.png)
“Moderation is a fatal thing; nothing succeeds like excess”
Oscar Wilde
When production meets the requirement that is the best thing. However, when production or existence of something surpasses a required limit, it can be one of the trickiest things to manage. In the global market one of the most convenient ways to absorb any country’s overproduction is to float it in the international market. The Chinese have proven themselves to be the best exporter and this has also been their strategy to rapid development. They are largely the best exporter of Telephones, Vehicles, Computers, Plastics, Integrated Circuits, Furniture etc.
Recently due to sustainability awareness the consumption of hazardous things has reduced as people want to save the mother earth. But China’s plastic boom is an emerging problem. Parts of China is observing the expansion in plastic production in spite of the restraints. After steel and solar panels, plastic will experience spilling over into the global market. On a global platform, the demand for plastics has come down drastically but companies have kept producing it, causing the industrial excess.
China’s plastic boom has metamorphosed the global plastic industry. On the one hand the rivals are slowing down due to environmental issues, on the other hand China’s petrochemical industry is coming out very strong. Where a quarter of global ethylene capacity is at the verge of closure, China has continued to add more. Between 2019 and 2024 the plastic production of China has been equal to that of Europe, Japan and South Korea together. According to the International Energy Agency (IEA) Chinese have doubled their production of PDH to that of global production. This was majorly done in China due to cheap land, fiscal perks and low monitoring of the government. It created so many domestic jobs and investments too.
The recent trouble faced by the producers is to cut down the production. The PDH plants are forced to come down to 50% capacity which was 70% last year and was usually functional at 80-85%. This happened due to less demand and subsequently less supply. Irrespective of this, 9 new PDH plants are expected to become functional by 2025. The major chunk of the production is expected to be absorbed by the overseas market. China is already a net exporter of plastic used in food containers and packing goods. It supplies these items majorly to Nigeria, Vietnam and India. The overproduction will cause major trade surplus and later more waste.
China always used the strategy to take major market share by burning enough cash and be the first in the industry. However, this strategy doesn’t seem to be working for the plastic industry and soon it might collapse. Right now, the plastic boom is like an inflated balloon which might get pricked soon, leaving the people in the industry clueless. Sustainable practices and green innovation should be accepted and practiced before it’s too late.
Thank you.
Regards,
Kautilya, IBS Mumbai.
Comments