petrochemical industry in china - japan/presentations/2005apicguangdong.… · petrochemical...

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Petrochemical Industryin China

- Growing Demand and Supply in the Future

byQuQu GuangdongGuangdongDirector,Director, SRI Consulting Beijing Office

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Contents

Chemical Industry In China

•• Macro Economic Situation in ChinaMacro Economic Situation in China•• Chemical Industry Review Chemical Industry Review •• Supply/Demand of Petrochemicals in ChinaSupply/Demand of Petrochemicals in China•• Supply/Demand of Methanol in ChinaSupply/Demand of Methanol in China

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China’s GDP Growth

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

199019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

05

GrowthRate (%)Year

Annual Growth Rate (percent)

Note: GDP in billion US$ (constant 1990 dollars)

Macro EconomicMacro Economic

9.0%2005e

9.5%2005,Q1

9.5%2004

9.1%2003

8.0%2002

7.3%2001

8.0%2000

7.1%1999

7.8%1998

8.8%1997

9.6%1996

10.5%1995

12.6%1994

13.5%1993

14.2%1992

9.2%1991

3.8%1990

4

Foreign Direct Investment

0

10

20

30

40

50

60

70

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

GrowthRate (%)FDIYear

Utilized FDI relatively stable in value


Note: Utilized FDI in billion US$.Note: Utilized FDI in billion US$.

FDI(Billion US$)

9.50%13.42005,Q1

13.30%60.62004

1.40%53.52003

12.40%52.72002

15.20%46.92001

0.93%40.72000

-11.4%40.41999

-3.8%45.461998

13.3%47.261997

11.2%41.731996

11.1%37.521995

22.7%33.771994

150.0%27.521993

151.9%11.011992

25.2%4.371991

3.491990

5

Macro EconomicMacro EconomicImport & Exports

Export Value has been larger than Import since 1994Total value of I & E exceeded 1,000.0 Billion US$ for the first time in 2004, reaching 1,154.8 BillionUS$Increasing rate will slow down to 15% in 2005

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Import & Export (Billion US$)

6

Macro EconomicMacro EconomicUnemploymentRegistered Unemployment Rate (%)

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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•• For longFor long--term, China will quadruple its 2000 GDP to US$ 4 trillion with aterm, China will quadruple its 2000 GDP to US$ 4 trillion with aper capita GDP of US$ 3,000. GDP will keep growth at 7per capita GDP of US$ 3,000. GDP will keep growth at 7--8%.8%.

•• For shortFor short--term, Chinese economy is facing challenges. Government has been term, Chinese economy is facing challenges. Government has been taking actions on dealing with overheating Investment and relatetaking actions on dealing with overheating Investment and related problems. d problems.

•• The main challenges facing the Chinese economy are that aggregatThe main challenges facing the Chinese economy are that aggregate e investment in some industries and regions is somewhat excessive,investment in some industries and regions is somewhat excessive,inflationary pressures are building up and much remain to be doninflationary pressures are building up and much remain to be done in the e in the areas of employment and social security. Solutions to these probareas of employment and social security. Solutions to these problems will lems will require China to pay even closer attention to proper macroeconomrequire China to pay even closer attention to proper macroeconomic ic management and to the proper handling of the relationship betweemanagement and to the proper handling of the relationship between reform, n reform, development and stability. development and stability.

•• The total value of Import and Export exceeded 1.0 trillion in 20The total value of Import and Export exceeded 1.0 trillion in 2004, ranking 04, ranking the third in world. However, Large value does not mean the third in world. However, Large value does not mean ““StrongStrong””

•• China turned in China turned in ““double surplusesdouble surpluses””--in both current and capital accountsin both current and capital accounts--in in 2004. The pressure on RMB appreciation is going up.2004. The pressure on RMB appreciation is going up.

