China's ethylene makers to see eroding margins in 2012-2017

18 April 2013 07:24  [Source: ICIS news]

SINGAPORE (ICIS)--China's ethylene producers can expect to see their profit margins erode through to 2017 amid rapid capacity expansions domestically and stiff competition from cheaper Middle East-based products, an industry consultant said on Thursday.

"China will experience rapid capacity expansions from coal and methanol to olefins capacities during the period which will lower the prices of ethylene," said Arley Li, petrochemicals and organic chemicals business manager at China National Chemical Information Centre.

"There will also be a lot of ethylene derivatives from the Middle East that are made at lower costs from gas," Li addded.

China is projected to see its overall ethylene production capacity surge from about 20m tonnes/year in 2012 to around 36m tonnes/year in 2017, according to Li.

This will narrow the shortfall in local production and demand to about 6m tonnes/year in 2017 from an expected deficit of about 17m tonne/year in 2013, he said.

Ethylene capacity expansions that use crude oil as a feedstock is expected to total about 12m tonnes/year in 2012-2017, Li added.

Li was speaking at the day-long China Petrochemical Industry Conference in Singapore.

By: Nurluqman Suratman

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