The region that will bear the brunt of exports in 2024 is Southeast Asia, so Southeast Asia is prioritized in the 2025 outlook. In the regional export ranking in 2024, the first place of LLDPE, LDPE, primary form PP, and block copolymerization is Southeast Asia, in other words, the primary export destination of 4 of the 6 major categories of polyolefin products is Southeast Asia.
Advantages: Southeast Asia is a strip of water with China and has a long history of cooperation. In 1976, ASEAN signed the Treaty of Amity and Cooperation in Southeast Asia to promote permanent peace, friendship and cooperation among the countries in the region, and China formally joined the Treaty on October 8, 2003. Good relations laid the foundation for trade. Second, in Southeast Asia in recent years, with the exception of Vietnam Longshan Petrochemical, few large-scale polyolefin plants have been put into production, and it is expected to remain low in the next few years, which reduces supply concerns, and its demand gap will exist for a long time. Southeast Asia is also the preferred region for the increase of product exports of Chinese merchants, with excellent stability.
Disadvantages: Although Southeast Asia is on good terms with China as a whole, small-scale regional frictions are still inevitable. For many years, China has been committed to promoting the Code of Conduct in the South China Sea to ensure the common interests of all parties. Second, trade protectionism is on the rise around the world, such as Indonesia in early December launched anti-dumping investigations against polypropylene homopolymers from Saudi Arabia, the Philippines, South Korea, Malaysia, China, Singapore, Thailand and Vietnam. The move, designed to protect domestic companies and at the request of domestic companies, does not target China alone, but the main source countries of imports. Although it cannot completely prevent imports, it is inevitable that import prices will be reduced to a certain extent, and China should also be vigilant about anti-dumping investigations in Indonesia in 2025.
We mentioned above that four of the top six categories of polyolefin products are occupied by Southeast Asia, while the remaining two products occupy the first place are Africa, the destination with the largest number of HDPE exports, and Northeast Asia, the destination with the largest number of other forms of PP exports. However, compared with Northeast Asia, Africa occupies the second place of LDPE and block copolymerization. The editors therefore placed Africa second on the list of priority areas.
Advantages: It is well known that China has deep integration of cooperation with Africa, and has repeatedly come to the aid of Africa. China and Africa call it a comprehensive strategic partnership of cooperation, which has a profound basis for friendship. As mentioned above, trade protectionism is on the rise globally, at this point, it is highly likely that Africa will not follow the pace of the West to take such measures against China, and in terms of its own supply and demand situation, it does not support the implementation of such measures at present. Africa's polypropylene production capacity currently stands at 2.21 million tons per year, including an 830,000 tons per year plant in Nigeria that came on stream this year. Polyethylene production capacity of 1.8 million tons/year, of which HDPE total 838,000 tons/year. Compared with the situation in Indonesia, Africa's PP production capacity is only 2.36 times that of Indonesia, but its population is about 5 times that of Indonesia, but it is worth mentioning that Africa's poverty rate is relatively high compared to Indonesia, and consumption power is naturally discounted. But in the long run, it is still a market with great potential.
Disadvantages: The African banking industry is not developed, and settlement methods are limited. There are always two sides to every coin, and Africa's advantages are also its disadvantages, because the future potential still needs time to prove, but the current demand is still limited, as mentioned above there is still insufficient consumption power. And Africa imports more from the Middle East, leaving our country with limited opportunities. Secondly, because of the limited capacity of Africa to deal with plastic waste, over the years, dozens of countries have issued plastic restrictions and bans. At present, a total of 34 countries have issued a ban on single-use plastic bags.
For South America, China mainly exports polypropylene, in the export pattern from January to October this year, South America is located in the second place of primary PP exports, the third place of other forms of PP exports, and the third place of block copolymerization exports. In polypropylene exports are among the top three. It can be seen that South America occupies a position in China's polypropylene exports.
Advantages: South American countries and China have almost no profound contradictions left over from history, China and Brazil in agriculture and green energy cooperation is increasingly close, South America's main partner the United States since Trump came to power to impose tariffs on global goods also caused a certain rift in South America's trade with its trade. The initiative of South American countries to cooperate with our country is also increasing day by day. Secondly, the average market price in South America is higher than the average market price in our country for a long time, and there are large opportunities for regional arbitrage Windows with considerable profits.
Disadvantages: Like Southeast Asia, South America also has trade protectionism, and this year Brazil took the lead in implementing tariffs on imported polyolefin from 12.6% to 20%. Brazil's aim is the same as Indonesia's, to protect its own industry. Secondly, China and Brazil, east and west and the northern and southern hemispheres of the two staggered, a long way, a long ship. It normally takes 25-30 days to travel from the west coast of South America to China, and 30-35 days to travel from the east coast of South America to China. Therefore, the export window is greatly affected by sea freight. The competition is equally strong, led by the United States and Canada, followed by the Middle East and South Korea.
Although the editors list not only the strengths but also the weaknesses of the main export regions, they still list them as the top growth areas of hope. One important reason is based on historical export data from last year and even recent years. The basic data, to some extent, represents the occurrence of facts, and it is actually a long process for essential changes to occur. If the situation is to be reversed within a short period of time, the editor believes that the following conditions must be met:
1) Violent conflicts in the region, including but not limited to the outbreak of a hot war, the rise of trade isolationism and other drastic measures.
2) Large-scale changes in regional supply will reverse supply and demand, but this cannot be completed in a short time. It usually takes a long time from initial production to full circulation of the product in the market.
3) Trade protectionism and tariff barriers are only aimed at China. Unlike the measures in Indonesia and Brazil, if the tariffs are highly targeted only on Chinese goods, rather than on all imports, as Indonesia and Brazil have done this year, then Chinese exports will be dealt a certain blow, and goods will be transferred between regions.
These conditions are actually the most extreme risks to global trade today. Although the above conditions are not fully met at present, global cooperation is still intertwined and should be applied in different directions. But trade protectionism and regional conflicts have actually become more frequent in recent years. Maintenance and progress in export destinations must also be closely monitored for developments and opportunities in other regions.
Post time: Dec-20-2024