How will China's polyethylene industry tackle overcapacity

Table of contents

• Executive summary
  • Production of specialised PE grades in China is no longer the obvious pivot for producers
  • Background
  • EVA
  • mLLDPE
• China polyethylene muddling through a slowdown with escalating competition
  • With 22 Mt of PE capacity set to be added from 2023 to 2030, China’s operating rate will fall
• Capacity growth in specialty PE grades is faster than in commodity grades
  • Producers are turning to high-end PE derivatives – mLLDPE, POE and EVA – to secure higher margins. EVA is forecast to have the highest capacity growth.
• EVA has experienced the strongest growth since 2018
  • EVA demand has more than doubled over the past six years
• Surging demand from China’s photovoltaic industry has induced EVA demand hike
  • While the first half of 2020s is seeing remarkable PV growth, we forecast negative production growth from 2025
• Global PV module growth is at risk of entering plateau from 2024
  • While first half of 2020s is seeing remarkable PV growth, we forecast negative production growth from 2025
• China EVA industry is facing sharply declining operating rates from 2025
  • The average operating rate of Chinese EVA production is forecast to decline to 55% by 2027
• China mLLDPE highly relies on imports, with limited improvement on domestic production
  • mLLDPE is the second largest category among all PE specialty derivatives in China, next to EVA
• China Domestic mLLDPE Supply Outlook
• China mLLDPE is estimated to have 2.1% CAGR growth till 2030

Tables and charts

This report includes the following images and tables:

China mLLDPE Supply & Demand OutlookChina polyethylene supply outlook 2018-2030China polyethylene capacity growth by category

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