INSIGHT: China attracts petrochemical exports as global demand sags; inventories rising
SINGAPORE (ICIS)–China’s petrochemical
industry faces yet another challenge – rising
inventories and congestion at ports – as global
supply far exceeds demand with the country’s
own exports hit hard by the fallout of the
Demand for finished goods from two of China’s
traditional export destinations, the US and
Europe, has shrunk as their wilted economies
are slowly trying to recover.
The same condition applies to other regions,
including Asia, where countries are at
different levels of lockdowns to prevent the
spread of the deadly coronavirus that has
claimed nearly 300,000 lives and infected more
than 4m people worldwide.
With demand poor elsewhere in the world, China
– which emerged from a pandemic-induced
lockdown much earlier than the others – has
become the favorite destination for global
Freight talks in Asia are dominated by
China-bound requirements this week, with robust
demand for cargoes out of southeast Asian and
Middle Eastern ports.
“Almost all May tonnage space has been taken
up, and there are still many cargoes awaiting
placement within the month,” a ship broker
Asian and Middle Eastern refiners have sold
actively in the last month diverse products
such as benzene and paraxylene (PX) to
China-based customers, market players said.
But influx of imports threatens to overwhelm
storage in China.
“We have seen and will see constantly inventory
rise of many commodities in China,” said Ann
Sun, analyst at ICIS Asia Petchem Analytics.
“It’s much more obvious for the solid
chemicals, polymers and synthetic rubbers,
because of easier storage conditions compared
to liquids,” she added.
Sellers are not keen to offload cargoes at
prices lower than their cost, and will wait to
recoup their investments, Sun said.
China’s benzene imports are rising, causing an
inventory build-up, which is expected to peak
in June, with huge volumes expected to arrive
Market players remained worried although demand
is slightly improving.
As of 8 May, inventories at shore tanks along
east China rose by 7.3% week on week to 199,000