To meet the customer’s request, the Tier 1 supplier validated a more sustainable PC/ABS compound against the manufacturer’s stringent standard that could work as a drop-in solution with the injection molding tools and within the tight project schedule.

China’s declining net imports, down from their all-time peak of 9m tonnes in 2020, will increase competition in the other big net import countries and regions. These are detailed below.

Nevertheless, even US producers, who sent just 8% of their HDPE exports to China in 2022, must plan for the worst-case outcome, ie. an entirely elf-sufficient China. This would reduce the size of the global pie for everyone.

To this end, materials supplier Trinseo took up a challenge presented by a leading premium German automaker and developed a polycarbonate/acrylonitrile-butadiene-styrene (PC/ABS) material for interior automotive applications incorporating 30% recycled content. In doing so, the company delivered a solution with 24% less global warming potential compared with an all-prime resin. Approximately 7.000 tonnes of CO2 were saved over the lifetime of the project. To boot, production of the drop-in grade, dubbed Pulse GX50 ECO PC/ABS, required 29% less energy and 22% less water.

Unlike in the case of PP where just 6% of its total exports went to China in 2022, Saudi Arabia is heavily exposed to China, with 23% of its HDPE imports going to China last year.

The ICIS base case would see net imports during the entire forecast period of 2023–2040 totalling 126m tonnes. Downside 1 would see the total at 38m tonnes and Downside 2 just 7m tonnes.

However, don’t get too excited. The reason for the improved outlook was the 16% month-on-month increase in China’s HDPE production in May compared with April.

Let’s next consider the long-term prospects for China’s HDPE imports. The chart below shows three scenarios for China’s net HDPE imports from now until 2040.

In January–June 2023, the CFR China HDPE injection-grade price spread over CFR Japan naphtha feedstock costs was $274/tonne. This is at least an improvement on last year’s $211/tonne. But here’s the thing:

Then we need to go the next level, as I did in the case of PP in my 29 June post. Here is a table for three of the world’s major HDPE exporters. It shows what percentage of their total HDPE exports in 2022 went to their top five destinations.

Spreads are not margins, of course, but spreads have stood the test of time. They remain the single best measure of supply and demand balances.

There is a possibility, of course, that all will be fine with China’s HDPE imports. Perhaps demand growth will be stronger than I assume, and/or capacity growth is below what ICIS forecasts because of efforts to reduce CO2 emissions. The latter theme will be the subject of a future blog post.

I assume that minus 3% demand growth will be the final number for 2023, with a recovery to 2% growth in 2024 and 1% growth in 2025. I have also assumed that the ICIS base case forecasts for capacity additions between 2023 and 2025 will happen.

Trinseo’s Pulse GX50 PC/ABS was used by the Tier partner for the development phase, and the Pulse GX50 ECO PC/ABS with recyclat-containing PC was selected as the more sustainable solution for series production. Trinseo’s Pulse GX50 is widely used for the manufacturing of door panel parts for several existing premium models of the OEM; the selection was approved for use in the development phase of the SUV’s door panel, while the more sustainable version was tested in parallel as a drop-in solution for models using Trinseo’s all-prime material.

The outlook has brightened slightly as the January–April data pointed towards a 4% decline in full-year 2023 HDPE demand over 2022, whereas January–May indicated a 3% decline.

The chart below puts this into a long-term context. It shows the percentages of China’s HDPE capacity over local demand in 2000-2021 and my expectations for 2023–2025.

South & Central America, Asia and Pacific, Africa and Europe are, of course, made up many different countries with varying net import and net export positions. ICIS supplies country-by-country trade flows in the ICIS Supply & Demand Database.

Pulse GX50 ECO PC/ABS is comparable in performance to its all-prime equivalent and comes with strong technical features, including superior flow properties, low temperature ductility, and low density. The backbone of Pulse GX50 ECO is Trinseo Magnum ABS, meaning that it has inherently low volatile organic compounds (VOCs), making it ideal for interior applications.

