FocusStrong toluene capacity boost in China to take toll on imports

22 September 2011 09:07  [Source: ICIS news]

Strong toluene capacity boost in China to take toll on importsBy Mahua Chakravarty and Vivian Liu

SHANGHAI (ICIS)--China will have less need for imported toluene with about 2.7m tonnes/year of new domestic capacity coming on stream between the third quarter of this year and the whole of 2014, industry sources said on Thursday.

The figure is about three times as large as the 829,337 tonnes of toluene that China imported last year. The country is the largest market for the aromatics product in Asia.

The huge capacity increase in China from the second half of 2011 onwards, coupled with an expected decline in domestic demand from the downstream solvent sector amid fears of another global recession, could hit Asia's toluene exporters hard.

The country - the second biggest economy in the world - continues to grow at a much faster pace than western industrialised countries. But just like the rest of export-oriented economies in Asia, China is vulnerable to the financial and economic troubles in the US and the eurozone.

Fears that the world economy is teetering towards another recession continue to hound the commodities and equities markets.

China also has its own troubles in reining in inflation, with a series of government-imposed monetary tightening measures adversely affecting traders’ access to credits.

This cashflow problem is expected to persist in the country well into next year, killing appetite for trades, said an east-China based aromatics trader and distributor.

“Domestic end-users are asking for letters of credit for 60 to 90 days nowadays, which is a change from the more prompt payment mode seen earlier,” the trader added.

“We expect the cash flow problems to continue at least till the middle of 2012,” said a second trader based in south China.

Further on the demand front, prospects for any resurgence in toluene demand from the gasoline blending sector in China also look dim due to the ample availability and a preference for cheaper mixed aromatics as substitute, the trader said.

Blenders have recently switched to using mixed aromatics and MTBE as blendstocks, significantly pulling down demand for toluene.

For the other key aromatics products, the market outlook is less gloomy.

Benzene supply in China is likely to be balanced-to-tight in the next three to five years on the back of a slew of new downstream units expected to start production, said a major producer.

Supply of mixed xylenes and paraxylene (PX) in China is also expected to be tight in the next year or two, supported by a growing purified terephthalic acid (PTA) market, market source said.

Company

Location

Benzene

(000 t/yr)

Toluene
(000 t/yr)

MX
(000 t/yr)

PX
(000 t/yr)

Start-up

Jinlin PC

Jilin, Liaoning

110

350

270

 

Q2 2012

Daqing PC

Daqing, Liaoning

120

90

85

 

Q3 2012

Sinochem

Quanzhou, Fujian

250

280

500

 

2013

Dragon Special Resin (Xiamen)

Zhangzhou, Fujian

230

350

1000

800

2013-14

Petrochina Sichuan Petrochemical

Pengzhou, Sichuan

150

280

400

600

Q3 2013

Fushun PC

Fushun, Liaoning

160

120

110

 

Q4 2012

Sinopec Wuhan

Wuhan, Hubei

160

120

110

 

Q2 2013

Maoming Petrochemical

Maoming, Guangdong

200

150

700

600

2015

Hainan Refinery

Yangpu, Hainan

100

280

240

600

Q4 2013

Zhejiang Huachen Energy

Pinghu, Zhejiang

30

60

60

 

Q3 2011

PetroChina Taizhou

Taizhou, Zhejiang

134

150

1083

 

2013

PetroChina Jieyang

Jieyang, Guangdong

200

150

140

 

2013-2015

PetroChina & Rosneft

Tianjin

200

150

140

 

2013

Sinopec KPC

Zhanjiang, Guangdong

250

190

180

 

2015

Source: Chemease, an ICIS service in China

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Mahua Chakravarty
+65 6780 4359



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