China olefins/polyolefins demand eclipses supply

22 May 2007 18:20  [Source: ICIS news]

ANTWERP (ICIS news)--Local demand for Chinese ethylene and polyolefins will continue to outstrip supply despite new projects coming on line, according to a senior chemical engineer and consultant.


A fast growing economy and large population meant demand for polyolefins used in the automotive, construction and packaging sectors would continue to rise rapidly until at least 2010, said Yu Jing of China International Chemical Consulting Corporation at the Fourth ICIS World Olefins Conference in Antwerp, Belgium.


On the ethylene market, Jing reported a 13% annual growth rate from 1995-2006, with an additional 1.8m tonnes of new production capacity coming on stream last year.


Current output was reported at almost 9.5m tonnes/year, well below total demand for ethylene and its equivalents downstream, which Jing put at almost 20m tonnes/year.


Despite investments in new production from local and foreign producers, the shortfall between ethylene supply and demand was predicted to continue and would stand at 10m tonnes/year by 2010, Jing said.


Rapid annual growth rates was also expected in the polyethylene (PE) and polypropylene (PP) markets, with PE to grow by 7% and PP by 15.4% from 2006-2010, Jing said. 


PE output reportedly rose by 12.7% each year from 1998-2006 and PP increased 15.3% from 1996-2006.


Increasing demand for packaging applications in particular would mean PE demand will exceed local supply by 4.7m tonnes by 2010, with offtake for PP 1.3 m tonnes over supplies, Jing said.


The Chinese government would continue to encourage building large-scale ethylene plants and it would support the use of coal as an alternative feedstock, Jing said. 


However, China would also rely on imports from the Middle East, where significant new olefins and polyolefins production capacity was due on line in the next five years


The one exception to the trend was the polyvinyl choride (PVC) market, where domestic supply would be more balanced with demand because of greater local production through the calcium carbide process.


Jing also said that petrochemical revenue stood at $560bn in 2006, up 28.2% from 2005, with profit up 19.9% year on year to $58bn.


By: Edward Cox
+44 20 8652 3214

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