Review and Development Orientation of Organic Raw Materials


Organic raw materials are important basic chemical raw materials
with many types and extensive applications. They are basic raw
materials for synthetic materials, pharmaceuticals, pesticides,
coatings, synthetic detergents and fine chemicals and hold a
very important position in the national economy.




Review of the organic raw material sector


   (1) The output has increased rapidly


Through the renovation and expansion to oil refining and
ethylene projects during the Ninth Five-year Plan period
(1996-2000) and the construction of large ethylene units, the
introduction of foreign capital and the renovation and expansion
to ethylene units during the Tenth Five-year Plan period
(2001-2005), the organic raw material sector in China has made
considerable progress in raw material route, process technology
and product quality and type. The rapid development during the
Tenth Five-year Plan period, in particular, has led to a constant
expansion of type, a drastic increase of output and a remarkable
improvement of quality. The serious supply shortage of many
organic raw materials has been changed. For example, the tense
supply of ethylene, propylene, methanol, acetic acid, propylene
oxide and phenol/acetone is greatly eased. Maleic anhydride,
phthalic anhydride, 1,4-butanediol and dimethyl carbonate being
in short supply in previous years can basically satisfy the
market demand. Many organic raw materials have attained the
objectives defined in the Tenth Five-year Development Program.
For example, the capacity of ethylene in China was 4.528 million
t/a at the end of the Ninth Five-year Plan period and increased
to 6.005 million t/a in 2004. With the completion of the ethylene
units in Shanghai Secco Petrochemical Company and Yangzi BASF
Petrochemical Co., Ltd., the capacity of ethylene in China
reached 7.50 million t/a at the end of the Tenth Five-year Plan
period, an increase of 65.9% over the end of the Ninth Five-year
Plan period. The capacity of methanol in China was 3.70 million
t/a and the output was 1.98 million tons at the end of the Ninth
Five-year Plan period. The capacity of methanol reached 6.50
million t/a and the output reached 5.356 million tons at the end
of the Tenth Five-year Plan period, an increase of 75.6% and 170%
respectively over the end of the Ninth Five-year Plan period.
The capacity of acetic acid in China was 1.00 million t/a and
the output was 865 thousand tons in 2000. It was estimated that
the capacity of acetic acid reached 1.70 million t/a and the
output reached 1.37 million tons in 2005. The capacity and the
output of acetic acid at the end of the Tenth Five-year Plan
period had an increase of 70% and 58% respectively over the end
of the Ninth Five-year Plan period.


    (2) The technology and equipment level has made a remarkable
upgrading


In terms of equipment level and raw material route, except for
small units, with the rapid development and the technical
renovation during the Tenth Five-year Plan period, the equipment
and the technology have reached the international level of the
1990s for most large organic raw material units and the
international level today for some units. Examples are
technologies for ethylene, methanol, acetic acid, phthalic
anhydride and 1,4-butanediol. The raw material route mainly
based on coal and agricultural/sideline products before the
Ninth Five-year Plan period has shifted to the raw material route
mainly based on oil and natural gas, keeping in line with the
development trend of raw material routes in countries with
advanced industry. With the constant price rise of crude oil in
recent years, the raw material route has started to develop
towards diversification such as natural gas chemicals,
biological chemicals and coal chemicals.


     (3) The impact of the domestic demand on the global market
has increased constantly


Due to the weak foundation of the organic raw material sector
in China, some organic raw materials still can not meet the
demand in related sectors. Organic raw materials needing to be
imported from abroad with great quantities include mono ethylene
glycol, PX (para-xylene), PTA (purified terephthalic acid),
phenol/acetone and styrene. For example, the import amount of
PTA in China was 5.72 million tons in 2004, accounting for 66%
of the total export amount in the world. The import amount of
mono ethylene glycol in China was 3.39 million tons in 2004,
accounting for around 43% of the total export amount in the world.
The import amount of acrylonitrile in China was 320 thousand tons
in 2004, accounting for around 16% of the total export amount
in the world. The supply shortage of organic raw materials has
restricted the rapid development of downstream products such as
synthetic resins. Since the Tenth Five-year Plan period, in
particular, the national economy in China has developed rapidly.
Comparatively speaking, the growth of organic raw materials is
lower than the growth of synthetic materials. There is therefore
a considerable supply deficit of some organic raw materials and
import has to be made.


    (4) The petrochemical sector in China is in the period of
prosperity


The global economy developed rapidly from 2002 to 2005.
Petrochemical products in the world are in the peak period. Large
foreign companies have constructed or expanded ethylene and
methanol units in Asia and the Middle East. Most of these units
will start production from 2006 to 2010.
     The production of basic organic chemical raw materials in
China has maintained a trend of sustained rapid development. The
scale of some organic raw materials holds a leading position in
the world. The output of ethylene in China was 6.266 million tons
in 2004, holding the third place in the world. Besides, the
execution of some large projects has also led to a rapid
development of the organic raw material sector in China. For
example, owing to the completion of the 900 thousand t/a ethylene
unit in Shanghai Secco and the 600 thousand t/a ethylene unit
in BASF-YPC Co., Ltd., the capacity and the output of organic
raw materials such as ethylene, propylene, styrene and mono
ethylene glycol have increased greatly. Contributions have been
made to the attainment of objectives defined in the Tenth
Five-year Development Program for the organic raw material
sector.


    (5) The consumption of partial organic raw materials holds
a leading position in the world


The consumption of PTA, mono ethylene glycol and PX in China
already holds a leading position in the world. Great quantities
of these products, however, have to be imported from abroad.
    Problems put before the organic raw material sector in China
include shortage of petroleum and chemical resources,
irrational distribution, insufficient input in science and
technology and inadequate development ability. The shortage of
oil/gas resources, in particular, has become a major factor
seriously restricting the development of the organic raw
material sector. The output of ethylene was 6.266 million tons
in 2004 and 19.11 million tons of light oil was consumed. The
output of ethylene is expected to reach 15.6 million tons in 2010
and 48.8 million tons of light oil will be needed. The amount
of li