China coal-based polyolefins to hit 5.96m tonnes by year-end

Amy Yu

24-Oct-2014

Coal mineFocus 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 Connections

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?