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China adds big PE capacities in 2023, just the tip of iceberg for 2024

by İrem Sargın -
by Esra Ersöz -
  • 16/03/2023 (16:28)
China has added more than 1.5 million tons of new PE capacity so far this year while there is more to come for the remainder of 2023. This makes up almost half of the capacities planned across the board for this year. What is more, 2024 is set for a much bigger wave of new capacities that will rattle markets.

In 2023, more than 7 million tons of new PE capacity is slated to come onstream globally, with 3.4 million or more than 48% of them coming from China, the latest data from ChemOrbis Production News Pro showed.

In the PE markets, 1.8 million tons of new PE capacity from China already started up in February. PetroChina Guangdong’s two HDPE/LLDPE swing plants with a total capacity of 800,000 tons/year and an HDPE plant with a capacity of 400,000 tons/year started up in late February. Sinopec Hainan also commissioned two HDPE plants with a combined capacity of 600,000 tons/year last month.

In March, Fujian Gulei PC’s new LDPE line with a capacity of 300,000 tons/year and Shandong Jinhai Chemical’s 400,000 tons/year of HDPE line is expected to be started up.
Along with the March start-ups, if not delayed, China will see a total 2.5 million tons of new PE capacities by the end of the first quarter, which forms around three fourth of total capacities to come this year. In other words, ChemOrbis Production Pro suggests that these 2.5 million tons of PE capacity addition is even more than the total capacity that started up back in 2022 and 2021.

For the rest of 2023, Ningxia Baofeng and Qinghai Damei’s new PE plants with a cumulative capacity of 950,000 tons/year are slated to come online in late June. Shortly, if these new capacities come online as scheduled, China will add all its new PE capacities, totaling around 3.4 million tons due for this year, during the first half of 2023.

China to keep cutting more supplies than new start-ups

As can be seen from the ChemOrbis Production News Pro graph below, the ratio of offline capacities to the installed capacities was around 5% to 8% in the past six months while the ratio of new capacities to installed capacities was steady at 1%. That is to say, China cut more supplies than it added in the past six months. Considering that new capacity additions will ramp up in the following six months going as high as 12%, China will definitely make bigger supply cuts either through lower run rates or shutdowns at existing PE capacities to avoid deep-dive in prices amid growing supply glut.

This supply balance can be easily tracked in ChemOrbis Production News Pro tool.
 PE – Capacity – additions – reductions – new – offline

Beware a much bigger wave of new additions in 2024!

Supply management is becoming more and more essential while China is set to add this amount of capacity in 2023. What will the situation be like in 2024 when there is more than 9 million tons of PE planned only in China? Particularly when economic and financial concerns have gummed up China’s growth machine recently? How will PE prices reflect on these developments? Will these big capacities rattle markets or find balance with demand somehow?

Check out for more comprehensive analysis of supply balance in ChemOrbis Production News Pro and their reflection on long-term prices in ChemOrbis Forecast Reports.

 PE – Capacity – additions– new – border=

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