China’s polymer market faces years of slow growth
on December 11, 2012

China PE Dec12.pngChina’s important polyethylene market (PE) showed little sign of any major upturn in October. Trade data from Global Trade Information Services shows:

• Demand was up just 4% versus 2010 levels
• Production was up 3%, as China’s refinery operating rates slowed
• Imports were up 8%, and exports up 57%

These figures are virtually unchanged over the past few months.

Yet as fellow-blogger John Richardson noted last week, some in the industry still seem to assume we are about to see a repeat of China’s 2008-10 panic stimulus measures. They thus ignore the policy statements being made by the new leadership about the need for slower growth. The official GDP target to 2020 is now just 7%, compared to an achieved 10.5% per annum over the past decade.

Equally, it is clear that domestic consumption is the key priority, not exports. This means the 1bn Chinese (89%) with incomes between $2-$20/day will be the main focus. Only 4% of the population has incomes over this amount. So their needs will be for very basic and affordable products. Anyone waiting for a return to 2009’s boom is thus likely to be waiting for a very long time.

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