Plastics policies will harm China’s PE imports

Polyethylene (PE) import volumes into China are likely to be impacted by policies announced by the country’s National Development and Reform Commission and the Ministry of Ecology and Environment, which are aimed at restricting the production, sale and use of single-use plastics.

Non-degradable bags will be banned in major Chinese cities by the end of this year, and in all cities and towns by 2022. Markets selling fresh produce, however, will be exempt from the bag ban until 2025.

The restaurant industry will be forced to stop using single-use straws by the end of the year and has been told to reduce the use of single-use plastics items by 30 per cent. Hotels will not be permitted to offer free single-use plastics items by 2025.

William Liu, senior consultant at Wood Mackenzie

William Liu, senior consultant at Wood Mackenzie, said: “This will certainly impact plastics consumption and going forward, the petrochemical industry. PE consumption will be impacted, as it is the main feed to produce bags and packaging films. But as plastics bags/straws are only one application of plastics, it will not have a major impact on the oil industry.

“The plastics ban will impact PE consumption, but as it is first carried out in major cities and only applying to single-use plastics such as supermarkets bags, straws, tableware, hotel disposables, the impact would be limited in 2020.

“But going forward, as the ban rolls out to more cities and substitute materials gain traction, China’s PE consumption will be impacted. China is the largest PE importer in the world. The country consumed more than 33 million tonnes of PE in 2019 of which 40 per cent is imported from producers in the Middle East and other Asian countries. The single-use plastics ban might impact import volume.”

China has already had a scrap ban in place since the start of 2018 and only imported 10,000 tonnes of polyolefin scrap that year and in 2019. This was a drop from three million tonnes in 2017.

As such, any new scrap ban will not have a major impact on polyolefins markets, believes Liu.

Wood Mackenzie last week reported that China’s petrochemical industry is on the start of a downcycle as a supply overhang in the paraxylene market looks set to be joined by similar in the olefins and polyolefins markets.