China July petchem imports down on weak demand, new capacity

27 August 2010 07:15  [Source: ICIS news]

By Judith Wang

Container terminal in ChinaSHANGHAI (ICIS)--Most of China's petrochemical imports in July fell for the fourth consecutive month amid a continued slowdown in the country's economy and weak downstream demand, analysts said on Friday.

“I think one key reason that led to a decrease in this year’s petrochemical imports is the new capacity additions from Sinopec, including its Tianjin and Zhenhai crackers,” said Xiong Jie, an analyst with Jiangsu-based brokerage house Huatai Securities.

Sinopec started commercial production at its 3m tonne/year petrochemical complex at Tianjin in early May, while its subsidiary, Zhenhai Refining & Chemical Co (ZRCC), started up its 1m tonne/year cracker and downstream units in April.

Increased output from these two facilities in the first half of 2010 led to the drop in imports, Xiong added.

China’s ethylene imports dropped 31% year on year in July to 64,502 tonnes, while butadiene imports plunged 67% to 9,279 tonnes, according to data released by China Customs. (Please see the table below)

The reduction in imports also reflected the drop in domestic consumption amid a cooling of the country’s economy, analysts said.

Demand for petrochemical products could drop further if China implemented strict measures to curb speculation in the property market, analysts said.

“If the housing market was curbed, all the chemicals, from upstream to downstream, will definitely encounter reduced consumption,” said Wang Hua, an analyst with Dalian-based brokerage firm Bohai Futures Broker Co.

Polyvinyl chloride (PVC), a major chemical used in the construction sector, saw a 29% year-on-year decline in imports to 121,188 tonnes in July, customs data showed.

However, imports of some products, including ethylene, monoethylene glycol and aromatics like benzene and toluene, saw a month-on-month rise as demand increased with the onset of the traditional peak manufacturing season.

Consumption of certain petrochemicals peaks between July and October in time to meet increased demand from Europe and the US during the December holiday season, analysts said.

While analysts said they expect imports to remain weak through 2010 due to the slowdown in the domestic economy, some believed that there could be a sharp reduction in petrochemical exports if the downturn in the US and EU markets continued for much longer.

China import chart

Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
To discuss issues facing the chemical industry go to ICIS connect


By: Judith Wang
+65 6780 4359



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index