Scope of development of petrochemical sector in China:


  1. China's growing domestic consumption will continue to drive the strong development of petrochemical industry in the next five to ten years.


  1. China's government support to build own petrochemical plants, as they could not wants to rely on the imports for a long time.


  1. In the recession period China's demand almost single-handedly buoyed up petrochemical prices in Asia when the rest of the world was reeling from an economic slump.


  1. There are major petrochemical giants are available such as PetroChina and Sinopec, can do investment of billions of Yuan to accomplishment of satiating the countrys strong enthusiasm for petrochemicals.


  1. Wison is a Shanghai-based company that provides engineering, procurement and construction (EPC) services, as well as commissioning services for refinery, petrochemical and other industrial projects. Wison has intentions to tender for a number of petrochemical projects in China, including the building of BASFs Chongqing crude methylene di-p-phenylene isocyanate (MDI) projects and the construction of a 1m tonne/year cracker of state-owned oil major China National Offshore Corp (CNOOC) in Huizhou.


Being the third largest economy, China still depends onimports for roughly half of its total requirement for the petrochemicalproducts like ethylene and propylene. To speed up its plan and to becomeself-sufficient China Government has implemented motivation plan, which leadsto the de-bottlenecking of the petrochemical industry, also acceleratesexpansion of the domestic refinery and cracker. China needs to build largescale refineries and crackers even under the negative assumption that industrydownstream from ethylene would not manage growth in next coming year.


China's cracker capacity accessed around 9.78 m ton/year in 2006, whichremain unchanged till year 2009. The motivation plan has aroused extensiveoversupply concerns at domestic and export when set against the background ofthe global economic collapse.


For supporting the government motivation plan, chinasindustrialist announced the expansion project of 4.55 m ton in 2009 and 1.40 mton in 2010, with these projects the chinas ethylene capacity reached to 14.33m ton/year in 2009 and 15.73 m ton/year in 2010, which included projects ofSinopec and Petro which were postpone due to shrinking demand and failingprofits in 2008.


Impact of Expansion project


Early in 2008, china imported around 40 percent ofpolyethylene, 74 percent of Mono ethylene glycol and 53 percent of styrene,Imports reduces to 5 percent, 58 percent and 13 percent respectively in year2010. Cracker expansion helps to reduce the dependency on imports for theethylene downstream products.


 

Trend of China's cracker expansion project


Sr. No. Company Project Location 2009 Expansion 2010 Expansion 2011 Expansion Start-up Time
Sinopec (including joint ventures)
1 Fujian United Petrochemical Fujian, South China 800

1H, 2009
2 Shanghai Secco Petrochemical Shanghai, East China 300

Aug, 2009
3 Tianjin Petrochemical Tianjin, North China 1,000

Sep, 2009
4 Zhenhai Refinery and Petrochemical Zhejiang, East China 1,000

Oct, 2009
5 Guangzhou Petrochemical Guangdong, East China

1,000 2010
6 Wuhan Petrochemical Hubei, Middle China

800 2010
PetroChina
1 Dushanzi Petrochemical Xinjiang, Northwest China 1,000

Q1, 2009
2 Panjin Petrochemical Liaoning, Northeast China 450

Oct, 2009
3 Fushun Petrochemical Liaoning, Northeast China
800
2010
4 Sichuan Petrochemical Sichuan, Southwest China

800 2010
5 Daqing Petrochemical Heilongjiang, Northeast China
600
2010
Total new capacity 4,550 1400 2,600


 

Forecasts of China's ethylene demand (kt)


Derivative

Item

2007

2008

2009

2010

Polyethylene (PE)

Equivalent ethylene consumption

7,369

7,129

9,828

11,203

Import reliance

39%

40%

16%

5%

Mono ethylene glycol (MEG)

Equivalent ethylene consumption

1,153

1,156

1,700

1,889

Import reliance

73%

74%

62%

58%

Styrene monomer (SM)

Equivalent ethylene consumption

701

675

1,185

1,254

Import Reliance

54%

53%

17%

13%

Ethylene equivalent consumption of the three Sectors

9,224

8,961

12,713

14,346

Consumption proportion of the three sectors

84%

82%

85%

85%

Total Ethylene consumption

10,937

10,963

14,956

16,878

Ethylene capacity

9,780

9,780

14,330

15,730



Reference: S/Z Intelligence