Economic Outlook

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Chemical Industry OverviewChemical Industry Overview

Characteristics of China’s Characteristics of China’s CChemical Industry:hemical Industry:

•• Consists of Many Small PlantsConsists of Many Small Plants•• Developed Rapidly During Past DecadeDeveloped Rapidly During Past Decade•• Net Importer of Most ChemicalsNet Importer of Most Chemicals•• Restructuring to Increase CompetitivenessRestructuring to Increase Competitiveness•• The development of Chemical Parks has been The development of Chemical Parks has been

speeding up the development of Chemical speeding up the development of Chemical IndustryIndustry

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China’s Chemical Industry In 200China’s Chemical Industry In 20044----------ExcellentExcellent YearYear

•• Total output reached about US$ 298 Billion, Total output reached about US$ 298 Billion, increasing 32.3% over the previous yearincreasing 32.3% over the previous year

•• Total sales revenue, US$ 293 Billion,Total sales revenue, US$ 293 Billion,increasing 32.5% over the previous yearincreasing 32.5% over the previous year

•• Total profit, US$ 33.7 Billion, Total profit, US$ 33.7 Billion, increasing 58.7% over the previous yearincreasing 58.7% over the previous year

•• Total value of I & E, US$ 159 Billion,Total value of I & E, US$ 159 Billion,increasing 40.0% over the previous yearincreasing 40.0% over the previous year

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China’s Chemical Industry In 200China’s Chemical Industry In 20044----------ExcellentExcellent YearYear

•• The output of the following products Ranked the first The output of the following products Ranked the first in the world: Fertilizer, Ammonia, Sodium Carbonate, in the world: Fertilizer, Ammonia, Sodium Carbonate, Sulfuric Acid, Dye Stuff, Synthetic Fibers, Rubber Sulfuric Acid, Dye Stuff, Synthetic Fibers, Rubber Shoes.Shoes.

•• The output of the following products Ranked the The output of the following products Ranked the second in the world: Pesticides, Tires and Sodium second in the world: Pesticides, Tires and Sodium HydroxideHydroxide

•• The output of the following products Ranked the third The output of the following products Ranked the third in the world: Oil refining, Ethylene, Paints & Coating in the world: Oil refining, Ethylene, Paints & Coating

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China’s Chemical Industry China’s Chemical Industry ---------- DifficultiesDifficulties

•• Industrial Structure ImbalanceIndustrial Structure Imbalance

•• Very High Energy ConsumingVery High Energy Consuming

•• Environment PollutionEnvironment Pollution

•• Trade warTrade war

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Supply/Demand Supply/Demand of Petrochemicals in Chinaof Petrochemicals in China

•• Ethylene Ethylene

•• PropylenePropylene

•• PolymersPolymers

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Ethylene OverviewEthylene Overview

Ethylene Capacity Situation:Ethylene Capacity Situation:

•• Capacity Grew 8.2% Per Year From 1990 to 2004Capacity Grew 8.2% Per Year From 1990 to 2004•• From 2004 to 2009, Capacity Will Increase 21.9% Per From 2004 to 2009, Capacity Will Increase 21.9% Per

Year. However, 4.2% From 2009 to 2014.Year. However, 4.2% From 2009 to 2014.•• Annual Capacity From 16 Plants Equaled 6,205 Annual Capacity From 16 Plants Equaled 6,205

Thousand Metric Tons At 2004 YearThousand Metric Tons At 2004 Year--end end •• 3 Large Joint3 Large Joint--Venture Plants startVenture Plants start--up this yearup this year•• 1 Large Joint1 Large Joint--Venture Plants Has Got ApprovalVenture Plants Has Got Approval•• 2 New Ethylene Units in Existing Producers2 New Ethylene Units in Existing Producers•• 6 Are Waiting For Government Approval6 Are Waiting For Government Approval

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Ethylene OutlookEthylene Outlook

2001 2004SINOPEC Shanghai Petrochemical Co. Ltd 545 845SINOPEC Maoming Petrochemical Co. 380 380PetroChina Jilin Petrochemical Co. 530 530SINOPEC Beijing Yanhua Petrochemical 660 710SINOPEC Yangzi Petrochemical Co. Ltd 400 800PetroChina Daqing Petrochemical Co. 480 600SINOPEC Qilu Petrochemical Co. Ltd 450 720PetroChina Lanzhou Petrochemical Co. 160 240PetroChina Dushuanzi Petrochemical Co. 180 220SINOPEC Tianjin Petrochemical Co 200 200SINOPEC Guangzhou Company 150 210Sinopec Zhongyuan Petrochemical Co. Ltd 180 180Liaoning Huajin Chemical Group 160 160Sinopec Beijing Dongfang Petrochemical Co. Ltd 150 150PetroChina Fushun Petrochemical Co. 144 140PetroChina Liaoyang Petrochemical 120 120

