and the future forecast:
With analysts around the world reworking forecast scenarios in response to talks around Iran sanctions relief, a look at China - Iran’s largest potential export market for polyethylene, indicates significant opportunity.
For the first time, China’s polyethylene resin imports reached 10 million tonnes in 2014, increasing an average of 4.8%/year (2009 – 2014). In the past five years, there has been a dramatic change in the countries supplying China’s PE resin converting market. The chart below shows China’s top ten polyethylene resin importing countries. Iran has moved solidly into 2nd place, tripling the amount of exports to China since 2009. Iran supplied 1.57 million tonnes in 2014 which is about 50% of their total production, has increased their exports to China 25% per year since 2009 and was nearly on par with Saudi Arabia’s exports. Saudi Arabia, Iran, UAE, Qatar and Kuwait collectively have increased the Middle East’s PE resin supply to China from 24% in 2009 to 46% in 2014, at 4.7 million tonnes. Other countries in the top ten include South Korea, Thailand, Singapore, Taiwan, United States, and Japan. Thailand and Singapore have also seen supply growth of 25% per year and 11% per year, respectively, due to the new capacities invested in those countries. South Korea and Taiwan have seen flat growth. The United States and Japan export market share has dropped 16% per year and 11% per year, respectively. The United States has fallen from the 2nd largest PE resin supplier to 9th, affected by a limited capacity and yet a growing domestic demand.
According to Peter Callais, VP-Market Studies at Townsend Solutions, “Iran has a large potential of changing the dynamics in the polyethylene resin trade in the future. Iran has 2.8 million tonnes of announced capacity additions that have been delayed mainly due to the sanctions. The easing of sanctions will give Iran more access to financing, technology and exports markets. For example, Iran supplied 250,000 tonnes of polyethylene to Western Europe in 2010. The ban was lifted late in 2013 following breakthroughs in nuclear talks between Iran and the P5+1 group of world powers. In December 2013 and again in February 2014, Iran shipped small quantities (3,000 tonnes in total) of PE to Belgium. If these capacity increases come to fruition, Iran could be a major PE resin supplier in Europe, Africa, Turkey and Asia/Pacific.” The trade forecast is dependent on two major factors: China’s PE demand remaining above 5% per year and China’s ability to bring on-line new PE capacity. Currently, China has announced about 8 million tonnes of new capacity to be added by 2020, equating to an average growth of 8.7% per year. Therefore, one could draw the conclusion that capacity will outpace consumption and PE trade will fall dramatically. However, many of the new capacity projects are dependent on the coal-to-olefins or methanol-to-olefins technology to supply the needed ethylene. In December 2014, China Energy News, reported that China will only complete the construction of approved coal-to-natural-gas plants but will not approve new projects until 2020, aiming to keep its coal-based synthetic natural gas production capacity to 15 billion cubic meters at the end of the decade. Of the 48 project M/CTO projects, 6 are on-stream, 15 are under construction, 5 have been approved for construction, and the remaining 23 are in danger of being delayed or cancelled. The plants that are on-stream are running well below capacity due to environmental or technical issues. It is Townsend’s view that PE exports to China will decrease but at a moderate rate of 3 - 4% per year through 2020.
2014 Global PE Study Available Now
Townsend’s newly published Polyethylene Global Market Study reports global polyethylene (PE) consumption is forecast to grow at an average annual rate of 3.7% per year between 2014 and 2109. By process, film applications will account for approximately 51.5% of that global demand. The % global consumption, volume growth and % CAGR by region of polyethylene is shown below:
Overall, PE consumption is forecast to grow at an average annual rate of 3.7% per year between 2014 and 2019. If current forecast come to fruition, Global PE consumption is forecast to exceed 100,000 KT by 2019. The highest growth rate – 9.0% CAGR – is forecast for India, where economic growth for the next 5 years is expected to be in the 8-9% range. Despite the political uncertainty in large parts of the region, the Middle East is also expected to continue to see steady growth through 2019. The GCC remains strong and focused on innovation, while the Turkish economy has shown remarkable performance with its steady growth, and is expected to continue moving forward. Townsend's Polyethylene Global Market Study contains fresh, new data on global PE consumption, capacity and trade in all major global markets. Download Prospectus
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