2024 China PE Price to Improve on Recovered Economy
In 2024, China’s PE supply is expected to keep rising with newly added capacity put into production continuously. Meanwhile, the demand in H2 may improve with the recovered economy boosted by economic cycles and favorable policies. Therefore, the market price is likely to show an uptrend in 2024.
In 2024, from the perspective of the macrocycle, it will be a replenishment cycle. Amid the improvement of macro expectations, people’s willingness to consume will increase. Consumption is expected to show an uptrend, but the growth rate is slowing down.
In the future, the consumption structure of China’s PE downstream industries is expected to be similar. The major consumption will come from daily necessities, packaging and other non-durable areas, and the increment will be driven by the increase in the number of new entrants within the industry. PE consumption will grow fastest in special fields such as wires and cables and high-end products, benefiting from the rapid development of new energy in the future. In addition, as the demographic dividend gradually weakens, the pressure on the development of non-durable goods needs to be noted. Meanwhile, based on the cyclical characteristics of macroeconomic development, China’s PE consumption in the future will accelerate first and then slow down. In terms of exports, China will mainly export PE to Southeast Asia, South Asia and parts of the Middle East. However, considering that Chinese-made PE products don’t enjoy cost and price advantages, and they are not highly recognized by overseas markets. Therefore, it is expected that China’s PE export growth rate will be limited.
In 2024, the overall macro environment is expected to gradually improve. Although there is still great uncertainty about the liquidity crunch caused by the Fed’s high interest rates, and the overall environment of China’s foreign trade market may see more pressure. However, China’s policies to stabilize economic growth continue to be vigorous, and outlooks on demand are optimistic. In addition, it will be the inventory replenishment stage of a new round of the inventory cycle, so the overall macro outlooks are optimistic. As for the supply and demand, the demand growth is expected to outpace the supply growth.
On the whole, external uncertainties may be the key driver of commodity prices, and China’s faster demand growth will mainly benefit from its economic recovery. SCI reckons that China’s LLDPE price will average RMB 8,250/mt in 2024.
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