VINACHEM

The further surge in oil prices threatens more lost PE and PP demand and weaker margins. But perhaps, as the ICIS analyst Ajay Parmar discusses, relief could come from higher OPEC production and a renewed Iran nuclear deal. But this might take several more months.

Meanwhile, polyolefins producers need a razor-like focus on assessing which end-use markets are most at risk, leading to changes in the ratio of grades produced.

Any lost European PE and PP production from reduced Russian oil supply could provide exporters with bigger opportunities. So, Russia might struggle to export its PE and PP. It has become a bigger exporter over the last three years because of capacity expansions

Perhaps Russian can export more to China. Maybe not because of a reluctance of banks to open letters of credit for Russian suppliers and cutbacks in container routes.

Amidst all this other noise, we must not forget China’s rising PE and PP self-sufficiency and how this will make it more difficult for exporters everywhere. Also critical to remember is that China is undergoing a long-term economic slowdown, although watch out for short term policy measures that could boost growth.

And don’t lose sight of the implications of the four megatrends – geopolitics, demographics, sustainability and the pandemic – both in the short and long term.

Geopolitics are restricting energy supply which may, in the in short term, slow the push to Net Zero and the use of more recycled plastics as supply security seems likely to be the No 1 concern.

But certainly not in the long term because of again geopolitics and Net Zero. Renewable energy and recycling are “local-for-local” businesses, free of the imports that are being disrupted by the Russia invasion.  - ICIS-