2013-10-23 07:10:15 - New Food research report from Business Monitor International is now available from Fast Market Research
The Chinese petrochemicals sector held steady with solid yet unspectacular demand growth in H113, but going forward this is insufficient to absorb ongoing increases in capacities. Combined with feedstock cost rises, this will cause a narrowing of margins. However, coal-to-methanol production should ease the situation over the medium term and reduce net imports in some segments.
In H113, Chinese ethylene output increased 4.9% y-o-y to just under 8mn tonnes, while production of primary plastics grew 7.9% y-o-y to 28.2mn tonnes and plastic products increased 3.2% to 29.7mn tonnes.
Growth in primary plastics declined markedly in Q213, while ethylene was on a steady upwards trajectory throughout the first half. Growth in ethylene demand over the medium-term should lead to consumption rising above 40mn
tonnes by 2017, fuelled in a large part by consumption of LLDPE. PE production will account for around 58% of overall ethylene demand.
In terms of the local market, in H113 PE apparent demand rose by 13% y-o-y, in spite of the weakness of the Chinese manufacturing sector. Explanations for the surge include the increased use of plastics packaging as a result of food safety concerns, a clampdown on imports of waste or scrap PE and restocking by traders and end-users.
Full Report Details at
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BMI has updated the following forecasts/views:
* Growth in ethylene demand over the medium-term should lead to consumption rising above 40mn tonnes by 2017, fuelled in a large part by consumption of LLDPE. PE production will account for around 58% of overall ethylene demand. China's demand for polyolefins could reach 60mn tonnes by 2020, almost double the level reached in 2012. As a result, by the end of the decade the country could account for around 60% of Asian demand.
* While GDP growth will moderate over the next five years, BMI anticipates a rebound in the agribusiness sector following a slump in 2012, which should support consumption of chemical fertilisers.
* By 2017, automotive production should be around 50% higher than in 2012, providing a strong base for consumption of synthetic rubber and engineering plastics.
* The construction sector is set to grow 6.4% in 2013, easing back to to 4.2% by 2016, which represents historically low levels of growth and will result in a slowdown in PVC demand growth. Given government plans to reduce capacity in China's PVC feedstock sector to help reduce surplus capacity, the slowdown may not have a major impact on prices.
* Retail sales growth will come in at above 7%, which again is below historical standards but should help absorb some of the growth in polymers with increased consumption of consumer goods. However, China may need to export a significant amount of polymer to justify growth in capacity.
* In BMI's Asia Petrochemicals Risk/Reward Ratings (RRRs) matrix, China scores 80.3 points - down 0.2 points since the previous quarter due to a 0.6 point decline in its country risk score. It is in second place, 1.1 points behind South Korea and 0.2 points ahead of Japan; any further decline in China's risk scores could push it into third place.
Partial Table of Contents:
BMI Industry View
- BMI Industry View
- Business Environment
- Industry Forecast
- Table: China's Petrochemicals Sector('000 tpa, unless otherwise stated), 2010-2017
- Macroeconomic Forecasts
- Table: China - Economic Activity
Industry Risk/Reward Ratings
- Asia Petrochemicals Risk/Reward Ratings
- Table: Asia Petrochemicals Risk/Reward Ratings
- Industry Risk Reward Ratings
- Market Overview
Industry Trends And Developments
- Industry Trends And Developments
- Table: Refineries In China With Over 200,000b/d Capacity
- Coal-Based Chemicals
- Aromatics And Derivatives
- Other Projects
- Regulatory Developments
- China Petroleum & Chemical Corporation (Sinopec)
- Table: PetroChina Financial Results, In Millions Of CNY
- Asia Overview
- Short-term outlook
- Rapid growth in Southeast
Global Industry Overview
- Global Industry Overview
- Short-term outlook: Prices Stabilising & Margins Improving
- Long-term growth
- Shale: The Future of Feedstock?
- Global Oil Product Price Outlook
- Crude Price Forecasts
- Table: BMI's Oil Price Forecasts, Average Price (US$/bbl)
- Product Prices Move Back Up But No Spikes Expected
- Narrower US Market Crude-Product Spreads
- Weak Demand Persists
- Table: BMI's Refined Products Forecasts, US$/bbl
- Supply: Supported By Global Refining Capacity
- Naphtha: Gas Renaissance Hits Demand
- Gasoline And Gasoil/Diesel: Subsidies & Fuel Efficiency Cap Upward Movement
- Jet Fuel: Slump Restricts Upward Movement
- Table: Total Air Freight And Passenger Volumes
- Bunker Fuels: No Rest To Downward Movement In Sight
- Table: China's Population By Age Group, 1990-2020 ('000)
- Table: China's Population By Age Group, 1990-2020 (% of total)
- Table: China's Key Population Ratios, 1990-2020
- Table: China's Rural And Urban Population, 1990-2020
- Table: Glossary Of Petrochemicals Terms
Full Table of Contents is available at:
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