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Competition set to heat up in European PE markets in 2022

by Esra Ersöz - eersoz@chemorbis.com
  • 23/12/2021 (13:00)
ChemOrbis Production News Pro suggests a slightly more than 8 million tons scheduled to come onstream in 2021 globally for the three products of PE, namely LDPE, LLDPE and HDPE. Around 41% of these new PE capacities were set in China, followed by 23% in South Korea and 15% in the US.

As it is the case in PP, China is not expected to be a net exporter given its robust buying appetite and relatively smaller capacity additions for this product. China will continue to be a major PE buyer despite the new capacities coming in 2021 and 2022; however, its imports will definitely shrink to some extent, causing global suppliers to lose market share in the world’s largest customer.

According to ChemOrbis Import Statistics, China’s PE imports already declined 20% in January-October 2021 on a yearly basis. This slump is expected to be larger next year. That is to say, global suppliers are seeking alternative routes to shift their exports.

Saudi Arabia shifts focus to West Europe for PE exports

China’s major PE suppliers are in the Middle East, which are listed as Saudi Arabia, Iran, the UAE and Qatar. All suffered losses in their exports to China in 2021. Saudi Arabia, which has the capability to export more than 9 million tons of PE in a year, faced a 22% slump in its exports to China during Q1-Q3 this year.

Even though China still formed Saudi Arabia’s 20% of overall exports and Singapore by 14%, they appear to have ramped up efforts to sell to alternative destinations given China’s reduced demand for imports.

Even outpacing Turkey, a regular destination for Saudi PE, Belgium stands out in the fourth place of the list for Saudi exports, according to the statistics, showing a 50% yearly increase in Q1-Q3. Total exports to Belgium for the full year of 2021 is expected to be larger as they must have speeded up sales in Q4 to deplete stocks, which may push Belgium’s place to the third place in the list.

Belgium is a hub for West Europe as imports get distributed from the major ports in Antwerp.

The US is back in the game

The US is indeed the major PE supplier for the world on the heels of its newly built capacities, having the capability to export more than 10 million tons. However, its performance for 2021 lagged far behind expectations as outages crimped the supply chain constantly. Exports in January-October 2021 slumped 17% on year, with the US only raising exports to nearby destinations including Canada, Mexico and Brazil.

Statistics show a slight slide of 3% in US PE exports to Belgium, which is in line with the overall slump, although Belgium still stood as the third major destination with more than 655,000 tons after Mexico and Canada. PE exports were up 11% to Spain and by 9% to the UK on year whereas down by 21% to Italy.

US PE film offers have started to emerge more often lately in Europe, which is the region offering by far the most attractive netback. This suggests that the US may have compensated its loss to its exports to Europe in Q4 by ramping up sales. Indeed, European players expect the pressure to mount particularly in Q1 2022, unless the US production is hit by another weather event.

S Korea will also join the party

South Korea, as the fourth or fifth largest supplier of PE to China, also faced a 15% slump in yearly exports and shifted its focus first to Vietnam. Along with its new capacities, South Korea will be able to export around 3 million tons of PE by the end of this year.

South Korea’s third major market for export PE, after China and Vietnam, became Belgium with a yearly increase of 66%, followed by Russia with a yearly increase of 41%. Exports to Italy stood in 6th place, showing a substantial increase of 165% on a yearly basis. That is to say, South Korea has ramped up exports to Europe conspicuously. Overall exports to Europe are expected to be much higher in 2022, needless to say.

Competition to heat up in Europe

Statistics give us clear evidence that Europe will be a major target market for PE suppliers from the Middle East, the US and South Korea in 2022. Although China will stay as their first buyer, they will be wrestling for sales to compensate for their losses in the China market.

The US will continue to relieve stock pressure primarily in North and South America while the priority will be Vietnam for South Korea. Yet, their second alternative will definitely be Europe after their nearby routes. Middle Eastern suppliers may also continue to step up efforts to conduct more share in the European market, even before Turkey.

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