PTA Capacity Expands Rapidly

By John Zheng  

Capacity increases stably
in the world

The capacity of PTA (purified terephthalic acid) in the world
reached 34.221 million t/a in 2005 and the apparent consumption
was 31.45 million tons, an increase of 8.5% and 6.2% respectively
over 2004. Due to the massive capacity expansion, the operating
rate in 2005 dropped from 96% to 94%.
   The total capacity of PTA in top 10 producers was around 20.60
million t/a, accounting for around 60% of the world total. BP
was the largest producer and its capacity reached around 7.376
million t/a, an increase of 4.5% over 2004.
   The consumption of PTA in the world is mainly distributed in
Asia, North America and Western Europe. The consumption in these
three regions in 2005 accounted respectively for 74.4%, 14.0%
and 7.2% of the world total. The consumption proportion in Asia
in 2005 was 1.3 percentage points higher than 2004 whereas the
proportion in North America and Western Europe had a slight drop.
The rapid demand growth of PTA in the world in recent years has
mainly resulted from the brisk demand of polyester.
   The trade volume of PTA in the world is mainly distributed
in Asia. The import amount and the export amount in Asia in 2005
accounted respectively for 71.1% and 65.9% of the world total.
The proportion in Western Europe was 14.6% and 20.1% and the
proportion in North America was 5.9% and 11.3%. North America
and Western Europe are major net export regions of PTA in the
world whereas Asia, South and Central America, Africa and
Central and Eastern Europe are major net import regions. Judging
from the global trade trend of PTA in recent years, the
proportion of the trade volume in Asia in the world total has
increased constantly, the proportion in Western Europe has
dropped slightly and the proportion in North America has
presented a trend of decline.
   PTA in the world is mainly used to produce polyester and the
consumption in this sector accounts for more than 98% of the
total. The PTA sector will still develop rapidly in the next few
years. It is expected that the capacity of PTA in the world will
reach more than 49.52 million t/a in 2010. The new capacity will
mainly come from Asia, especially Chinese Mainland, India,
Thailand and Taiwan province. There are not many construction
plans in the Middle East, North America and Western Europe and
the growth of the PTA capacity in these regions will be
relatively slow.

Supply and demand in China

     (1) Output increased rapidly

The PTA sector in China has developed rapidly in recent years.
The total capacity was already more than 6.0 million t/a in 2005
and the output was around 5.56 million tons, an increase of 25.7%
over 2004. The 600 thousand t/a PTA project in Zhejiang Hualian
Sunshine Petrochemical Company Ltd. started production in April
2005. (CCR2005, No. 11) The 600 thousand t/a PTA project in
Zhejiang Yisheng Petrochemical Company Ltd. was completed and
put on stream in August 2005. (CCR2005, No. 26) As China has a
huge supply deficit in the PTA market, some producers are
planning to construct or expand PTA units. According to the known
construction and expansion plans, the newly added capacity of
PTA in China will reach 9.85 million t/a during 2006-2010.
Besides the units in CNPC Liaoyang Petrochemical Company Ltd.
and Jinan Zhenghao Advanced Fiber Co., Ltd., other newly added
capacity is distributed in companies located in southeastern
coastal areas such as Zhuhai Biyang Chemical Co., Ltd., Sinopec
Yangzi Petrochemical Company Ltd., Zhejiang Hualian Sunshine
Petrochemical Company Ltd., Ningbo Mitsubishi Chemical Co.,
Ltd., Fujian Shishi Jialong Petrochemical and Textile Co., Ltd.,
Zhejiang Yisheng Petrochemical Company Ltd. and Jiangsu
Jiangyin Hanbon Petrochemical Co., Ltd.
    PTA in China is almost totally used to produce polyester.
Owing to the rapid development of the polyester industry,
especially private companies in southeastern coastal areas, the
demand of PTA has always maintained a trend of rapid growth. The
output of polyester in China was around 14.0 million tons in 2005,
consuming around 12.0 million tons of PTA. The consumption of
PTA in engineering plastics such as PBT (polybutylene
terephthalate) was only around 51 thousand tons. It is expected
that the present status of using PTA mainly in the polyester
production will have no change before 2010 and the demand of PTA
in PBT will still be quite small.

     (2) Import grew stably

Despite the rapid expansion of the PTA capacity in China, the
import amount has increased constantly due to the brisk demand
in the downstream polyester production. According to customs
statistics, the total import amount of PTA in China was 6.491
million tons in 2005, an increase of around 770 thousand tons
over 2004 and accounting for around 54% of the apparent
consumption.
    The amount of PTA imported in the mode of general trade
reached 5.125 million tons in 2005, accounting for 79.0% of the
total and the proportion was around 12.0 percentage points lower
than 2004. The amount imported in the mode of processing and
installing imported materials trading was around 820 thousand
tons, accounting for 12.6% of the total and the proportion was
8.0 percentage points higher. The proportion of the amount
imported in other trade modes was also around 4.0 percentage
points higher. Private companies in China have constructed lots
of polyester projects in recent years and the demand of PTA is
quite large. As these private polyester producers basically have
no upstream units, raw material PTA they need has to be imported
from abroad. PTA importers are therefore mostly private and
foreign-funded companies mainly distributed in southeastern
coastal areas.
    Major sources for the import of PTA in 2005 are peripheral
countries and regions. The amount imported from Korea, Taiwan
province, Japan, Indonesia, Thailand and Saudi Arabia accounted
for 95.9% of the total. The amount imported from North America
has reduced gradually in recent years.
    The import of PTA in China is mainly distributed in
southeastern coastal areas in recent years because these areas
are polyester production bases. Areas with considerable import
amount in 2005 mainly included Zhejiang province, Jiangsu
province, Shanghai and Shandong province and their proportion
in the total amount was respectively 40.1%, 33.4%, 13.5% and 3.1%.
The import amount in Jiangsu province was around 950 thousand
tons higher than 2004 and the proportion was up by 12.0
percentage points.

     (3) Sustained high price before 2007

The market price of PTA in China fluctuated at a high level in
2005. It recovered gradually in July 2005 from the trough, but
only to have a slight drop once again at the end of 2005. The
average ex-factory price of PTA was RMB8 084 per ton in 2005,
an increase of 4.9% over 2004.
    Price changes of PTA as raw material for polyester are mainly
influenced by raw material cost, downstream demand and supply
trend. Market features are also different in different stages
of the prosperous period in the petrochemical industry of the
world. The improvement of the world economy in recent years has
promoted a rapid increase of the dem