New market study, "China Petrochemicals Report Q2 2013", has been published

From: Fast Market Research, Inc.
Published: Fri Apr 19 2013

While growth in the Chinese petrochemicals market will be sustained, profits will continue to be squeezed by a combination of rising input costs, weakening downstream markets and surplus capacity. Ethylene capacity is continuing to surge even as ethylene output stagnates, leading to low capacity utilisation and a decline in net imports. This situation will persist over the medium-term even as downstream polymers capacities grow.

The overall value of Chinese petrochemical output grew 12.9% to CNY10.86trn in 2012, but this was not enough to avert a decline in profits due to poor demand. Output registered month-on-month (m-o-m) declines throughout H112 before rebounding in H212 due to government stimulus. Nevertheless, profitability plunged 9.4% to CNY324.9bn in the January-November period and estimates suggest that the full-year decline could be as much as 10%. The decline in the petrochemicals industry comes amid GDP growth of 7.8%, the slowest rate of growth since 1999. BMI estimates that ethylene output declined by 2.2% year-on-year (y-o-y) to 14.9mn tonnes in 2012, in spite of 20% growth in cracker capacity to 21.56mn tonnes. With consumption growth of just 4% (to 32.5mn tonnes), the country's ethylene deficit was slashed by 18% to 10.94mn tonnes. Two factors were behind the slowdown in the petrochemicals market: the effects of the economic stimulus package of 2008-2010, which led to a surge in production and excessive purchasing, leading to massive inventories; and the decline in industrial activity resulting from a slowdown in export trade.

Full Report Details at

However, the effects on the industry have been more limited, with exports and output holding up. Primary plastic output grew 11.2% to 52.23mn tonnes and production of plastic products rose 9.4% to 59.91mn tonnes. Net imports totalled 23.7mn tonnes, according to the Chinese customs authorities. The production of rubbers, fibres and plastics was down y-o-y, with synthetic resins production falling 2.3% to 13.3mn tonnes, synthetic fibres production down 3.5% to 1.3mn tonnes, and production of synthetic rubbers down 5.5% to 936,000 tonnes. In contrast, fertilizer manufacturing climbed strongly during 2012, with urea production jumping 35% y-o-y to 1.1mn tonnes.

BMI has revised the following forecasts/views:

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