After three consecutive years of sustained decline, China’s imports of high-density polyethylene (HDPE) reported a substantial decline in the first half (January – June) of 2023. This decline can be attributed to a significant decrease in domestic demand and a robust increase in production, driven by numerous greenfield and brownfield projects coming on stream. China’s domestic demand has softened over the past three years due to weak economic activity and a slowdown in the local manufacturing sector, following a slump in global consumption.
According to industry sources, China’s HDPE imports for the January-June 2023 period are estimated to be 2.4 million tonnes, which is over 17 percent lower than the 2.9 million tonnes reported in the corresponding period the previous year. Reflecting the trend seen in the first half, China’s HDPE imports for the second half of the calendar year 2022 stood at 5.9 million tonnes, exactly double the figure for the January-June 2022 period. If this trend persists, China’s HDPE imports in the second half of the calendar year 2023 may reach 4.8-5 million tonnes, marking a decrease of over 15 percent from the previous year’s total.
| China’s HDPE imports |
| Calendar year | Volume (million tonnes) |
| 2019 | 7.3 |
| 2020 | 9.5 |
| 2021 | 6.6 |
| 2022 | 5.9 |
| 2022* | 2.9 |
| 2023* | 2.4 |
Source: Industry; *January-June period
In fact, China’s HDPE imports have been declining since reaching a record high of around 9.5 million tonnes in 2020. The world’s second-largest economy had been stockpiling raw materials to produce value-added products and accrue higher economic value. Despite the setback experienced by the global economy in 2020, which witnessed a negative growth of (-)2.8 percent due to the pandemic-induced periodic lockdowns, China managed to report a positive growth in its gross domestic product (GDP) at 2.2 percent. Building on this lower base, the Chinese economy posted achieved an 8.4 percent growth compared to the global GDP growth of 6.3 percent in 2021, as indicated by a recent study from the International Monetary Fund (IMF).
| Leading HDPE exporters to China (‘000 tonnes) |
| Countries | 2022 | 2023 |
| Saudi Arabia | 562.43 | 413.18 |
| United Arab Emirates | 525.78 | 388.52 |
| Iran | 416.16 | 231.17 |
| South Korea | 367.30 | 263.71 |
| Kuwait | 73.33 | 44.93 |
| Taiwan | 71.60 | 54.60 |
| Thailand | 71.47 | 62.97 |
| United States | 61.84 | 268.89 |
| Qatar | 52.91 | 61.76 |
Source: Industry
Use of HDPE and its link with the economyIn terms of volume, HDPE ranks as the third-largest commodity plastic material globally, following polyvinyl chloride (PVC) and polypropylene. The HDPE industry is experiencing growth, with both supply and demand projected to increase significantly in the coming years. Its demand will continue to be primarily driven by Asia, particularly China. Northeast Asia alone is predicted to account for over one-third of the total global consumption by 2027. The recent expansion of the polyethylene industry has led to the relocation of production hubs to regions with feedstock advantages (such as the Middle East) or those with a strong domestic demand base.
Globally, film and sheet applications take the lead in HDPE demand, followed by blow molding applications. These three categories collectively represent more than two-thirds of the global HDPE market, mainly within packaging (excluding blow-molded fuel tanks). Nevertheless, Southeast Asia and China demand is propelled by film and sheet applications, whiles in the United States and Western Europe, it’s driven by blow molding applications for HDPE resins.
HDPE serves as a fundamental material in the manufacturing of plastic bottles and packaging materials used for packing liquid fast-moving consumer goods (FMCG) applications. These materials are intrinsically linked to the country’s economic growth. HDPE finds applications in manufacturing shampoo bottles, toys, chemical containers, milk jugs, recycle bins, grocery bags, and cereal box lines. Furthermore, this plastic material is employed in manufacturing pipes for transporting drinking water, along with culinary and industrial gases. The eco-friendliness of HDPE pipes adds to their appeal, making them more favourable for various applications.
This plastic raw material is consumer-friendly due to its extensive range of applications. HDPE pipes are non-toxic, resistant to chemicals and corrosion, and boast a lengthy lifespan. Premium-quality HDPE pipes from leading manufacturers and suppliers ensure zero leak performance. These pipes exhibit resistance to numerous solvents, chemicals, and acidic environments. Additionally, they are built to withstand impacts, making them an ideal choice for sizable resistant industrial projects. Given its close connection to consumers, the increase in HDPE demand serves as an indicator of the economy’s performance.
