FocusChina June chemical output grows on demand revival

11 August 2009 06:29  [Source: ICIS news]

By Dolly Wu

SHANGHAI (ICIS news)--China’s chemical output improved in June, with some products registering annual double-digit growths, as soft revival of demand and the resulting high prices encouraged manufacturers to produce more, industry sources said on Tuesday.

“Rising prices and demand recovery boosted the chemical output,” said Wang Xixin, an analyst from Wuxi-based Guolian Securities.

Polyester output had the highest annual increase of 24.9% to 1.03m tonnes, with total production in the first six months rising 12.5% to 5.88m tonnes, based on data from China Petroleum and Chemical Industry Association (CPCIA).

This strong production explains the continued rally in the values of fibre intermediates purified terephthalic acid (PTA), paraxylene (PX) and monoethylene glycol (MEG).

The country’s textile market is in better shape now compared to the previous year as economic conditions improved, said a textile trader in east China.

China, the world’s third largest economy, accelerated its pace of expansion to 7.9% in the second quarter, a strong improvement from the low of 6.0% growth registered in the first quarter.

“Restocking is the major reason for high polyester output. Many companies have wound up destocking in the last few months due to weak downstream demand. Producers started to produce [more] along with improving demand,” said Fang Jun, an analyst from Shanghai-based Essence Securities.

Benzene output, meanwhile, grew 13.7% year on year to 387,000 tonnes in June, while acetic acid production rose 16% to 185,000 tonnes, based on CPCIA data.

“The recovering demand attracted some new plants to go on stream in the first half of year,” a CPCIA source said.

In the first half of the year, China’s benzene capacity jumped by more than 1m tonnes/year with total capacity increase for the whole year likely hitting more than 2m tonnes, he said. In the first six months of the year, the country's benzene production was 2.1m tonnes.

“Of course the demand is not very well at present, but we believe that the stimulus package for the petrochemical sector should give a powerful boost,” the CPCIA source added.

China’s petrochemical industry has received a separate fiscal stimulus package apart from the general Y4,000bn fiscal stimulus announced late last year.

Products

June-09

Jan-June 2009

Output (‘000

tonnes)

% change*YOY

Output (‘000 tonnes)

% change*YOY

Inorganic chemicals

Sulphuric acid

4,983

12.3

27,288

5.1

Concentrated Nitric acid

181

-7.6

1,009

-0.4

Hydrochloric acid

615

-4.4

3,834

0.9

Caustic soda

1,721

5.9

9,148

-4.9

Calcium carbide

1,340

-5.5

6,723

-12.8

Organic chemicals

Ethylene

762

-2.8

4,804

-6.8

Benzene

387

13.7

2,101

-1.0

Methanol

1,027

9.4

4,938

-7.6

Acetic acid

185

16.0

989

-1.4

Synthetic material

Synthetic resin and co-polymer

2,903

3.2

16,474

-0.1

   PE

589

-2.7

3,744

-5.8

   PP

625

2.0

3,856

4.9

   PVC

802

2.6

4,289

-4.1

Synthetic rubber

243

9.9

1,258

2.0

Polyester

1,028

24.9

5,882

12.5

Chemical fibre

2,465

22.5

12,885

10.6

Plastic product

4,059

0.1

20,156

4.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: CPCIA

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By: Dolly Wu
+65 6780 4359



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