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China Petrochemicals Report Q1 2012
Business Monitor International, Dec 2011, Pages: 80
Business Monitor International's China Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on China's petrochemicals industry.
The Chinese petrochemicals industry will continue to grow, despite slower growth in domestic consumption, as the country becomes increasingly self-reliant up the value chain, according to BMI’s latest China Petrochemicals Report.
In H111, the output value of the Chinese chemical and petroleum industry increased 34.4% y-o-y, to CNY5.32trn (US$826bn). The industry accounted for 13.4% of the country’s total industrial output value. However, the industry is expected to slow down in H211, with the government projecting an annual value of CNY10trn and full-year profits of CNY900bn, up 28.5% y-o-y.
In the first nine months of the year, the output volume of ethylene rose 10.1% y-o-y, to 11.4mn tonnes, though September saw a y-o-y decline of 18.8% of production, continuing a downward trend in the latter half of the year. Plastic in primary forms was up 9.6% y-o-y, to 11.4mn tonnes, chemical fibres grew 16.1% y-o-y, to 25.01mn tonnes, and plastic products grew 19.9% y-o-y, to 38.35mn tonnes, through the first nine months of the year. The moderation in output is related, in part, to the tightening lending conditions, amid government efforts to combat inflation. This situation has primarily affected the construction and automotive sectors, which had made orders on the basis of assumptions of strong growth levels.
Forward-looking metrics, such as the purchasing managers’ indices and raw materials and oil imports, also point to slower overall growth in the second half of 2011, and heading into 2012. Meanwhile, negative growth in vehicle sales suggests the consumer picture may not be as rosy as the headline figures suggest. This subdued outlook will inevitably mean that orders for chemical and petrochemical products will experience lower growth over H211 and into H112. As such, BMIs outlook is more pessimistic than in previous quarters, when BMI anticipated a recovery in H211.
China's annual PE demand is expected to grow by 8-9% in 2011, but new capacity will reduce imports by up to 14% from the 7.4mn tonnes imported in 2009, although this will be more at the expense of neighbouring Asian states, while Middle Eastern suppliers will be unaffected.
According to Chinese customs statistics, the country’s imports of plastics in primary forms declined 3.2% y-o-y in the first ten months of the year, while exports of plastic products grew 6.4% in volume and 23.9% in value over the same period. The trend demonstrates both the slowdown of domestic demand coupled with increased self-sufficiency in plastics.
Under the petrochemical stimulus plan, China aims to boost its annual crude oil processing, fuel output and ethylene output to 405mn tpa, 247.50mn tpa and 15.5mn tpa by the end of 2011. BMI believes that, on the basis of current projects, China will have ethylene capacity of 17.91mn tpa by the end of 2011. Sinopec is strengthening its position as a leading chemicals producer, with 2mn tpa of ethylene capacity added to its operations in 2010, lifting capacity to 9.5mn tpa. It forecasts ethylene capacity of 12-13.5mn tpa by 2015, with three additional refinery and petrochemicals complex planned by 2015. It also has plans to upgrade existing refinery and chemical operations, while eliminating chemical operations with poor profitability. A further surge in capacity is expected in 2016, as a range of coal-to-olefins complexes come onstream.
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