Total 4889 6,205

During 2001During 2001-- 2004,Capacity Increase is only 2004,Capacity Increase is only from the expansion of Existing Plantsfrom the expansion of Existing Plants

(Thousands of Metric Tons/Year)

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New Ethylene PlantsNew Ethylene Plants

3 Joint Venture Ethylene Plants Have 3 Joint Venture Ethylene Plants Have Been Under Construction And Will Been Under Construction And Will Add 2.3 Million Tons of CapacityAdd 2.3 Million Tons of Capacity

BASF-YPC Company Ltd.Location: Nanjing, JiansuCapacity: 600,000 mtpaStart-up: 2005

Shanghai Secco Petrochemical Company Ltd.(SECCO)Location: Jinshan, ShanghaiCapacity: 900,000 mtpaStart-up: 2005

CNOOC-Shell Petrochemical Company Ltd.Location: Huizhou, GuangdongCapacity: 800,000 mtpaStart-up: 2005

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1 Joint Venture Ethylene Plants1 Joint Venture Ethylene Plants

22 New Ethylene Units in the Existing ProducersNew Ethylene Units in the Existing Producers

Exxon Fujian PCLocation: Quanzhou, FujianCapacity: 800,000 mtpaStart-up: 2007

PetroChina DushanziPetroChemicalLocation: Dushanzi, XinjiangCapacity: 1,000,000 mtpaStart-up: 2008

PetroChina Fushun PetrochemicalLocation: Fushun, LiaoningCapacity: 800,000 mtpaStart-up: 2008

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66 Are Waiting for ApprovalAre Waiting for Approval

Sinopec Tianjin PCLocation: TianjinCapacity: 800,000 mtpaStart-up: 2008

Dalian Shide Group, Ethylene ProjectLocation: Dalian, LiaoningCapacity: 1,300,000 mtpaStart-up: 2010

Sinopec Zhenhai Refining & Chemical Co. LtdLocation: Zhenhai, ZhejiangCapacity: 800,000-1000,000 mtpaStart-up: 2009

Sinopec Shanghai ChemicalParkEthylene ProjectLocation: ShanghaiCapacity: 1,000,000 mtpaStart-up: 2010

Sinopec Wuhan CompanyLocation: Wuhan, HubeiCapacity: 800,000 mtpaStart-up: 2010

PetroChina Chengdu Ethylene ProjectLocation: Chengdu, SichuanCapacity: 800,000 mtpaStart-up: 2010

Planned Start-up Year is 2008-2010, But Might Delay!

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Ethylene CapacityEthylene Capacity

0

5000

10000

15000

20000

25000

2001 2004 2005 2009 2010 2014

Dalin ShidePetroChinaSINOPECExxon-FujianCNOOC-ShellBASF-YPCShanghai SeccoExisting Plants

LongerLonger--term Increases in Capacity term Increases in Capacity Dominated by New PlantsDominated by New Plants

(Thousands of Metric Tons/Year)

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Ethylene in ChinaEthylene in China

Ethylene Supply SituationEthylene Supply Situation

•• Production Increased at AAGR of 10.4% from Production Increased at AAGR of 10.4% from 19901990--20042004

•• Production Will Increase at AAGR of 12.7% from Production Will Increase at AAGR of 12.7% from 20042004--20142014

•• The Percentage of Domestic Supply of Ethylene The Percentage of Domestic Supply of Ethylene Over Total Ethylene Equivalents Consumption is Over Total Ethylene Equivalents Consumption is IncreasingIncreasing– 38% in 2004– 63% in 2014

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Ethylene DemandEthylene DemandFrom 2004 to 2014:From 2004 to 2014:

Ethylene Production grows at 12.7%Ethylene Production grows at 12.7%

Ethylene Apparent Consumption grows at 12.9%Ethylene Apparent Consumption grows at 12.9%

Ethylene Equivalents Demand Grows at 7.3%Ethylene Equivalents Demand Grows at 7.3%(Thousands of Metric Tons)

0

5000

10000

15000

20000

25000

30000

35000

1999

2001

2003

2005

2007

2009

2011

2013

Production

ApparentConsumptionEquivalentConsumption

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Ethylene DemandEthylene Demand

