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The senior analyst pointed out that in the first five months of this year, China's polypropylene (PP) imports dropped by 20%, and imports of polyethylene (PE) dropped by 6%. The most notable of these is low-density polyethylene ( LDPE) imports decreased by 36% compared to the same period last year. These figures are surprising because the demand for polyethylene and polypropylene in China has increased by an average of 12.7% and 14.9% respectively in the past 10 years. However, what is less well known is that the growth rate of China's domestic production capacity slightly exceeded the growth rate of demand during the same period.
He believes that the main reason for the deceleration in China's polyolefin market is the high oil price. As oil prices continue to rise, producers place great emphasis on reducing costs to cope with rising resin prices. For example, some companies try to use less resin material in the product and make the plastic bottle wall as thin as possible; some companies reduce the quality standard; others use more recycled plastic in production. In the past two years, China's annual import of recycled plastics has increased by more than 20%. In 2004, the amount of recycled plastics imported by China accounted for 10% of the total national plastic consumption.
Does the above data indicate that the Chinese polyolefin market will no longer be on the rise? The analyst agency expert believes "depending on the level of expectations." Analysts further pointed out that in the future, China's polyolefin market will continue to grow at a relatively gradual but continuous pace. It is expected that the growth rate of polyolefin demand in China from 2005 to 2015 will be 5%-7%/year, which is lower than the growth rate of GDP. One reason for the slowdown in polyolefin growth is the slowdown in the development of China's national economy. On the other hand, after the Beijing 2008 Olympic Games, the demand for plastic products, especially pipes, wires and cables, will be reduced by 20% or more. However, the growth rate of 5% to 7% still means that by 2015, China's polyethylene market will reach 15.7 million to 18.8 million tons, and the polypropylene market will reach 14.5 million to 17.3 million tons. It is expected that the supply and demand gap for polyethylene in China will be about 4 million to 5 million tons in 2015, and the supply and demand gap for polypropylene will be 4 million tons or more. At the same time, the growth rate of polyolefin imports will continue to decline in the next 10 years.
Companies in the Middle East are most likely to beat Asian competitors and gain a dominant share of the Chinese market. At present, most of the polyolefins imported by China come from Asian countries and regions, including South Korea, Japan, Malaysia, India and Singapore. However, the Middle East is expanding its market share and this trend will continue.
The Chinese polyolefin market has been growing rapidly at a double-digit growth rate for the past 10 years. However, such a golden age may be over. This is a prediction made recently by a senior analyst at Chemical Market Resources Inc. on the Chinese market. In 2005, China's polyolefin imports fell for the first time in 10 years. He pointed out that at present, China's polyolefin market has shown signs of sudden braking, and the trend of deceleration will continue.