Production Continued to Increase with Prices Moving up

By Feng Shiliang of CPCIA

In April 2006, China's petroleum and chemical industry remained up trend in production. Among the 65 types of petrochemical products that have been tracked by CPCIA (China Petrochemical and Chemical Industry Association), the output of 60 types increased, accounting for 92.3% of the total. Pulled by the soaring crude oil prices and demand increase of upstream and downstream sectors, 76 out of 156 types of chemicals being tracked had a higher price than that in March 2006.

Production

According to the statistics released by the National Bureau of Statistics of China, in April 2006, the total output of crude oil reached 15.125 million tons, an increase of 2.6% over the same period of 2005, and the output of natural gas grew by 21.4% to 4.6 billion m3.   In April 2006, the crude oil processing amount was 25.022 million tons, an increase of 7.1% over April 2005, therefore the output of oil products has a growth of 7.5% to 15.086 million tons. The output of gasoline and diesel increase considerably, of which the output of gasoline was 4.592 million tons, a rise of 7.9% and the output of diesel jumped by 8.1% to 9.686 million tons. However, due to the slack demand, the output of fuel oil dropped by 23.8%.   In April 2006, the chemical fertilizers output increased by 9.7% compared with April 2005, however the output growth was around 10 percentage points lower than that in March 2006. Pesticides production climbed up by 16.5%, compared to April 2005. The rapid growth was mainly due to a rise of 28.5% for the herbicides.    The output growth of some inorganic materials decreased considerably in April 2006. Among them, the output growth was 19.8% for caustic soda, 3.5% for soda ash, and -0.8% for hydrochloric acid.    The production of the main organic materials increased rapidly in April 2006. Ethylene, methanol and pure benzene, in particular, rose by 32%, 20.5% and 17.3% respectively over the same period of 2005.     With several ethylene projects putting into operation, the capacity of synthetic resins has increased rapidly. The output of general-purpose synthetic resins had a record high growth of 29.2% in April 2006 in response to strong demand, of which, the output of PE, PP and PVC increased by 34%, 26.7% and 29.8% respectively. Synthetic rubber's output gained as high as 15.2% in April 2006, and the output of synthetic fibers increased by 25%.     The output of tires increased by 12.6% to 34.962 million pieces in April 2006, and the rubber shoes production rose by 7.3%.

Prices

Promoted by various factors such as Iran nuclear crisis, the global crude oil price increased rapidly in April 2006. The average spot prices of Blent crude oil reached US$69.3 per barrel, an increase of 33.5% over April 2005, while the average spot prices of WTI crude oil rose by 28.5% to US$68.7 per barrel.    Inorganic materials prices showed different price change according to the demand. In April 2006, the prices of caustic soda (liquid) and soda ash stood at RMB530/t and RMB1515/t, with a drop of 9.6% and 10.9% respectively compared with the same period of 2005.    Pulled by the oil price rise, the prices of quite a few organic materials showed an up trend in April 2006, however, with the capacity increase both at home and abroad, the prices of 54.8% organic materials dropped compared with April 2005. CPCIA reported that the prices of propylene, butadiene, toluene, pure benzene and methanol in April 2006 presented a certain rise compared with March 2006.    The price of fertilizers increased constantly in April 2006, the average price of urea in April 2006 was RMB1 860/t, an increase of 2.8% over that in April 2005. Due to the high price level and sufficient supply caused by the rapid output increase, the fertilizer market has entered a period of adjustment.     The demand of synthetic resins was slack in April 2006, however, due to the price rise of crude oil, the price of some resins still increased. The prices of the five main kinds of general-purpose synthetic resins (PE, PP, PVC, PS and ABS) showed a certain drop compared with April 2005, the prices of LDPE and PS, in particular, dropped by over 10%.    In April 2006, the price of natural rubber rebounded after decrease in March 2006.    The price of natural rubber reached around RMB20 000/t, an increase of around 4% over the previous month, and brought a great pressure on the rubber product sector. The prices of most synthetic rubbers remained steady compared with March 2006. However, due to the price rise of organic materials, the prices of styrene-butadiene rubber and cis-1,4-polybutadiene rubber rose by 7.8% and 6.5% respectively.