China coal-based polyolefins to hit 5.96m tonnes by year-end
Amy Yu
24-Oct-2014
Focus article by
Amy Yu
SINGAPORE (ICIS)–China’s coal-based
polyolefins capacity is expected to hit 5.96m tonnes by the
end of the year, a sharp surge from 2.16m tonnes/year in 2013
and will account for about a fifth of total polymer
production in the country, industry sources said on
Friday.
Its total polyolefins production capacity stands at 30.2 m
tonnes, according to Chemease, an ICIS service in
China.
Capacity additions from coal-to-polyolefins technology
totaled 2.3m tonnes/year so far this year.
In end-October, 300,000 tonnes/year of new polyethylene (PE)
capacity would be added by Ningxia Baofeng, while Pucheng
Clean Energy Chemical will add a similar PE capacity and a
400,000 tonne/year polypropylene (PP) capacity in
mid-November, they said. (Please see table below)
In Shandong province in northern China, Shenda Chemical plans
to start up its 200,000 tonne/year PP unit via a
methanol-to-olefins (MTO) technology
next month, a company source said.
China’s abundant coal resources provides it with the
advantage of boosting polyolefins capacity via a cheaper
coal-based technology, compared with the usual route derived
from the more expensive naphtha.
Because of lower production cost, coal-based linear low
density PE (LLDPE) are priced lower by yuan (CNY)
100-200/tonne compared with normal LLDPE, industry sources
said.
Coal-based polyolefins are only marketed domestically in
China.
Industry players are increasingly growing worried over the
continued build-up in China’s capacity that is heavily
weighing on prices of the polymers in the domestic
market.
Aggravating the price pressures is new supply
originating from the Middle East, with the start-up of
Borouge’s new PE units in the UAE.
Polyolefin prices have been on a downtrend since September,
and the outlook does not seem to be improving as new
capacities are still due to come on stream before the year
draws to a close, they said.
Domestic LLDPE prices in north China were assessed at yuan
(CNY) 10,200-10,400/tonne EXWH on 23 October, down by
CNY100-200/tonne from 22 September, according to
Chemease.
The bearish sentiment also permeates the futures market, with
the most active LLDPE contract – January 2015 – shedding
CNY315/tonne over the same period to CNY9,810/tonne.
Meanwhile, domestic PP yarn prices in north China were
assessed at yuan (CNY) 10,250-10,350 /tonne EXWH on 23
October, down by CNY 700-750/tonne from 22 September,
Chemease data showed.
January 2015 PP yarn futures contract, on the other hand,
slumped $458/tonne over the same period to
CNY9,595/tonne.
Citing the wide gap between spot and futures prices of
polymers, some market players expect spot prices to continue
falling.
A few suppliers may have cut prices to achieve their targeted
sales volumes by the end of the year, an import trader
said.
Downstream demand in China in the current quarter is not
expected to improve significantly amid the ongoing
anti-corruption drive by the government, industry sources
said.
China – the world’s second biggest economy and a major
importer of petrochemicals in Asia – is slowing down.
Its third-quarter GDP growth at 7.3% was the slowest
in five years, with the nine-month average of 7.4% falling
below the government’s full-year target of 7.5%.
New coal-based polypropylene (PP) units in China in 2014 | |||||
Region |
Province |
Producer |
PP Capacity (tonnes/year) |
Actual/expected start-up |
Upstream plant |
Northwest China |
Shaanxi |
Shaanxi Yanchang China Coal |
600,000 |
Jul-14 |
CTO |
Yulin Energy Chemical Co | |||||
Northwest China |
Shaanxi |
China coal energy Shaanxi Yuheng Coal Chemical Co |
300,000 |
Jul-14 |
CTO |
Northwest China |
Ningxia |
Shenhua Ningxia Coal Group Co |
500,000 |
Aug-14 |
CTP |
Northwest China |
Ningxia |
Ningxia Baofeng |
300,000 |
2014 |
CTO |
Northwest China |
Shaanxi |
Pucheng Clean Energy Chemical |
400,000 |
2014 |
CTO |
North China |
Shandong |
Shandong Shenda Chemical |
200,000 |
2014 |
MTO |
New coal-based polyethylene (PE) units in China in 2014 | ||||||
Region |
Province |
Producer |
PE Capacity (tonnes/year) |
Upstream plant |
Actual/expected start-up | |
LLDPE |
HDPE | |||||
Northwest China |
Shaanxi |
Shaanxi Yanchang China Coal |
300,000 |
300,000 |
CTO |
Jul-14 |
Yulin Energy Chemical Co | ||||||
Northwest China |
Shaanxi |
China coal energy Shaanxi Yuheng Coal Chemical Co |
150,000 |
150,000 |
CTO |
Jul-14 |
Northwest China |
Ningxia |
Ningxia Baofeng |
150,000 |
150,000 |
CTO |
Oct-14 |
Northwest China |
Shaanxi |
Pucheng Clean Energy Chemical |
150,000 |
150,000 |
CTO |
Nov-14 |
Read John Richardson and Malini Hariharan’s blog –
Asian Chemical
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