Global research firm ICIS is expecting major overcapacities in polyethylene and polypropylene resins beginning this year.
Between 2024 and 2030, global PE overcapacity will average just over 57 billion pounds, according to Houston-based ICIS. For PP, overcapacity will average almost 53 billion pounds in that time frame.
By comparison, PE overcapacity averaged about 15 billion pounds per year from 1993-2023, with PP overcapacity at about 13 billion pounds.
The main driver behind these huge overcapacity predictions is lower-than-expected demand from the Chinese market, according to senior analyst John Richardson.
"Longer-term data continue to tell us that we face all-time levels of oversupply," he said in a recent research note. "The global oversupply crisis centers on China … and China of course really, really matters because it is by far the biggest driver of global demand."
China's petrochemicals demand had been expected to continue to grow at 6-8 percent per year, Richardson added, but that country's demographics and debt now have him expecting Chinese demand growth of 1-3 percent per year for those materials.
The drop in expected demand "has resulted in far too much global capacity that was added to serve China growth that isn't going to happen," he said. "In every discussion over short-term fluctuations in supply, this is the essential context that must not be forgotten."
Richardson added in a separate research note that the global petrochemicals market "must prepare for the possibility" that China is close to self-sufficiency in high, low and linear low density PE — as well as PET feedstocks paraxylene and monoethylene glycol — by 2030. China currently is a net importer of those materials.