China Petrochemicals Report Q4 2011
Includes 3 FREE quarterly updates
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 seven months of the year, the output volume of ethylene rose 16.9% y-o-y, to 9.16mn tonnes, plastic in primary forms was up 9.7% y-o-y, to 26.58mn tonnes, chemical fibres grew 16.2% y-o-y, to 19.07mn tonnes, and plastic products grew 19.0% y-o-y, to 29.11mn tonnes. 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 imports paint a slightly more subdued picture of growth. 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 low growth over H211 and into H112. As such, our outlook is more pessimistic than in the previous quarter when we 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 6.2% y-o-y in volume although they increased 8% y-o-y in value in the first seven months of the year, while exports of plastic products grew 5.9% in volume and 21.6% 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 and the upgrading of 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.
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 seven months of the year, the output volume of ethylene rose 16.9% y-o-y, to 9.16mn tonnes, plastic in primary forms was up 9.7% y-o-y, to 26.58mn tonnes, chemical fibres grew 16.2% y-o-y, to 19.07mn tonnes, and plastic products grew 19.0% y-o-y, to 29.11mn tonnes. 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 imports paint a slightly more subdued picture of growth. 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 low growth over H211 and into H112. As such, our outlook is more pessimistic than in the previous quarter when we 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 6.2% y-o-y in volume although they increased 8% y-o-y in value in the first seven months of the year, while exports of plastic products grew 5.9% in volume and 21.6% 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 and the upgrading of 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.
Contents
Executive SummarySWOT Analysis
China Petrochemicals Industry SWOT
China Political SWOT
China Economic SWOT
China Business Environment SWOT
Table: World Ethylene Production By Country, 2010 And 2015 (‘000 tonnes capacity)
Global Oil Products Price Outlook
Table: Oil Product Price Assumptions, Q410-Q411 (US$/bbl)
Table: Oil Product Price Data And Forecasts, 2008-2015 (US$/bbl)
Emerging Asia Petrochemicals Overview
China Market Overview
Table: China’s Petrochemicals Sector – HDPE Capacity
Table: China’s Petrochemicals Sector – LDPE Capacity
Table: China’s Petrochemicals Sector – LLDPE Capacity
Table: China’s Petrochemicals Sector – PP Capacity
Table: China’s Petrochemicals Sector – Cracker Capacity
Table: China’s Petrochemicals Sector – PVC Capacity
Table: China’s Petrochemicals Sector PS Capacity
Energy Inefficiencies And Bottlenecks
Production
Table: China’s Supply And Demand Volumes Of Major Petrochemical Products
Table: Cracker Capacity, 2006-2013 (‘000tpa)
Industry Trends And Developments
Table: China’s Petrochemicals Sector – Ethylene Projects
Table: China’s Petrochemicals Sector – PE Projects
Table: China’s Petrochemicals Sector – PP Projects
Table: China’s Petrochemicals Sector – PS Projects
Upstream
Olefins
Intermediates
Integrated Projects
Coal-Based Chemicals
Other Projects
Regulatory Developments
Financial Results
Business Environment
Petrochemicals Business Environment Ratings
Table: Asia Pacific Petrochemicals Business Environment Ratings
China’s Foreign Investment Policy
Foreign Trade Regime
Industry Forecast Scenario
Table: China’s Petrochemicals Sector, 2008-2015 (‘000 tpa, unless otherwise stated)
Macroeconomic Outlook
Company Profiles
China Petroleum & Chemical Corporation (Sinopec)
Glossary of Terms
Table: Glossary Of Petrochemicals Terms
BMI Methodology
How We Generate Our Industry Forecasts
Chemicals And Petrochemicals Industry
Cross Checks
Business Environment Ratings
Table: Petrochemicals Business Environment Indicators And Rationale
Weighting
Table: Weighting Of Indicators Skip to top