Stephen has been with PlasticsToday and its preceding publications Modern Plastics and Injection Molding since 1992, throughout this time based in the Asia Pacific region, including stints in Japan, Australia, and his current location Singapore. His current beat focuses on automotive. Stephen is an avid folding bicycle rider, often taking his bike on overseas business trips, and is a proud dachshund owner.

WHEN I HEARD RUMOURS that China’s polyethylene (PE) and polypropylene (PP) markets had bottomed out last week with a big recovery just around the corner, my first reaction was “good luck with that idea”.

As I’ve discussed before, China’s petrochemicals demand in general has grown far too quickly given the size of the country’s population and its per capita income. This was the result of three events — economic liberalisation, a youthful population and the world’s biggest-ever economic stimulus package — that have been consigned to history.

In Downside 1, I therefore take growth down to 1% and leave the operating rate at 76%. Downside 2 again involves 1% growth, but an operating rate of 90% as China pushes hard towards self-sufficiency.

In 2040, this could mean that under our base case, China’s net imports are around 7m tonnes versus some 200,000 tonnes of net exports under Downside 1 and 1m tonnes of net exports under Downside 2.

Support your strategic planning with expert insight on the wider trends impacting markets, from the circular economy and the energy transition to global macroeconomics and chemical overcapacity in China.

One of Trinseo’s Tier 1 partners was approached by its OEM customer in the development phase of a new premium SUV, with the request to change the proposed PC/ABS material for the top roll and support of the vehicle’s doors with a more sustainable grade for series production. This request came as a result of the OEM’s ambitious environmental initiative, which, among other goals, aims to offer a fully-carbon neutral passenger car fleet by 2039.

However, South Korea is in a far worse position than Saudi Arabia, with no less than 49% of its 2022 exports going to China. Southeast Asia (SEA), not including Singapore, was in distant second place at 16%.

Now let us look at what the latest China Customs department data indicate about China’s HDPE net imports in 2023 versus the years going back to 2020.

Then we have the US which is far more diversified as only 8% of its 2022 exports went to China, with Mexico in pole position.

Scenario planning has always been important. But in this increasingly uncertain world, it has become a vital component of business success.

The ICIS base case involves average annual demand growth of 2% and an operating rate of 76%. This would compare with actual average annual demand growth of 10% between 2000 and 2022 and an operating rate of 90%.

We can also assume that some of the 11% of its total exports that it went to Singapore will have probably ended up in China, as Singapore is a major distribution hub.

Materials supplier Trinseo supported a premium German automotive OEM with a recyclate-containing grade that requires 29% less energy and 22% less water to produce.

Testing validated that Pulse GX50 ECO is a drop-in equivalent of its all-prime counterpart, meeting the requirements set by the OEM’s standards and the crash performance on the existing platform, where it was used for the final validation round of the SUV project. Trinseo delivers about four kg of Pulse GX50 ECO PC/ABS for each vehicle.

The ICIS Pricing editors reported that efforts by producers to no longer tolerate very weak margins by holding to firmer offers had met with strong buyer resistance.

In 2022, China accounted for more than 40% of total global net imports among the countries and regions that imported more than they exported.

As the mobility revolution gears up, manufacturers are facing increased challenges. Not only is the development and engineering of hybrid, electric, and autonomous vehicles complex, there’s also constant pressure from regulators to meet economy, safety, and sustainability requirements, along with consumer demand for performance, digital connectivity, and aesthetics. Plastics can play a key role in many ways, from lightweighting and metal replacement to using bio-based feedstocks. Recyclate-containing content in the makeup of a resin is another way to create a solution with a lower footprint without sacrificing material performance.

Some market participants would argue that this signalled a return to the old China of a booming economy. But as I wrote in my 29 June post:

The end-result would be that in 2025, HDPE capacity as a percentage of demand would go over 100% for the first time. In PP, this happened in 2020.

Buy, plan and negotiate more effectively with 18-month price forecasts and analytics. Monitor cost pressures and identify early signs of production shifts.

And look no further than the chart below to understand that we are a long, long way off from a full recovery in one of the grades of PE — high-density PE (HDPE). It is the same story in low-density PE (LDPE) and linear low-density PE (LLDPE).

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