China Petroleum and Chemical Industry Saw Satisfactory Functioning and Balanced Supply/Demand in April     

By Feng Shiliang, CPCIA
According to the analysis report by China Petroleum and Chemical Industry Association (CPCIA), the unduly high growth of the petroleum and chemical production was further contained in April, the production growth in major sectors was further slowed down, the supply and demand in market were basically balanced, the production/sales ratio reached 98.79% and the prices still had a trend of overall increase. Due to the sustained drastic price rise of energies and raw materials, the cost in enterprises increased constantly and competition became fiercer.

1. High growth of the output value

Data from the National Bureau of statistics show that the industrial total output value accomplished by the petroleum and chemical sectors in April was RMB540.76 billion, an increase of 30.2% over the same period of 2007. The output value of the chemical sectors was RMB302.79 billion, accounting for 41.3% of the total and an increase of 31.8%. The output value of the oil/gas mining sector was RMB83.48 billion, accounting for 15.4% of the total and an increase of 41.3%. The output value of the refining sector was RMB143.92 billion, accounting for 26.6% of the total and an increase of 20.7%.
   The total output value of petroleum and chemical sectors was RMB1 997.37 billion from January to April 2008, an increase of 30.6% over the same period of 2007. The price rise was a force. In the first quarter of 2008, the total price index of more than 1 200 petroleum and chemical products included in the statistics was 15.25% higher than the same period of 2007.

2. Slowdown in the oil/gas production

China produced 15.414 million tons of crude oil this April, a slight increase of 0.5% over the same period of 2007 and the growth was 1.5 percentage points lower. The output of natural gas was 6.17 billion m3, an increase of 13.4% and the growth was 3.3 percentage points lower.
   China processed 27.379 million tons of crude oil in April, an increase of 3.6% over the same period of 2007, showing the lowest in recent years. The output of oil products (gasoline, kerosene and diesel) was 16.36 million tons, an increase of 4.1% and the growth was 1.4 percentage points lower. The output of gasoline and diesel was 4.832 million tons and 10.536 million tons respectively, an increase of 0.9% and 5.6% and the growth was 5.5 percentage points and 1.3 percentage points lower.

3.  Growth downturn in agrochemical production

With impacts from export tax imposition, raw material shortage, price rise and reduced domestic demand growth, the chemical fertilizer production was greatly slowed down in April. The total output of chemical fertilizers (converting to 100% nutrient) was 5.449 million tons, an increase of 4.1% over the same period of 2007 and the growth was 11.2 percentage points lower. The output of nitrogenous fertilizers was 3.854 million tons, an increase of 3.4% and the growth was 12.0 percentage points lower. The output of phosphate fertilizers was 1.282 million tons, an increase of 3.1% and the growth was around 12.0 percentage points lower. The output of potash fertilizers was 313 000 tons, an increase of 18.6%. The urea production increased stably and rapidly in April. The output of urea was 2.264 million tons, an increase of 6.1% and the growth was around 3.0 percentage points lower. The total output of chemical fertilizers was 19.438 million tons from January to April 2008, an increase of 6.1% over the same period of 2007 and the growth was 8.7 percentage points lower.
   The pesticide production was stable and the growth was slowed down in April. The output of pesticides was 183 000 tons, an increase of 15.1% over the same period of 2007 and the growth was 18.5 percentage points lower.

4. Recovery of basic chemical production

After a sustained slowdown in the first quarter of 2008, the basic chemical production had strong recovery in April. The production of inorganic chemical raw materials, in particular, showed a robust growth. The output of caustic soda was 1.654 million tons in April, an increase of 13.3% over the same period of last year and the growth was 4.2 percentage points higher. The soda ash production maintained briskness and the output was 1.586 million tons, an increase of 13.2%. The output of calcium carbide was 1.36 million tons, a drastic increase of 23.3% and the growth was 5.2 percentage points higher. The output of sulfuric acid was 4.831 million tons, an increase of 7.9% and the growth was 1.2 percentage points lower than the same period of 2007 but 2.8 percentage points higher than the first quarter of 2008. The output of phosphate ore increased by 30.2% and the growth was 12.5 percentage points higher.
   In spite of an overall slowdown, the production of organic chemicals and synthetic materials had evident signs of recovery. A few products even represented a strong restorative growth. The output of ethylene was 922 000 tons in April, an increase of 7.8% over the same period of 2007 and the growth was the biggest after the end of 2007. The high prices of energies promoted a rapid development of the methanol sector and the output of methanol was 899 000 tons in April, a drastic increase of 29.6%. The output of construction coatings also rose 25.2% and the growth was 14.6 percentage points higher than the first quarter of this year. With the impact from reduced downstream demand, the pure benzene production showed a decline and the output in April was down by 6.9%, a great difference from the growth of 38.5% in the same period of 2007. The output of synthetic resins was 2.783 million tons, an increase of 12.7% and the output of synthetic fibers was 2.029 million tons, an increase of 12.5%. The growth of synthetic resins and synthetic fibers still presented a declining trend but a considerable rise compared with the first quarter of this year. The output of synthetic rubbers was 210 000 tons, an increase of 26.9% and the growth was 14.1 percentage points higher.
   The recovery of basic chemical products today indicates that the domestic demand in the second quarter of 2008 will likely increase.

5. Market situation

In the 163 chemical products tracked by CPCIA, 115 showed a price rise in April compared with the same period of 2007, accounting for 70.6%. Three varieties had an equal price, accounting for 1.8%. 45 varieties showed a price drop, accounting for 27.6%.

    5.1 Consumption reduction and drastic price rise of chemical fertilizers

Stimulated by the raw material price rise and the production cost increase, the prices of chemical fertilizers in the domestic market continued to increase in April. The average prices of the 13 chemical fertilizers tracked by CPCIA in April were 59.36% higher than the same period of 2007 and 9.65% higher than the first quarter of this year.
   Due to the unduly rapid price rise of chemical fertilizers, the enthusiasm of farmers in using chemical fertilizers was weakened and the consumption of fertilizers drastically reduced. The apparent consumption of chemical fertilizers (100%) in China was 13.12 million tons in April, being 7.1% lower from the same period of 2007. The consumption of chemical fertilizers fell drastically in the first quarter of this year. The apparent consumption of nitrogenous fertilizers was 9.262 million tons, a drop of 4.7%, the apparent consumption of urea was 5.271 million tons, a drop of 9.6% and the apparent consumption of phosphate fertilizers was 2.586 million tons, a drop of 5.1%.

    5.2 Sustained price rise and demand slowdown of basic chemical raw materials

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