China’s HDPE Self-Sufficiency to Exceed 50%

By Wang Ying, The Transportation & Sales Centre of Tianjin Petrochemical Co., Ltd.

Demand

Demand for high-density polyethylene (HDPE) comes mainly from makers of blow molding hollow products, films, pipes, injection molding products and electric cables. Of that, demand from films, blow molding hollow products and pipes is bigger, each accounts for over 20% of the total demand and demand in making injection molding products and drawing products accounts for over 10% respectively (see Figure 1). HDPE is the biggest variety in consumption among polyethylene (PE) varieties, accounting for 42.83% of total PE consumption. The apparent consumption of HDPE in China was 10.28 million tons in 2016, an increase of 2.1% over 2015 (see Table 1 for details).
Demand for HDPE is expected to reach 12.427 million tons in 2020.

Supply

There were no new HDPE units in China in 2016. China’s capacity to produce HDPE remained 6.04 million t/a, accounting for 37.2% of PE capacity. Output was 4.211 million tons, slightly higher than in 2015. The main reason for the meager increase was two large-scale overhauls conducted by some producers. Production scheduling of low-pressure products in full-density polyethylene units also affected the output of HDPE to a certain extent (see Figure 2).
In 2016, coal to olefin (CTO) enterprises increased the production of some HDPE brands such as blow molding 5502 and draw molding 4009. To increase profits and enhance competitiveness, CTO enterprises will be more aggressive in R&D for other coal-based HDPE products this year.
As most PE varieties produced in CTO units are medium/low-end products, these enterprises will gradually ocuppy mid-/low-end products market. PetroChina and Sinopec are more active in R&D for high-end products. China’s supply pattern of PE will change considerably with the upgrading of CTO capacity. Table 2 shows the new PE projects planned for construction in China in the next four years.
HDPE capacity in China will likely exceed 9.07 million t/a in 2020, with self-sufficiency exceeding 53%.

Import & export

Due to inadequate capacity and increasing demand for high-end PE products in China, nearly half of the market demand still needs to be satisfied by imports today. In 2016, the export volume of HDPE was 164.3 kt, an increase of 6.76% over the previous year. Compared with LDPE and LLDPE capacity, however, the new HDPE capacity in China is small, and the export amount of HDPE is less than LDPE and LLDPE.
The total import amount of HDPE in China was around 5.2768 million tons in 2016, an increase of around 148.3 kt over the 5.1285 million tons imported in the previous year. The Middle East remained the major import source, providing around 60% of the total. The amounts imported from the Far East and Southeast Asia respectively held second place and third place. North American exports of HDPE to China increased, owing to capacity expansion there (see Figure 3). The average price of imported HDPE was around US$1 136/t in 2016, a drop of US$124/t from US$1 260/t in 2015 and the lowest of the past seven years.

Table 1   China’s apparent consumption & export of HDPE, 2013-2016 (kt)

Year    2013    2014    2015    2016
Export volume    111.7    157.1    153.9    164.3
Apparent consumption    8 555.9    8 060.4    10 023.9    10 280.3


Prices

The prices of HDPE injection molding products fluctuated considerably during 2015-2016. It can be seen from Figure 4 that the price difference between these two years was quite big in the second quarter and the fourth quarter. The average price was lower in 2016 than in 2015, declining 5.03%. The main factors in the decline were as follows. New CTO capacity was commissioned in China in recent years and started to take market share. Coal-based products were mostly low-priced, pulling the overall price level down.      

Table 2   New PE projects planned for China, next 4 years

Company    Variety    Capacity (kt/a)    Date for startup    Production process
Qinghai Damei Coal Industry Co., Ltd.     PE    300    2017    CTO
CNOOC and Shell Petrochemical Co., Ltd. second phase    HDPE    400    2017    -
Shanxi Coking Coal Group Co., Ltd.    PE    300    2017    CTO
Qinghai Salt Lake Industry Group Co., Ltd.    PE    500    Planned to be in 2017    CTO
Jiutai Energy Group Inner Mongolia Co., Ltd.    Full-density polyethylene    250    Early 2017    CTO
Shenhua Ningxia Coal Industry Group Co., Ltd.    PE    430    Second quarter of 2017    CTO
Zhong’an United Coal Chemical Co., Ltd.    PE    350    2017 or likely to be pigeonholed    CTO
Shenhua Baotou Coal Chemical Industry Co., Ltd. second phase    PE    300    Likely to be pigeonholed    -
Datong Coal Mine Group Co., Ltd.    PE    300    To be fixed or likely to be pigeonholed    CTO
Xinjiang Shengwo Energy Development Co., Ltd.    PE    400    Planned to be completed in 2017 and put on stream in 2018    -
Sinopec Guizhou Zhijin New Energy Chemical Base    PE    300    2018    -
Sinochem Quanzhou Petrochemical Co., Ltd.    HDPE    400    2019    -
Hainan Yangpu Ethylene Project    HDPE    350    2019    -
China Power Investment Corporation    Full-density polyethylene    200    2020    -