Production Rose with Higher Prices

By Feng Shiliang of CPCIA
In the first half of 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
Petroleum and Chemical Industry Association), the output of 61
types increased compared with the same period of 2005,
accounting for 95.4% of the total. In June 2006, pulled by the
soaring crude oil prices and demand increase of upstream and
downstream sectors, 97 out of 156 types of chemicals being
tracked had a higher price than that in May 2006.

Production

According to the statistics released by the National Bureau of
Statistics of China, in the first half of 2006, the total output
of crude oil reached 91.664 million tons, an increase of 2.1%
over the same period of 2005, and the output of natural gas rose
by 23.9% to 28.83 billion m3.
     In the first half of 2006, the crude oil processing amount
was 149.385 million tons, an increase of 5.6% over the same
period of 2005. The output of gasoline and diesel increased
considerably, of which the output of gasoline was 27.617 million
tons, a rise of 5.3% and the output of diesel jumped by 6.6% to
57.129 million tons. However, due to the slack demand, the output
of kerosene dropped by 3.2%.
     In the first half of 2006, the output of chemical
fertilizers was 26.50 million tons, a rise of 15.5% compared with
the same period of 2005, and the output growth was around 3.8
percentage points higher than that in the same period of 2005.
Pesticides output was 657 thousand tons, an increase of 16.9%
compared with the same period of 2005. Among the pesticides, the
output growth was 23.2% for herbicides, 15.0% for insecticides
and 4.8% for fungicides.
     The output of some inorganic materials increased
considerably in the first half of 2006. Among them, the output
growth was 20.0% for caustic soda, 10.6% for soda ash, and 32.9%
for calcium carbide.
     Due to the expanded capacity, the output of the main organic
materials increased rapidly in the first half of 2006. The output
of ethylene and pure benzene, in particular, rose by 18.2% and
22.0% respectively over the same period of 2005.
     With several ethylene projects putting into operation, the
output of synthetic resins further increased. The output of
general-purpose synthetic resins had a high growth of 21.2% to
12.225 million tons in the first half of 2006 in response of
strong demand, of which, the output of PE (polyethylene) and PVC
(polyvinyl chloride) increased by 19.2% and 26.2% respectively.
Synthetic rubber抯 output gained as high as 17.7% to 933
thousand tons in the first half of 2006, and the output of
synthetic fibers increased by 14.7%.
     The output of tyres was 203.204 million pieces in the first
half of 2006, a year-on-year increase of 14.0%, and the rubber
shoes output rose by 20.2% to 701.939 million pairs.

Prices

The global crude oil price rose rapidly in June 2006. The average
spot prices of Blent crude oil reached US$68.1 per barrel, a
year-on-year increase of 27.9%. Due to the price rise of crude
oil in the international market, the cost of refineries
increased constantly, the National Development and Reform
Commission lifted the ex-factory prices of oil products. The
average market price of 90# gasoline and 0# diesel was RMB5978/t
and RMB5195/t in China in June 2006, a rise of 8.1% and 2.9%
respectively over May 2006.
     Inorganic materials showed different price change
according to the strong or slack demand. In June 2006, the
average price of caustic soda (liquid) increased by 4.3%
compared with May 2006, and the average price of caustic soda
(flake) dropped by 6.1%.
     Pulled by the oil price rise, the prices of most organic
materials showed an up trend in June 2006 compared with May 2006,
however, with the capacity increase both at home and abroad, the
prices of some organic materials dropped compared with June 2005.
CPCIA reported that the average prices of propylene, toluene and
pure benzene in June 2006 were RMB10 200/t, RMB 8 880/t and RMB7
240/t, a rise of 24.4%, 17.7% and 15.8% respectively over those
in May 2006.
     Due to the increase in demand and production cost, the
prices of fertilizers increased constantly in June 2006, the
average price of urea in June 2006 was RMB1 900/t, an increase
of 1.1% over that in May 2006. The average price of potassium
chloride rose by 3.2% to RMB1 960/t compared with May 2006.
     The prices of synthetic resins showed different price
change in June 2006. Except HDPE and PP, the prices of other
general-purpose synthetic resins showed a certain rise compared
with May 2006. The average prices of HDPE (high density
polyethylene) and PP (polypropylene) were RMB13 350/t and RMB12
300/t in June 2006, a drop of 1.8% and 0.4% respectively from
May 2006. The average price of LDPE (low density polyethylene)
was around RMB12 900/t, a rise of 0.8%.
     The price of natural rubber further increased in June 2006.
The average price of natural rubber reached around RMB25 250/t,
an increase of 3.1% over May 2006, and brought a great pressure
on the rubber consumption sector. Synthetic rubbers also showed
an overall price rise compared with May 2006, among which the
price rise was 14.9% for styrene-butadiene rubber and 5.4% for
cis-1,4-polybutadiene rubber.