China March chems imports surge, volumes may slow from April

27 April 2009 15:15  [Source: ICIS news]

By Bohan Loh

SINGAPORE (ICIS news)--China’s imports of most petrochemical products surged in March from a year earlier as local manufacturing industries felt the positive effects of the government’s aid, but the strong volumes may not be sustainable, analysts said on Monday.

The hazy recovery prospects of its major trading partners in west will likely curb petrochemical volumes headed towards the mainland from this month onwards, they said.

“I expect production, import, exports for chemicals to grow mildly on a year-on-year basis for April and May,” said Wang Aochao, a petrochemical analyst with brokerage UOB Kay Hian.

Analysts attributed the spike in March imports volumes to the Chinese government’s yuan (CNY)4,000bn ($585.65bn) stimulus package, which is continuing to work its way into the domestic economy and the recent significant easing in access to credit.

The country's appetite for various petrochemicals, along with tight supply, has helped product prices to recover from the sharp slump seen late last year. China is a major importer of petrochemicals that it feeds into its manufacturing facilities to produce a wide array of end-products from textiles to toys.

Basic chemical ethylene gained over 22% while propylene jumped 54% from the beginning of the year before slightly retreating in recent weeks, according to data from global chemical intelligence service, ICIS pricing.

The price behaviour of chemicals in the aromatics cluster was similar, with benzene almost doubling its value over the same period. But it began showing a slight price weakness two weeks ago and has since shed about $45/tonne to close at $605/tonne FOB (free on board) Korea last Friday.

China’s industries could not keep on churning without the country’s major export markets that will absorb the produce, analysts said.

“If you want to see sustainability in China, the economy in US and Europe must stabilise. But now, the recovery route still isn’t clear and there isn’t momentum to keep growth up,” said Grace Liu, an analyst with brokerage, Guotai Junan Securities.

US President Barack Obama had recently hinted at signs of recovery but cautioned that the rest of the year will prove to remain hard.

Another threat to global economic recovery just arose with the outbreak of swine flu, which killed over 100 in Mexico, said Liu.

“We must take this seriously as we have experienced severe acute respiratory syndrome (SARS) back in 2003. This could be another factor that could hit the recovery route of the west,” she said.

SARS, when it struck in 2003, cost global businesses millions of dollars in lost revenue and threw brakes onto business and leisure travels.

“I would take a cautious stance towards this. If it blows up to the magnitude of SARS, this is going to hit the global economy and not just China’s,” she added.

Mar-09	Import			Export
Product	Import (tonnes)	YoY growth (%)	MoM growth (%)	Export (tonnes)	YoY growth (%)	MoM growth (%)
Naphtha	141,181	267%	-28%	0	-100%	-100%
Olefins
Product
Ethylene	91,395	48%	2%	4	-100%	0%
Propylene	118,146	84%	-15%	0	-100%	0%
Butadiene	35,967	58%	0%	2,539	53%	42%
Polymers
Product
hdPE	336,947	80%	9%	5,130	221%	169%
ldPE	132,036	132%	14%	1,981	41%	38%
lldPE	204,608	54%	-10%	710	31%	145%
PP	328,535	61%	13%	2,891	-12%	8%
ABS	0	-100%	0%	0	-100%	0%
PC	69,109	-11%	41%	14,126	-39%	28%
EVA	45,541	40%	28%	3,640	45%	28%
Aromatics
Product
Benzene	114,857	381%	-7%	2,819	70375%	-2%
Toluene	93,824	292%	31%	245	19%	15%
MX	33	-49%	371%	5	-100%	-76%
PX	311,393	-8%	-8%	35,532	69%	30%
Xylole	39,361	-31%	-13%	0	-100%	0%
Intermediates
Product
SM	275,680	13%	2%	3,949	32808%	6374%
PTA	417,516	-14%	1%	0	0%	0%
MEG	526,060	22%	5%	103	27%	-34%
ACN	42,598	87%	37%	0	0%	0%
Caprolactam	66,439	37%	52%	19	217%	-68%
Phenol	53,885	57%	-4%	8	-97%	0%
Others
Product
Methanol	653,024	834%	10%	261	-100%	11%
Acetone	47,146	17%	-15%	50	-57%	233%
BPA	52,329	16%	18%	15	-48%	650%
IPA	9,396	-8%	8%	100	809%	-1%
MEK	3,526	30%	22%	1,438	-51%	-15%
Ethanol	0	-100%	-100%	10,322	652%	29%
Base oil	146,221	17%	108%	2,714	-79%	811%
MMA	9,402	44%	126%	2,526	-25%	178%
PMMA	15,575	-2%	69%	1,443	-9%	122%
Source: China Customs

($1 = CNY6.83)

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By: Bohan Loh
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