BLOG: Trade war or no trade war, these are the market fundamentals that won’t change

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

I could present a dozen charts such as the main one in today’s post on polypropylene (PP) — for example on polyethylene (PE), ethylene, propylene and styrene—and the patterns would be similar though, of course, the numbers would differ.

During the pandemic, while demand dipped in many places, China’s PP consumption rose—from 7% growth in 2019 to 9% in 2020, then stayed strong at 7% in 2021. The same trend played out across other chemicals and polymers.

This was the “China in, China out” story: Rising imports of feedstocks to make finished goods that lockdown-affected, cash-rich Westerners were snapping up, backed by stimulus.

Margins climbed—not just from demand, but also from refinery feedstock shortages as fuel demand dropped and refinery rates were cut.

But 2022 marked a shift. As ICIS Data and Analytics illustrates, multiple headwinds kicked in: The Evergrande Turning Point, China’s constantly deteriorating demographics, and a China petrochemicals self-sufficiency drive dating back to 2014.

Focusing on China’s PP self-sufficiency and exports:

• China’s PP capacity as a percentage of domestic demand is expected to surge from 89% in 2014 to 134% by 2028.
• In 2020, China’s PP exports were around 500,000 tonnes. In 2023 they reached 1.3m tonnes and climbed to 2.4m tonnes in 2024.
• ICIS data suggests China’s exports in 2025 could reach 3.1m tonnes.
• On current trends, China’s exports to ASEAN could exceed 1 million tonnes to ASEAN in 2025 versus less than 900,000 tonnes in 2024.

The trade war? Hard to say if it’s moved the needle. These structural trends were in motion long before it began—and they’ll likely outlast it too.

Sentiment swings (as seen since April’s “Liberation Day”) will keep influencing prices and buying patterns, but the fundamentals remain.

The Chemicals Supercycle is over. What comes next? That’s the big question.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.