SelfSelf--supply rates (%)supply rates (%)(Ethylene Production over Ethylene Equivalents Demand)(Ethylene Production over Ethylene Equivalents Demand)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

199920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

22


EDC/VCM/PVC is the Fastest Growing Areas in EDC/VCM/PVC is the Fastest Growing Areas in Ethylene Equivalents RequirementsEthylene Equivalents Requirements

(Thousands of Equivalent Metric Tons)

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

PE EO/EG EDC/VCM/PVC EB/SM/PS

2004

2009

2014

Polyethylene Demand Increase Accounts Polyethylene Demand Increase Accounts for 56% of Total Growthfor 56% of Total Growth

8.1% growth rate from 20048.1% growth rate from 2004--20142014

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0

5000

10000

15000

20000

25000

2004 2009 2014

Production

Import


New Ethylene Capacity Has Dramatic Impact on New Ethylene Capacity Has Dramatic Impact on Derivative Import RequirementsDerivative Import Requirements


14.4 Million14.4 Million 2.3 Million2.3 Million

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Polyethylene Single Largest Polyethylene Single Largest Derivative ImportedDerivative Imported


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

PE EO/EG EDC/VCM/PVC EB/SM/PS

2004

2009

2014

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Ethylene in China Ethylene in China

ETHYLENE DEMAND SITUATIONETHYLENE DEMAND SITUATION

•• Ethylene Ethylene SelfSelf--Supply Rate will increase Dramatically.Supply Rate will increase Dramatically.

•• Future Imports Future Imports Will Derease Gradually Along With the Will Derease Gradually Along With the StartStart--up Of New Ethylene Plantsup Of New Ethylene Plants

•• Ethylene Capacity Ethylene Capacity Still Still Insufficient to Make DerivativesInsufficient to Make Derivatives

--Substantial Imports of Derivatives for Next DecadeSubstantial Imports of Derivatives for Next DecadePE PSPVC PETABS EG

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Propylene OverviewPropylene Overview

PROPYLENE SITUATIONPROPYLENE SITUATION••Capacity Grew 14.5% Per Year from 1990 through 2004Capacity Grew 14.5% Per Year from 1990 through 2004••Market Demand for Derivatives Grew Faster than Domestic Market Demand for Derivatives Grew Faster than Domestic Supply Supply

••Substantial Amount of Derivatives ImportedSubstantial Amount of Derivatives Imported–Polypropylene –Acrylonitrile

•n-Butyl Alcohol•2-EH Alcohol

•• Imported Derivatives Account for Large Amount of Total Imported Derivatives Account for Large Amount of Total Propylene Equivalents ConsumptionPropylene Equivalents Consumption

–47% in 2004–33% in 2014

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Propylene DemandPropylene DemandFrom 2004 to 2014:From 2004 to 2014:

Propylene Production grows at 9.1%Propylene Production grows at 9.1%

Propylene Apparent Consumption grows at 9.2%Propylene Apparent Consumption grows at 9.2%

Propylene Equivalents Demand Grows at 6.6%Propylene Equivalents Demand Grows at 6.6%

(Thousands of Metric Tons)

0

5000

10000

15000

20000

25000

2000

2002

2004

2006

2008

2010

2012

2014

Production

ApparentConsumptionEquivalentConsumption

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0

2000

4000

6000

8000

10000

12000

14000

16000

PP AN BA & 2-EH

2004

2009

2014

Propylene DemandPropylene Demand


Polypropylene Demand Growth Drives Polypropylene Demand Growth Drives Propylene Equivalents RequirementsPropylene Equivalents Requirements

Polypropylene Demand Increase Accounts Polypropylene Demand Increase Accounts for 66% of Total Growthfor 66% of Total Growth

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Derivatives Production Increases Derivatives Production Increases Limit Import OpportunitiesLimit Import Opportunities


0

2000

4000

6000

8000

10000

12000

14000

16000

2000

2002

2004

2006

2008

2010

2012

2014

ProductionImport

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PP & AN Imports are Real PP & AN Imports are Real OpportunityOpportunity


