By Tan Jie, Research Institute of China Petroleum & Chemical Corporation Maoming Branch
High-density polyethylene, also called low-pressure polyethylene, is widely used in various fields including packaging, agriculture, communication, building and electronics & electric, enjoying a broad prospect for application and development.
Production status
In recent years, several HDPE manufacturing plants were successively constructed and put into use in China, for example: 2021, Heilongjiang HAIGUOLONGYOU Petrochemical Company Limited, Ningbo Hautai Wealthy Polymer Material Limited, Lianyungang Petrochemical Company Limited (Phase1 Unit), Sino-Korea (Wuhan) Petrochemical Company Limited, Zhejiang Petroleum & Chemical Co., Ltd. (Phase2 Unit), PetroChina Dushanzi Petrochemical Co., Ltd. Tarim Ethane-to-Ethylene Unit, PetroChina Lanzhou Yulin Chemical Company Limited and Shandong Shouguang Luqing Petrochemical Company Limited. With construction and use of the units above, the capacity of HDPE of China succeeded in growing from 6 920 000 t/a in 2017 to 13 370 000 t/a in 2021, with an annual growth rate of 14.08% during 2017-2021. The HDPE producers with capacity above 400 000 t/a in China are presented in Table 1.
As new units were constructed and put into use, the distribution of HDPE capacity in China has changed substantially and Eastern China has become the largest producing area, including Shanghai, Shandong, Zhejiang and Jiangsu with capacity of 3790 000 t/a in 2021, about 28.35% of the total. The HDPE capacity of 2021 was mainly distributed in the provinces in Chart1.
Chart 1 Capacity distribution of HDPE in the major provinces and regions in China, 2021
From perspective of sources of ethylene, in 2021, the capacity of HDPE made from oil ethylene, coal-based ethylene, ethane and light hydrocarbon respectively reached 10 002 000 t/a, 1 350 000kt/a, 1 050 000 t/a and 950 000 t/a, taking up 74.94%, 10.10%, 7.85% and 7.11% of total capacity of the country.
Import & export analysis
1. Import
According to customs data, China’s import of HDPE increased year by year at first and then decreased during the period from 2017 to 2021. Due to multiple factors such as reduction of international supplies, high-level of HDPE price, stabilized domestic demand and growing supplies, the import of HDPE was slashed to 6631 000 tons, down by 27.11% year on year. The HDPE import was 2 472 300 tons from Jan to May 2022, down by 14.02% year on year. China’s import of HDPE from 2017 to 2022 is presented in Chart2.
Chart 2 Import of HDPE in China, 2017-2022
(1) Source countries or regions of import
The major source countries or regions of HDPE import of China from 2017 to 2022 are presented in Table 2.
(2) Import trade pattern
In 2021, HDPE imported mainly through general trade and processing with imported materials amounted to 6 002 700 tons, around 90.52% of the total, down by 31.26% year on year. The import volume through general trade was 5 354 100 tons, 80.74% of the total, down by 29.05% year on year and the import volume through processing with imported materials was 648 600 tons, taking up 9.78% of the total, down by 3.32% year on year.
2. Export analysis
2017-2021, the export of HDPE of China experienced great changes: export volume in 2021 was 278 500 tons, growth of 110.98% year on year. From Jan to May 2022, the export volume was 119 100 tons, down by 14.50% year on year.
In 2021, the HDPE made in China was mainly exported to the countries and regions including China Hong Kong, Brazil, Columbia, Germany, Vietnam, Mexico and Peru, totaling 138 400 tons, roughly accounting for 49.69% of China’s total export volume.
In 2021, the export of HDPE of China was primarily general trade, logistics and trade in goods in customs special supervision zones, reaching 222 600 tons, 79.93% of the total and up by 177.9% year on year. The export volume of HDPE through general trade hit 158 300 tons, 56.84% of the total, growth of 237.53% year on year. Meanwhile, the export volume through logistics and trade in goods in customs special supervision zone was 64 300 tons, 23.09% of the total and up by 93.67% year on year.
Consumption status and development prospect
2017-2021, the annual growth rate of apparent consumption of HDPE in China was around 6.37%. Although there was a great boost in HDPE output in 2021, big falling of import in contrast to big export growth jointly led to a major decline in HDPE apparent consumption in 2021, to 16 535 000 tons, down by 7.2% year on year, the self-sufficiency rate of HDPE relevant products hitting 61.58%, up by 23.95% year on year.The supply and demand of HDPE of China 2017-2021 are presented in Chart 3.
Chart 3 Supply and demand of HDPE of China, 2017-2021
In China, HDPE products are mainly applied in film, sheet materials, injection molding, blow molding and pipes among which the first two are the biggest consumption areas where the consumption in 2021 took up 27.5% of the total and injection molding as the second biggest consumption area with 24% of the total.
