China petchem players wary of Middle East competition - CNCET

25 May 2010 06:30  [Source: ICIS news]

By Chow Bee Lin

NINGBO, China (ICIS news)--Massive petrochemical capacity additions in the Middle East have intensified competition for a slice of the Chinese market, and domestic producers are wary of losing their market share, a senior official at a Chinese think-tank said on Tuesday.

“Middle East producers have been gaining market shares in China at the expense of their competitors from Japan, Korea, United States, Singapore, Taiwan and Thailand. Chinese producers are the next in line,” said Yang Ting, vice director of the China National Chemical Economic and Technical Development Centre (CNCET) at an industry seminar.

CNCET is a state-owned agency that provides economic and technical consulting, as well as training and information services relating to petrochemicals.

Yang was speaking at the Sino-Iran Seminar on Petrochemical Industry Investment and Trade, a one-day event held at Ningbo, Zhejiang province in eastern China.

Iran may pose a bigger threat to domestic Chinese producers compared to the other Middle East producers like Saudi Arabia, he said.

Iranian producers were likely to export majority of their products to China as geographic factors hinder their trade to alternative markets in western Europe, Yang said.

Saudi Arabian producers, meanwhile, have better access to the western European markets because of their locations, negating the need to export as much volumes to China, he added.

Furthermore, some recently started up petrochemical plants in Iran were under great pressure to cover their investment costs, and might resort to low pricing to gain share in overseas markets, he said.

Iran exported $12bn worth of petroleum and petrochemical products to China last year, representing 92.3% of the country’s total export to China.

China exported $4.28bn worth of oil and petrochemical products to the Middle East last year, of which 22.5% went to Iran.

China’s main petroleum and petrochemical imports from Iran include crude oil, liquefied petroleum gas (LPG), sulphur, naphtha, fuel oil, methanol, ethylene glycol, ethylene, benzene, polyethylene (PE) and polypropylene (PP).

Iran, on the other hand, mainly imports polystyrene (PS), triple superphosphates (TSP) and sodium tripolyphosphates from China.

Iran is also a key export market for Chinese-made plastics injection moulding machines.

The Sino-Iran seminar, which provides a platform for state-owned and private companies from China and Iran to explore collaborative opportunities in petrochemicals, was co-organised by the China Petroleum and Chemical Industry Federation (CPCIF), the Ningbo municipal government, and the Oil Products Export Development Fund of Iran (OPEX Fund).

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Chow Bee Lin
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