Recovery of Petrochemical Industry Speeds up in September    

By China Petroleum and Chemical Industry Association (CPCIA)   

CPCIA reported the economic recovery of Chinese petrochemical industry speeded up in September, with high growth in production and improvement in operation rate. Demand for some major chemicals went warmer, prices remained steady, the investment in the industry increased continuously at a high speed and the year-on-year drop in imports and exports was narrowed.
   In September alone, China's petroleum and chemical industry achieved a total production value (output multiplied by current price) of RMB613.97 billion, hitting the year's high, growing 3.3% year over year and 5.97% over August, which was also the first month recording positive growth in this year. All of four sectors witnessed a month on month growth. Among the chemical sector, only the synthetic materials segment suffered a 1.74% decline in production value than August this year, the chemical mining segment reported a month-on-month growth of 25.54%.
   The cumulative production value in the first nine months was RMB4 680 billion, falling 7.9% year over year, compared with 9.6% in the first eight months. By quarter, the year-on-year drop was 14% for Q1, 7.9% for Q2 and 3.1% for Q3. CPCIA expected a positive growth to arise in Q4.
   If China's macro economy can remain the stable trend in the remaining months, CPCIA projected that the economic performance of the petrochemical industry will end the slow recovery period before the end of 2009 and enter into an expansion stage.
   Among the 62 petrochemicals tracked by CPCIA, the output of 56 petrochemicals grew annually in September. Of that, 44 petrochemicals gained a double digit growth.  
   The demand for oil products remained recovering in September, and the demands for synthetic materials, rubber, tire and methanol continued to grow rapidly. In the first three quarters, the apparent consumption of chemical fertilizers increased 12.7% over the year-ago period, compared with the 17.1% growth in the first two quarters. The apparent consumption of petroleum family gained a year-on-year growth of 0.7% in the first three quarters, that of ethylene increasing 3%, methanol 37.8%, pure benzene 9.8%, polyethylene 25.9%, polypropylene 19.3%, polyvinyl chloride 17.8%, polyester 22.5% and tires 45.9%.
   Spring is arriving at the petrochemical market, CPCIA stated. The umbrella price index that was supplied by the National Bureau of Statistics through tracking 1 046 petrochemicals was 85.80 in September (equivalent to a 14.2% drop over the year-ago period), compared with 81.30 in this August. CPCIA attributed the recovery to the driving of petroleum price. The crude oil price index in September went up by 11.8 percentage points than August.
   The investment in the chemical sector boosted continuously in September, CPCIA judged. In the first nine months, the total fix asset investment in China's petroleum and chemical industry augmented 11.54% year over year, compared with the 12.3% increase in the first eight months and 13.5% in the first seven months. The investment made by the chemical sector accounted for 66.3% of the total, with a reported growth of 28.1% over one year earlier. The investment in the petroleum and natural gas exploration and production sector plunged by 13.7% year over year and the refining sector dropped by 14.1%.  
   In September the total imports and exports of the petrochemical industry was US$32.193 billion, hitting the year's high, plummeting 17.9% over the year-ago period (the drop was 30% in August, according to CPCIA). Of that, the imports was US$22.785 billion, falling 16.9% year over year and the exports was US$9.408 billion, falling 20.2%. In the first nine months, the total imports and exports of the petrochemical industry dropped 32.8% over the same period of 2008. Of which, the exports dropped 30.2% and the imports declined 33.8%. The trade deficit for the industry accumulated to US$88.518 billion, a down of 36.5% annualized.   
   Three problems CPCIA warned domestic petrochemical firms in its September report include the slack market, overcapacity and difficulties in exports.

Production value in China's petroleum and chemical industry by sector
Sector
    in September    Growth (%)    in Jan-Sep      Growth (%)
  (billion RMB )    year-on-year    (billion RMB)     year-on-year
Total      613.97    3.3    4 678.69    -7.9
The petroleum and natural gas exploration and production sector
    67.98    -23.7    509.90    -37.5
The refining sector
    170.64    1.2     1 248.50    -12.4
The specialized chemical equipment manufacturing sector
    14.42    0.2     125.62    15.6
The chemical sector
    360.93    11.9     2 794.67    2.4
   Of which
   The chemical mining segment
    2.21    20.6    16.79    12.3
   The basic chemical raw materials manufacture segment
    88.22    5.9     656.65    -6.9
   The fertilizer manufacture segment
    40.13    -1.7    333.85    -1.8
   The chemical pesticide manufacture segment
    10.44    8.5     99.98    2.1
   The coatings and pigment manufacture segment
    30.10    22.0    224.60    5.6
   The synthetic materials segment
    56.31    13.5    437.66    -0.3
   The specialty chemicals manufacture segment
    88.76    17.9    679.55    11.4
   The rubber product segment
    44.75    19.8    345.58    11.5
   Source: CPCIA