China PE Imports from U.S. Rose
In H1, 2023, China’s total PE import volume reached 6,324.3kt, down 3.68% Y-O-Y. Although the total import volume declined, PE imports from the U.S. increased significantly, and exceeded those from Saudi Arabia, making the U.S. China’s top 1 PE import origin. As of June 2023, China’s PE import volume from the U.S. reached 1,137.5kt, up 181.07% Y-O-Y. Will China’s PE imports from the U.S. continue the uptrend amid bullish macro factors and demand peak season in Q3? What impacts will it bring to China’s PE market?
According to SCI, the PE capacity in the U.S. kept rising from 2020-2023, with a growth rate of 11.57% in 2022. By the end of 2022, the total PE capacity in the U.S. reached 26,996kt/a. In 2023, merely 325kt/a newly added capacity is estimated to be put into production, while China’s PE imports from the U.S. is expected to rise amid the high inflation in Europe and the U.S. and the weakening global economy.
According to SCI, China’s PE import volume from the U.S. trended up notably from 2021 to 2023. As of June 2023, it reached 1,137.5kt, up 181.07% Y-O-Y. The import volume from the U.S. in H1, 2023 was 13.23% higher than that in the whole year of 2022. The import volume of LLDPE saw the largest increment. In the first six months of 2023, China’s LLDPE import volume from the U.S. was 605.7kt, which was 31.45% higher than the total volume in 2022.
In 2023, affected by geopolitics and inflation in Europe and the U.S., global economic development slowed down, and the demand recovery in Europe and the U.S. was under expectation. Therefore, PE prices kept falling from Q2, and LLDPE offers from the U.S. was around $870-900/mt (equaling RMB 7,750-7,950/mt), enlarging the price spread between China and the U.S., so China’s traders showed increasing buying appetites amid more arbitrage opportunities. In the short term, the supply of low-priced imported resources from the U.S. will continue to improve, which will intensify the competition in China’s PE market.
According to SCI, taking LLDPE as an example, the export destinations of LLDPE in the U.S. gradually shifted to China and Southeast Asia. As of April 2023, China became the top 1 LLDPE export destination of the U.S. From 2022, China’s economy recovered rapidly after the global pandemic, so the global trading started to shifted to China’s market. In addition, the high inflation in Europe and the U.S. caused the sluggish demand, while China’s market performed well with positive macro and political adjustments. Therefore, the overseas market had a high expectation on China’s demand recovery, making China the major LLDPE export destination of the U.S.
On the whole, with the upcoming demand peak season in Q3 and bullish macro and political factors in China, China’s PE demand will gradually improve. As the imported PE resources from the U.S. may rise notably from end-August to September, especially general materials of LLDPE, the increasing low-price imported resources will intensify the competition in China’s PE market.
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