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China Petrochemicals Report Q2 2012 Published : March 2012

No. of Pages : 78

Price:US$1175

Expansionary fiscal policy and product price stabilisation should lead to an improved performance in the Chinese petrochemicals industry in 2012, according to BMI’s latest China Petrochemicals Report. In 2011, BMI estimates that Chinese ethylene output rose around 7.5% to 15.28mn tonnes (slightly below the 15.5mn tonnes targeted by the Chinese government) Primary plastic output was up 9.5% to 47.29mn tonnes and output of plastic products grew 21% to 54.8mn tonnes. With the rate of petrochemical capacity additions slowing from the surge seen in 2009 and 2010, continued Chinese demand growth should support acceleration in global petrochemicals trade and support global cracker operating rates of around 85%. Chinese chemicals growth in 2012 will be similar to levels recorded in 2011 and remain above the rate of GDP growth. However, there are significant downside risks, such as the impact of the European debt crisis and associated economic downturn on Chinese exports, a situation that is unlikely to improve over 2012. This should be mostly offset by domestic demand and exports to higher growth regions, particularly Asia. China is also losing out as a low cost producer and will have to advance higher value downstream production in order to boost chemicals growth. In the immediate future, the main concern for domestic producers will be the price of naphtha, which is influenced by crude prices. BMI believes that, on the basis of current projects, China will have ethylene capacity of 21.56mn tpa by the end of 2012. Sinopec forecasts its ethylene capacity rising to 12-13.5mn tpa by 2015 from around 9.5mn tpa in 2011, with three additional refinery and petrochemicals complexes as well as the upgrading of existing refinery and chemical operations planned by 2015. Meanwhile the company will eliminate chemical operations with poor profitability. Ethylene capacity in China could increase to 31.7mn tpa by 2016, a rise of over 75% compared to 2011. This includes 5.6mn tpa based on coal-to-olefins processes at 10 projects – either under construction or being planned. Six conventional integrated petrochemical complexes will add a further 4.6mn tpa by 2015. A further 5.75mn tpa will be available once other projects are completed in 2016. These include: a 1.5mn tpa methanol-to-olefins facility at Ningxia, which is being planned by Shenhua; CNOOC-Shell JV’s 1mn tpa ethylene complex at Guangdong; two 1mn tpa ethylene plants planned by PetroChina – to be located at Yangzhou and in eastern China; a 1mn tpa ethylene JV at Hainan; Qingdao Petrochemicals’ 1mn tpa ethylene plant at Qingdao; and Dalian Petrochemicals’ 1mn tpa plant at Dalian. In BMI’s Asia Petrochemicals Risk Reward Ratings (RRRs) matrix, China's score is 80.3 points, up 1.3 points since the previous quarter due to an improvement in its petrochemicals ratings. As a result, China rises to first place in BMI's regional rankings, one point ahead of Japan. Although China's petrochemicals market ratings are the highest in Asia, it continues to be weighed down by a relatively poor financial and trade infrastructure, and negative risks specific to the petrochemicals sector; namely its reliance on imported feedstock and overcapacity in some segments. Indeed, while its overall score has risen this quarter, it has been held back by a decline in its long-term financial markets rating. Chinese Petrochemicals Industry Executive Summary . 5 SWOT Analysis . 7 China Petrochemicals Industry SWOT... 7 China Political SWOT ... 8 China Economic SWOT . 9 China Business Environment SWOT 10 Global Petrochemicals Overview . 11


Petrochemicals Market Overview 11 Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 11 Financial Results . 15 Table: Financial Results Of Major Petrochemicals Companies, 2010 15 Global Oil Products Price Outlook .. 16 Emerging Asia Petrochemicals Overview ... 22 China Market Overview .. 28 Table: China’s Petrochemicals Sector – HDPE Capacity ... 28 Table: China’s Petrochemicals Sector – LDPE Capacity 29 Table: China’s Petrochemicals Sector – LLDPE Capacity .. 29 Table: China’s Petrochemicals Sector – PP Capacity . 30 Table: China’s Petrochemicals Sector – Cracker Capacity . 31 Table: China’s Petrochemicals Sector – PVC Capacity .. 32 Table: China’s Petrochemicals Sector PS Capacity 35 Energy Inefficiencies And Bottlenecks . 36 Production ... 37 Table: China’s Supply And Demand Volumes Of Major Petrochemical Products ... 38 Table: Cracker Capacity, 2006-2013 (‘000tpa) ... 39 Industry Trends And Developments 40 Table: China’s Petrochemicals Sector – Ethylene Projects . 41 Table: China’s Petrochemicals Sector – PE Projects .. 41 Table: China’s Petrochemicals Sector – PP Projects .. 42 Table: China’s Petrochemicals Sector – PS Projects .. 43 Upstream . 43 Olefins . 46 Intermediates ... 47 Integrated Projects .. 49 Coal-Based Chemicals . 51 Other Projects .. 52 Regulatory Developments 54 Risk Reward Ratings .. 57 Table: Asia Pacific Petrochemicals Business Environment Ratings 57 China's Foreign Investment Policy .. 59 Foreign Trade Regime . 60 Industry Forecast Scenario ... 61 Table: China’s Petrochemicals Sector, 2008-2016 (‘000 tpa, unless otherwise stated) ... 63 Macroeconomic Outlook ... 64 Table: China – Economic Activity ... 67 Company Profiles ... 68 China Petroleum & Chemical Corporation (Sinopec) . 68 Glossary of Terms .. 72 Table: Glossary Of Petrochemicals Terms .. 72 BMI Methodology ... 73 How We Generate Our Industry Forecasts .. 73 Chemicals And Petrochemicals Industry . 73 Cross Checks ... 74 Business Environment Ratings . 75 Table: Petrochemicals Business Environment Indicators And Rationale . 76 Weighting . 77 Table: Weighting Of Indicators ... 77 Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 11 Table: Financial Results Of Major Petrochemicals Companies, 2010 . 15 Table: China's Petrochemicals Sector – HDPE Capacity . 28 Table: China's Petrochemicals Sector – LDPE Capacity . 29 Table: China's Petrochemicals Sector – LLDPE Capacity . 29 Table: China's Petrochemicals Sector – PP Capacity . 30


Table: China's Petrochemicals Sector – Cracker Capacity . 31 Table: China's Petrochemicals Sector – PVC Capacity . 32 Table: China's Petrochemicals Sector PS Capacity . 35 Table: China's Supply And Demand Volumes Of Major Petrochemical Products . 38 Table: Cracker Capacity, 2006-2013 (‘000tpa) . 39 Table: China's Petrochemicals Sector – Ethylene Projects . 41 Table: China's Petrochemicals Sector – PE Projects . 41 Table: China's Petrochemicals Sector – PP Projects . 42 Table: China's Petrochemicals Sector – PS Projects . 43 Table: Asia Pacific Petrochemicals Business Environment Ratings . 57 Table: China's Petrochemicals Sector, 2008-2016 (‘000 tpa, unless otherwise stated) . 63 Table: China – Economic Activity . 67 Table: Glossary Of Petrochemicals Terms . 72 Table: Petrochemicals Business Environment Indicators And Rationale . 76 Table: Weighting Of Indicators . 77"


chinese petrochemicals industry