Demand recoveryChina’s HDPE demand sentiment has rebounded in the last three months after weak indicators received earlier. With the previous estimates indicating a reduction of around 5 percent, the improvement in the factory output has raised hopes that the full-year demand will remain at a similar level as observed last year. Previously, experts had estimated China’s HDPE demand to decrease by nearly 5 percent at 17 million tonnes for the full calendar year 2023, compared to 17.5 million tonnes reported in the previous year i.e. the calendar year 2022. HDPE accounts for around 45 percent of China’s overall polyethylene demand of an estimated 38.9 million tonnes in the calendar year 2023, versus 38.5 million tonnes in the previous year.
China’s industrial production increased by 3.7 percent year-on-year (yoy) basis in July 2023, slowing from a 4.4 percent rise in June and below economists’ forecasts of 4.4 percent growth, due to softer rises in manufacturing activity and mining output. The government of China showed its manufacturing activity reported a growth of 3.9 percent in July versus 4.8 percent in June, and mining output jumped by 1.3 percent in July versus 1.5 percent in the sequential previous month.
| China PE new capacities in 2023 |
| Company | Grade | Capacity (‘000 tonnes) |
| Nova Chemicals | LLDPE | 500 |
| Guangdong Petrochemicals | LLDPE/HDPE | 800 |
| Guangdong Petrochemicals | HDPE | 400 |
| Sinopec Halnan | LLDPE/HDPE | 300 |
| Sinopec Halnan | HDPE | 300 |
| Shandong Jinhai Petrochemical | HDPE | 400 |
| Ningxia Baofeng Phase III | HDPE | 400 |
| Ningxia Baofeng Phase III | LDPE | 250 |
| China Coal Yulin | HDPE | 350 |
| Tianjin Nangang | LLDPE | 300 |
| Tianjin Nangang | HDPE | 500 |
| Qinghal Damel | LLDPE/HDPE | 300 |
Source: Industry
Some gain some…Despite an overall decline in demand, leading supplier countries such as the United States and Qatar have gained a substantial market share in HDPE exports to China during the January-June 2023 period. For example, the United States reported a more than four-fold increase in the volume of HDPE shipment to China at 268,892 tonnes, claiming the third-largest, in the first half of the current calendar year as against 61,843 tonnes reported in the corresponding period last year.
Similarly, HDPE exports from Qatar surged from 52,911 tonnes in January-June 2022 to 61,759 tonnes in the same period this year. By contrast, countries including Saudi Arabia, United Aran Emirates, and Iran have lost a substantial share in China’s export market due to overall weakness in demand.
| China PE new capacities in 2024-26 |
| Company | Grade | Capacity (‘000 tonnes) |
| Yantal Wanhua Phase II (2024) | HDPE | 300 |
| Tianjin Nangang (2024) | HDPE | 500 |
| Tangshan Xuyang (2024) | HDPE | 500 |
| Sinopec Maoming (2024) | LLDPE/HDPE | 400 |
| Yulongdao Refining & Petrochemical (2025) | HDPE | 400 |
| Yulongdao Refinng & Petrochemical (2025) | LLDPE/HDPE | 500 |
| Huajin United Petrochemical (2026) | HDPE | 350 |
| Huajin United Petrochemical (2026) | LLDPE/HDPE | 450 |
Source: Industry
Increasing domestic capacityChinese producers have been raising HDPE production capacity consistently to achieve self-reliance in this plastic packaging material. In the calendar year 2023, Chinese producers are set to commence around 4 million tonnes of new greenfield and brownfield HDPE production capacity. While Guangdong Petrochemical is set to commence 400,000 tonnes per annum of additional production, Sinopec Hainan is scheduled its 300,000 tonnes per annum of its project this year.
Companies such as Shandong Jinhai Petrochemical and Ningxia Baofeng have also come of the few names that have decided to start HDPE production with additional scheduled capacity this year. However, these additional production facilities are expected to remain under-operated with lower capacity utilization at least this year, which may go up next year. In fact, some of these planned projects may defer actual commencement till the demand situation normalizes.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