0

500

1000

1500

2000

2500

3000

3500

4000

PP AN BA & 2-EH

2004

2009

2014

31

Polymers OverviewPolymers Overview

POLYMERS SITUATIONPOLYMERS SITUATION

••Domestic Demand Increased Rapidly in Past DecadeDomestic Demand Increased Rapidly in Past Decade– 11.7% Growth Rate in Past Five years– 7.0% in Next Ten Years

••Large Volume of ImportsLarge Volume of Imports– 13 Million of 5 Main Polymers in 2004– 17 Million in 2014

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Polymer DemandPolymer DemandTotal Five Polymers Demand Grows at Total Five Polymers Demand Grows at 7% per Year in Next Ten Year7% per Year in Next Ten Year


0.0

10000.0

20000.0

30000.0

40000.0

50000.0

60000.0

70000.0

1999

2001

2003

2005

2007

2009

2011

2013

Production

Import

Demand

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Polymer ImportsPolymer Imports

SelfSelf--Supply Rate of Five Major Polymers Supply Rate of Five Major Polymers will reach will reach the highest in 2011the highest in 2011

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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Polymer ImportsPolymer Imports

Import Opportunities of Five Major PolymersImport Opportunities of Five Major Polymers


0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

PE

PP

PS

PVC

ABS

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Supply/Demand Supply/Demand of Methanol in Chinaof Methanol in China

•• High Oil PriceHigh Oil Price

•• Technology ImprovementTechnology Improvement

•• Coal Reserves is AboundantCoal Reserves is Aboundant

Why Methanol So Important Now?

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•• More Than 100 Producers, Totla Capacity More Than 100 Producers, Totla Capacity 7400 Thousand Ton7400 Thousand Ton

•• Only 8 Of Them Produced More than 100Only 8 Of Them Produced More than 100Thousand Ton Methanol last year.Thousand Ton Methanol last year.

•• Feedstock: Coal 58%, Natural Gas 20%, Feedstock: Coal 58%, Natural Gas 20%, Other 22%Other 22%

Current Situation of Methanol Producers

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•• Production In 2004, More Than 4400 Production In 2004, More Than 4400 Thousand Ton. Thousand Ton.

•• Import 1358 Thousand Ton In 2004.Import 1358 Thousand Ton In 2004.Mainly From Saudi Arabia, New Zealand...Mainly From Saudi Arabia, New Zealand...

Current Situation of Methanol Supply

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Current Situation of Methanol Consumption

32.8%

12.6%

8.7%8.4%

6.6%

5.1%

2.4%

23.4%

Formaldehyde

Fuel

MTBE

Solvent

Acetic Acid

Methylamines

Chlorinated Methanes

Others

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•• Under Construction Projects: 3,810Under Construction Projects: 3,810Thousand Ton. Thousand Ton.

•• Approved Projects: 1,970 Thousand Ton.Approved Projects: 1,970 Thousand Ton.

•• Waiting for Approval Projects: 4,000 Waiting for Approval Projects: 4,000 Thousand Ton.Thousand Ton.

•• Planning Projects: 30,000 Thousand Ton.Planning Projects: 30,000 Thousand Ton.

•• Total New Capacity: 39,780 Thousand TonTotal New Capacity: 39,780 Thousand Ton

Future Methanol Projects

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•• Coal: 60%Coal: 60%

•• Natural Gas: 26%Natural Gas: 26%

•• Other: 14%Other: 14%

Future Methanol Projects

Feedstock:

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•• Methanol to Olefins Methanol to Olefins

•• FuelFuel

•• DMEDME

Future Consumption Trends:

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SummarySummary

•• Chinese economy is facing challenges but the prospective growth Chinese economy is facing challenges but the prospective growth is is positive. positive.

•• ChinaChina’’s Petrochemical Industry Has Been Developing Very Fast s Petrochemical Industry Has Been Developing Very Fast And Will Continue to Grow.And Will Continue to Grow.

•• Huge Investment In Petrochemical Complex Would Dramatically Huge Investment In Petrochemical Complex Would Dramatically Increase Domestic Supply for Most PetrochemicalsIncrease Domestic Supply for Most Petrochemicals

•• But Continued Dependency on Imports for Next DecadeBut Continued Dependency on Imports for Next Decade

•• Methanol Is Becoming More Important In Chemical IndustryMethanol Is Becoming More Important In Chemical Industry

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Thank You !Thank You !

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