Import of DOP Decreases Constantly

Output increases rapidly

Worldwide output of plasticizers was around 7.5 million tons in
2005 -22% from North America, 38% from the Asia-Pacific region,
25% from Europe and 15% from other regions. China's production
of DOP (dioctylphthalate) is mainly in Shandong, Jiangsu and
Zhejiang provinces, and with steady capacity expansion, the
output of DOP in China has increased annually. According to
statistics from China Plasticizer Association, the output of DOP
was 480.6 thousand tons, a year-on-year increase of 43.5%.

Consumption increases constantly

DOP is in greater demand than any other plasticizer. Around 90%
of China’s use of DOP is in the production of flexible PVC
(polyvinyl chloride) products, and the balance is used in the
processing of synthetic rubber, adhesives, cellulose acetate,
coatings and other resins.
    Consumption of DOP in China has increased continually in
recent years, reaching 844 thousand tons in 2005 - an increase
of 15.8% over 2004. Demand for DOP is mainly distributed in
Jiangsu, Zhejiang, Fujian and Guangdong provinces, the demand
of DOP in these regions accounts for around 90% of the national
total. Major consumption sectors include PVC artificial leather,
cable materials, shrinking film and rolling film, PVC floor, PVC
wallpaper and PVC tube.

Import dependence decreases

The consumption of PVC has increased constantly and flexible PVC
products, in particular, still accounts for the largest share
of PVC consumption. The consumption of plasticizers therefore
presents a rising trend. Due to a supply deficit in the domestic
market, China has to import a large quantity of DOP to meet the
downstream demand. Imported DOP amounted to 370 thousand tons,
accounting for 43.8% of the DOP consumption, somewhat lower than
2004's 54.5%. DOP imported by China mainly came from the
Asia-Pacific region, of which the largest share was from South
Korea, and Taiwan province and Singapore came next.
    Due to the rapid increase of DOP output in the domestic
market, China’s importation of DOP has decreased considerably,
falling to 254.6 thousand tons in the first nine months of 2006,
a drop of 10.5% from the same period of 2005.

DOP price rises

In the first nine months of 2006, the price of DOP increased due
to the constant price rise of octanol caused by the oil price
rise. On September 15th, 2006, the Ministry of Commerce
announced a decision to extend by six months the investigation
into the dumping of octanol imported from Korea, Saudi Arabia,
Japan, EU and Indonesia. The deadline will be postponed to March
15th, 2007. (CCR 2006, No.28) Due to the unstable operation of
the domestic octanol units and increase of unplanned overhauls,
China's octanol production was seriously affected, the
constrained supply of octanol caused a drop of the operating rate
in DOP producers, and DOP was therefore in short supply.
   The downstream users still had inventory from April to May
2006 when the price of DOP rose. However, from August to
September 2006, as the price of DOP increased rapidly, the
downstream demand slowed because downstream users could not
afford the increased cost, and the operating rate of downstream
units was forced to drop. The price of DOP continued to rise from
August to September, but the expected purchase activity of
downstream users was curtailed. Due to the apparent decrease of
downstream demand, the price of DOP dropped in October 2006.

Market projection

The price of crude oil has dropped drastically, and due to the
completion of octanol unit overhauls, both in the home and abroad,
the short supply of octanol will be eased somewhat. Besides, the
price of DOP is still relatively high, it is expected that the
price of DOP will not see a large increase.
    Each price rise of DOP is basically caused by the raw
materials (including octanol and phthalic anhydride). The price
of phthalic anhydride rose drastically in July 2006, and once
replaced octanol to be the main driving factor for the price rise
of DOP. However, on the whole, octanol normally has larger impact
on the price of DOP.
    From November to December, the demand for DOP will enter a
slack season. However, because the oil price in winter will
probably increase considerably and drive the price of DOP upward,
it is expected that the price of DOP in China will hover in the
range of RMB14 500-RMB16 000 per ton.

Table 1 Major DOP Producers in China in 2005 (thousand tons)
Producer                      Output
Qilu Platicizers Co.    170.7
Zhejiang Huatai Fine Chemical Co.    82.3
Shandong Hongxin Chemical Co.    62.2
Jinling Petrochemical Co.    48.9
Beijing Huaying Chemical Co.    38.7
Suzhou Anli Chemical Co.    37.7
Shijiazhuang Bailong Chemical Co.    21.3
Henan Qing’an Chemical Hi-Tech Co.    18.3
Hangzhou Nature Organic Chemicals Co.    10.3
Tianjin Solvent Factory    6.1
Source: CNCIC Chemdata

Table 2  Import of DOP in China in Recent Years  (thousand tons)
Year    2001    2002    2003    2004    2005
Import    326.6    389.4    401.8    397.6    370.0
Source: CNCIC Chemdata