China’s Polyethylene (PE) Imports Dip in May, New Capacities Lengthen Domestic Supplies

Polyethylene (PE) imports in China have tumbled by more than 30 per cent on y-o-y basis in May, to their lowest since 2018. As per import data for the month of May,  Low-density polyethylene (LDPE) imports fell by 15.5% over the same period last year to 221.5 thousand tonnes, while High-density polyethylene (HDPE) imports dropped by 32%. The largest drop was noted in import volumes of Linear low-density polyethylene (LLDPE) which stood around 358.5 thousand tonnes, showing 38.5% fall from May last year.

The recent dip in import volumes has been attributed to lesser reliance of China over PE imports as several new capacities have turned operational in Q2 with many more expected by early Q3. Lianyungang Petrochemical, a subsidiary of Zhejiang Satellite Petrochemical, and Huatai Shengfu has commissioned its new 400 KTPA HDPE and 400 KTPA LLDPE/HDPE swing plants respectively in late May while Lanzhou Changqing's 400 KTPA HDPE and 400 KTPA HDPE/LLDPE units are scheduled to be operational in June. Zhejiang Petrochemical's 450 KTPA HDPE/LLDPE and 350 KTPA HDPE units are expected to come online in July. Shandong Luqing in North China is also planning to start its new 400 KTPA LLDPE plant in July. Moreover, China's Sinopec-SK Wuhan Petrochemical JV is planning to start testing its production at its new High-Density Polyethylene (HDPE) plant in Wuhan, China in July. This new plant has HDPE production capacity of 300 KTPA.

China’s PE demand has been already affected by the resurgence of COVID-19 infections in Guangzhou which has forced the concerned authorities to impose logistic restrictions in cargoes going in and out of Guangdong, which controls nearly 24% of China’s exports and 19% of its imports. Since mid-May, the Chinese polymer industry has already been grappling with market uncertainties after nearly 17 provinces of South China were forced to cut production rates after the government imposed restrictions on the industrial power consumption with the arrival of the summer season. This further hit the consumption of several key polymers such as Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC) etc. in Guangdong, which is the industrial hub in Southern China, engaged in producing various products such as toys, textiles, cars despite being home to several other downstream petrochemical end user industries.

As per ChemAnalyst, the impact of improved supplies and less demand can be clearly seen in the current Polyethylene prices in China. FOB Qingdao LLDPE prices are hovering around $1220/mt , while HDPE (Blow Moulding grade) prices have fallen by $110/mt since mid-May to $1215/mt-1210/mt FOB Qingdao in mid-June.