China's PX and PTA Industries Need to Optimize Their Industrial Layouts   

With the support of related national industrial policies, China's paraxylene (PX) and polymer-grade purified terephthalic acid (PTA) industries basically realized an orderly, healthy and fast development during the Eleventh Five-Year Program period (2006-2010). In China, PX units have become larger and larger. Their technical level has improved significantly, and their equipment sources are more localized. The industrial layout of PTA has been optimized. The technical level of the PTA industry has increased significantly, and its independent innovation ability has constantly improved. The overall competitiveness of the PX and PTA industries has been enhanced significantly.
   What market situation will the PX and PTA industries face during the Twelfth Five-Year Program period (2011-2015). At present, China has become the world's largest PX and PTA producer and consumer. Its PX capacity and consumption account for about 20% and 30% of the global total, respectively, and its PTA capacity and consumption account for about 30% and 46% of the world's total respectively. As China has such large PX and PTA output and consumption, it has significant impacts on the development of the global PX and PTA industry chain.
   The PX industry will still have much room for development during the Twelfth Five-Year Program period. First, it has a huge market potential. From 2005 to 2010, China's PX capacity tripled from 2.69 million t/a to 8.17 million t/a, and the domestic satisfaction rate also increased from 59% to 76%. However because the downstream PTA industry has now become one of the investment hotspots in the petrochemical field, it will grow rapidly in China during the Twelfth Five-Year Program period. This will expand the market space of PX.
   Second, the Middle East and other regions continue to make use of their resource advantages to constantly expand their PX capacity. This will bring huge competition pressure to China's PX producers. The impact of the global financial crisis on the real economy and market demand will continue to last for some time. This may have some impacts on the development of PX-based polyester industry chain.
   Third, the total capacity of PX continues to grow. This will bring certain pressure to the supply of raw materials (mainly chemical light oil).
   The growth of the demand for PTA may slow down during the Twelfth Five-Year Program period. In China, the supply and demand of PTA have undergone significant changes. From 2000 to 2010, China's PTA capacity increased from 2.1 million t/a to 16 million t/a , increasing by 6.6 times in the past 10 years, and the domestic satisfaction rate also increased from 45% to 70%. However, downstream applications have become mature, so the growth of their demand for PTA has slowed down.
   In China, investors in the PTA industry are dispersed. Private and foreign enterprises are major investors in this field, so the competition of the PTA market is relatively fierce. In the Middle East and Southeast Asia, there is a trend to develop downstream industries of aromatics. Therefore, in the future, the competition of the PTA market will become increasingly fierce at home and abroad.
   The PTA industry is a highly concentrated and capital-intensive chemical industry. In China, PTA units are now mainly distributed in developed coastal areas. The downstream application field of PTA is the labor-intensive and export-oriented textile industry, which is now being transferred to underdeveloped western areas. Optimizing and adjusting the layout of the PTA industry to better promote the orderly and healthy development of the whole industrial chain needs careful and overall planning.
   As for the PX industry, the demand for PX mainly depends on the development of PTA production. It is predicted that in order to meet domestic demand, by 2015 and 2020 China's annual PTA output should reach 24 million tons and 30.4 million tons, respectively. If the domestic satisfaction rate of PX is 80% and the consumption of PX is 0.66 tons per ton PTA, by 2015 and 2020 the domestic demand for PX will be about 12.67 million tons and 16.05 million tons, respectively. If the average operating rate of PX units is 90%, by 2015 and 2020 the domestic capacity of PX should be 14.07 million t/a and 18.21 million t/a, respectively, growing by 5.9 million t/a and 9.66 million t/a, respectively, compared to the 2010 level (8.17 million t/a).
   Pulled by China's policy of expanding domestic demand, the domestic economy is recovering. The global economy is also gradually recovering from the financial crisis. To meet the domestic demand for polyester, ensure a steady raw material supply for PTA and enhance the overall competitiveness of the industrial chain, China's PX industry should also develop properly with the expansion of PTA production. During the 2011-2015 period, it is proper that China increases its PX capacity by about 6 million t/a and controls the rate of its dependence on imports at about 20%. By 2015, China's total PX capacity will reach about 14.1 million t/a.
   As for the PTA industry, the demand for PTA depends primarily on the production of polyester. In the past decade, China's polyester fiber industry had maintained an average annual growth rate of more than 15%, and driven by related industries, the demand for polyester non-fiber has also grown rapidly at an average annual growth of more than 20%. According to sound predictions, by 2015 and 2020, China's annual equivalent demand for PTA will reach 30 million tons and 38 million tons, respectively. If the domestic satisfaction rate is 80% and the average operating rate of PTA units is 90%, by 2015 and 2020 the corresponding PTA capacity should be 26.70 million t/a and 33.8 million t/a, respectively, growing by 10.70 million t/a and 17.80 million t/a, respectively, compared to the 2010 level (16 million t/a).
    To meet the growing domestic demand for polyester and enhance the overall competitiveness of the industrial chain, China's PTA industry needs appropriate and orderly development, gradually increasing the domestic supply capacity and reducing dependence on imports. According to experts' calculations, during the 2011-2015 period China can increase its PTA capacity by 11 million t/a and control the rate of its dependence on imports at about 20%. By 2015, China's total PTA capacity will reach about 27 million t/a.
   Experts suggest that it is necessary to set access conditions for the PX industry. For example, new PX units must each have a design capacity of more than 600 000 t/a, and local equipment should account for more than 80% of their total equipment value.
    As for the PTA industry, the Chinese government should encourage a variety of investors to jointly build large PTA projects, set necessary access conditions for the industry, appropriately raise the capital adequacy ratio of PTA projects, for example, from 30% to 40%, and stipulate that new PTA projects must each have a design capacity of more than 1 million t/a (i.e., having an hourly output of 125 tons, and running 8 000 hours a year).