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October 14, 2024Global Polyolefins Market Snapshot
The global economy remained fragile through 2023, with a generally slow recovery getting underway in some regions in the second half of the year, and some major polyolefin growth drivers such as China and Turkey remaining very weak. Following the chaotic exit from the strict COVID lockdowns in late 2022, the Chinese economy remained hobbled by the debt crisis in the construction industry, and weak demand for exported goods. Turkey was affected by a return of its hyperinflation issues, and many countries around the world faced demand constraints due to high inflation and borrowing costs.
The sanctions imposed on Russia led to substitution of imported goods with domestic equivalents and supported relatively robust polyolefin demand as a result. Energy cost pressures eased in the European Union but did little to stimulate consumption.
State recovery funding plans have been led by the United States and the European Union. President Biden’s three-trillion-dollar recovery plans prioritise massive infrastructure investment in the early phases, accompanied by tax credits for families and other measures likely to increase employment and spending. The Inflation Reduction Act was brought into action in 2022 by the Biden Administration aiming to curb inflation with a focus on domestic energy production, lower drug pricing and reducing the federal government budget deficit. The European Union has proposed a more modest €800 million of recovery and resilience spending plans. The concept of resilience is somewhat nuanced, but centres on reforms to enable the industry and economy of member states to react to changing circumstances. Some immediate economic benefit is expected, but the focus is more on the longer term.
The outlook for 2024 is for a gradual recovery, albeit with China still largely absent from the growth story as corporate debt and losses continue to dampen near term prospects. Inflation and interest rates are however declining. The economic stimulus measures being introduced in several countries appear to be benefitting the automotive sector more than construction and record global temperatures and the resulting water management issues are underpinning plastics use in agricultural uses. The economy remains close to the bottom of the cycle, with the potential for several years of accelerating growth, although fears of recession also continue to be voiced in some areas.
Global demand for all polyolefins was 207 million tons in 2023, an increase of nearly 3 percent from 2022. The global economy continued to struggle with inflationary and cost-of-living pressures through 2023, although these problems eased, and growth resumed progressively into 2024.
Demand growth in North America and Western Europe remained well below trend levels and increased by only 1.5 percent and 0.1 percent respectively. Consumption in Russia has benefited from the sanctions affecting some finished product imports, while consumption growth in the Middle East was effectively halted by the combined effects of ongoing inflationary environment and the developing conflict in Israel and neighbouring countries.
Despite some major economic and debt-related issues consumption growth in China hit 5.6 percent in 2023 as the country rapidly emerged from strict COVID lockdowns towards the end of 2022. The growth picture across the rest of Asis was mixed, with generally low activity in Northeast Asia, and some higher levels of growth in India and the ASEAN countries. The closure of some capacity in Australia may weaken some key consumers and entrain a decrease in some demand into manufactured goods.
LDPE is expected to lose market share as LLDPE continues to take market share in the film market while recycling pressures in North America and Europe put pressure on virgin resin volumes. Similar concerns are evident for the other grades of polyolefins but strong economic growth and lack of legislation in the largest Asia Pacific markets means that strong growth over the forecast is still expected.
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Market Analytics: Polyolefins - 2024
This report provides analysis and forecasts to 2050 of supply and demand of the global polyolefins markets, including low density polyethylene (LDPE), linear low density polyethylene (LLDPE), high density polyethylene (HDPE) and polypropylene. This analysis identifies the issues shaping the industry as well as provide detailed demand breakdown by end-use and supply, demand and net trade data for 40 countries.
About Us - NexantECA, the Energy and Chemicals Advisory company is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms. Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies and economics, NexantECA provides solutions that our clients have relied upon for over 50 years.
