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The Chinese petrochemicals market continues to expand at an extraordinary pace, but the growth in capacity is in danger of creating overcapacity in the long term, with the likelihood of significantly reduced margins, according to BMI's latest China Petrochemicals Report.
China's overcapacity of polyvinyl chloride (PVC) is having an impact on global prices. China accounted for 90% of the 5.5mn tonnes per annum (tpa) of added global PVC production capacity between 2004 and 2007, with its proportion of the global total reaching around 30% in 2007. This has led to a market imbalance, with supply now exceeding demand. Demand for PVC has been rising in recent years because of increased consumption from the chemicals and construction industries. Production is thought to have hit 11.5mn tonnes in 2006, compared to demand of around 8mn tonnes. New capacity is also planned over the rest of the decade. In September 2007, construction on the second phase of the 200,000tpa PVC unit of a 400,000tpa PVC project by Xinjiang Tianye Company was started in Shihezi, Xinjiang. The entire project is scheduled for completion in October 2008. Meanwhile, also in September, the Jilantai Salt Chemical Group Company completed and brought on stream its first phase 200,000tpa PVC unit of a 400,000tpa PVC project in the Inner Mongolia Alasan Economic Development Zone. Added capacity will create further problems for PVC prices, particularly with an anticipated moderation in activity in the construction sector, which is the main consumer of PVC.
It is not only the PVC segment that is experiencing rising inventories as supply exceeds demand. China's tight credit market is having a deleterious impact on the petrochemicals sector, with controls on the volume of loans to regulate aggregate demand in the economy and balance international payments. The goal is to prevent the Chinese economy from overheating and stop spiralling inflation levels. Restrictions on credit lines have curtailed trade in petrochemicals in China, with buyers usually depending on letters of credit to make purchases. Locally traded styrenic products and purified terephthalic acid have experienced a sharp decline, leading to a rise in inventories and forcing producers to sell stocks at low prices.
Nevertheless, the scale of overall Chinese demand growth has led to rising petrochemicals prices across Asia, with China sucking in imports to make up for the gap between domestic supply and demand. Despite the government's efforts to increase domestic feedstock supply, the industry is likely to experience margin pressures due to high dependency on foreign sources. With industry production falling short of demand, there is still potential for further growth in petrochemicals. Besides, the petrochemicals market in the country's vast rural areas is still not well developed, and hence remains untapped to a large extent. The China Petroleum and Chemical Industry Association forecast 20% growth in the Chinese petrochemicals market in 2007, which implies local demand of around 59mn tonnes. In the first 10 months of 2007, China produced 8.7mn tonnes of ethylene, an increase of 14.3% y-o-y, which was line with BMI's forecast of 10.75mn tonnes for the year. China's nameplate ethylene capacity is expected to approach 13mn tpa in 2008. It should then come close to competing against Saudi Arabia as the secondlargest producer of ethylene in the world, behind the US.
目录及图表
Chapter 1 - Executive Summary
China Petrochemicals Industry SWOT
China Economic SWOT
China Political SWOT
China Business Environment SWOT
Chapter 2 - Market Overview
Energy Inefficiencies And Bottlenecks
Production
Table: Cracker capacity data and forecasts (000 tpa)
Chapter 3 - Industry Trends and Developments
Projects By Company
Sinopec
PetroChina
CNOOC
CNPC
BP
Possible Foreign Joint Ventures
Other Projects
Regulatory Developments
Financial
Chapter 4 - Industry Forecast Scenario
Table: Chinese Petrochemicals Sector: Historical Data & Forecasts
Chapter 5 - Economic Outlook
Table: China Macroeconomic Data & Forecasts
Foreign Investment Policy
Overview
Chapter 6 - Company Monitor
China Petroleum & Chemical Corporation (Sinopec)
PetroChina
China National Offshore Oil Corporation (CNOOC)
BP
Royal Dutch Shell
ExxonMobil
Chevron
Dow
Chapter 7 - BMI Forecast Modelling
How we generate our industry forecasts
Petrochemicals Industry
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