The HDPE consumption in 2021 was made up with 27.5% of the total by film and sheet, 24% by injection molding products, 17% by pipes, doors and windows, 16% by blow molding products, 5.5% by fibers, 5.5% by wire drawing and 4.5% by other products.
Eastern China, as No.1 area for HDPE consumption in China, took up 30% of the total market share in 2021, dominated by film, injection molding, hollow products, etc. South China, as No 2, consumed 25% of the market share, mainly on the hollow products, injection molding, etc. The third largest area is North China, 19% of the total and mainly on the plastic products such as film and pipes.
With rapid development of transportation industry, the upgrading of supporting infrastructure in urbanization, the growing demand for packaging products and gradual carrying out programs of national subsidy policy for home appliances, China is expected to embrace a steadily increasing demand for HDPE which is estimated to be about 20 000 000 tons till 2026. Pipes will be the area of the fastest growth of HDPE application in the future.
Development tendency and suggestions
1. Development tendency
(1) The capacity is expected to grow continually and the supply structure is expected to change. In the next few years, several enterprises were going to construct or expand HDPE manufacturing units including Zhejiang Petroleum & Chemical Co., Ltd., Sinopec Zhenhai Refining & Chemical Company, Shandong Jinhai Chemical Co., Ltd., PetroChina Guangdong Petrochemical Company, Sinopec Hainan Refining-chemical Company, Lianyungang Petrochemical Co., Ltd., Qinghai Damei Coal Industry Co., Ltd., and Tianjin Bohua Chemical Development Co., Ltd.. The HDPE capacity is estimated to be over 16 000 000 tons if the units can be constructed as planned. With further growth of capacity, optimized energy structure and accelerated industrial transformation and upgrading, the HDPE supply pattern in China will be continually changed. In terms of sources of raw materials, the pattern in which naphtha, coal, methyl alcohol, and light hydrocarbon coexist will be more prominent as naphtha is dominant, and coal and methyl alcohol take less percentage. In terms of producing areas, the emerging capacities cluster in Eastern and South China where Zhejiang and Guangdong are the two provinces with mos of new capaciy.
(2) With the increasing growth of China’s HDPE capacity, the import of HDPE is expected to continually decrease. However, due to the underdevelopment of new technologies and products and severe product homogeneity, China will still depend on importing high-end products from Middle East countries including Saudi Arabia, Iran, United Arab Emirates and Kuwait as well as neighboring countries such as South Korea and Thailand. General trade and processing with imported materials will remain to be the major channels for import trade.
(3) China has witnessed a continual growth of HDPE capacity, but high-end products are expected to be imported because of excessive capacity in low-end profucts. In the future, domestic general HDPE will be involved in a more intensified competition for market prices.
(4) As market economy developed and state-owned enterprise reform deepened, some private enterprises launched mix-ownership reform with state-owned enterprises to forge a giant alliance and consolidate their market shares to better run the enterprises. Sinopec and PetroChina will remain to be taking majority of market shares in the future and be able to exert much influence on the market. However, with advance of refining-chemical programs, private enterprises of large-scale with advanced management, technologies and equipment will gradually own bigger shares of HDPE market.
2. Development suggestions
(1) Enterprises should optimize existing production technologies, improve product quality, and reduce the consumption of energy/materials to realize clean production.
(2) The relevant authorities should take the lead and join with institutions of higher education, scientific research institutions, manufacturing enterprises and downstream users to develop a complete set of HDPE production technologies with China’s full independent intellectual property right so as to get rid of disadvantageous situation of depending on imported production technologies and fundamentally improve overall technological level of HDPE of China.
(3) The enterprises which still plan to construct new HDPE units are suggested delivering thorough market surveys, considering sources of raw materials and demands of downstream users, assessing risks prudently to avoid to be left at a disadvantage in the intense market competition in the future.
(4) Product mix should be readjusted to evade the competition of staple HDPE products. The product development strategies should be implemented through tailing after and replacing the imported products at first, then cultivating and guiding the market to transform, and realize a win-win growth with downstream industries. It is important to learn the marketing and technology services patterns from international first-class competitors to provide better technological services. It is also suggested that overall solutions should be provided for downstream application and high-end market should be explored to match the actual domestic production and alleviate the dependence on imported products.
(5) Close attention should be paid to the production trend of major international HDPE producers to prevent domestic HDPE and relevant industries being negatively affected because of ignorance of possible gap between China and international competitors.
(6) Industrial coordination and rational development should be strengthened to avoid destructive competition. It is necessary to improve application specification to ensure proper application, performance index and quality of downstream products.
(7) It is necessary to positively expand export and raise the popularity of HDPE made in China on the condition that the domestic needs are met in order to accelerate Chinese HDPE industry to develop in a fast and steady way.
