Europe may end up with net imports of high-density polyethylene (HDPE) as much as 3m tonnes higher than last year, more than compensation for a 2.8m tonne decline in China’s 2022 net imports.
The assumption on Europe is based on the region only being able to replace 25% of the naphtha that it will no longer be buying from Russia, as China’s demand growth falls to minus 3% and it runs its extra 22% of new capacity at quite high operating rates.
We must stress that these calculations, the details of which you can read in the post, only scratch the surface of the complex analysis you must do in order to estimate the shift in trade flows taking place out there.
Other areas that need to be covered include the potential impact on European feedstock availability of reduced purchases of Russian crude – and the risks of power cuts affecting HDPE plants as Europe lowers its dependence on Russian gas.
We also need to consider different outcomes for European HDPE demand as our scenarios only assume one outcome – 2% demand growth over last year.
But no matter what the complexity, this is work that HDPE exporters simply must do as the revenue implications run into hundreds of millions of dollars.
- Source: ICIS-