Polyolefin Market Competition Will Be Fiercer in the Future   

By Yan Lisong, Sinopec Chemicals Sales Company North China Branch

Editor's note: Spurred by the economic recovery, China, northeast Asia and the Middle East are leading the world's robust polyolefin demand growth. And the polyolefin production capacity in Asia also keeps expanding. China will continue to build polyolefin projects in the coming couple of years. With an increasingly mature market and improvement made in special-purpose catalysts, China has become a focus in the global polyolefin manufacturing sector. Now FLEXPO 2010 again comes to China, bringing some latest international market information and the development trend of advanced technologies to Chinese polyolefin producers.

Capacity is expanding rapidly

China's polyolefin industry expanded its production capacity rapidly over the past 10-15 years. Its production capacity grew from less than 7.5 million t/a in 2001 to 21.54 million t/a in 2010, with an average annual growth rate of 12.9%, including 10.54 million t/a of PE (polyethylene)and 10.54 million t/a of PP (polypropylene). Among the past five years, 2009 and 2010 saw the most robust growth, with a total 6.81 million t/a capacity added.
   By region, south China is the largest polyolefin production base, followed by east China, northwest China, northeast and north China. Capacity growth mainly came from north, northeast and northwest China over the past years. The three regions accounted for 51.81% of the nation's polyolefin capacity in 2010, compared with 45.65% in 2008. The share of east China and central China fell while that of south China remained flat during the period.
   South China is the nation's largest PE production base, followed by east China, northwest China, northeast China and north China. East China is the nation's largest PP production base, followed by south China, north China, northwest China and northeast China. See Table 1 and Table 2 for the nation's PE and PP capacity distribution by region.

Table 1 China's PE capacity distribution from 2006-2010     (thousand t/a)
Region    2006    2007    2008    2009    2010
North/northeast/northwest regions
   Northeast China    1435    1435    1435    1535    1835
   Northwest China    950    950    950    1850    2150
   North China    1060    1060    1060    1060    1660
   Subtotal    3445    3445    3445    4445    5645
East region
   East China    1805    1835    1835    1835    2285
South region
   South China    1280    1570    1570    2410    2410
Central region
   Central China    200    200    200    200    200
   Southwest China    -    -    -    -    -
   Subtotal    200    200    200    200    200
Total    6730    7050    7050    8890    10540

Table 2 China's PP capacity distribution by region from 2005-2010 (thousand t/a)
Region    2005    2007    2009    2010
North region
   Northeast China    840    840    990    1440
   Northwest China    390    690    1440    1540
   North China    790    790    990    1840
   Subtotal    2020    2320    3420    4820
East region
   East China    1360    1600    2100    2400
South region
   South China    460    1200    1740    1980
Central region
   Central China    460    460    460    460
   Southwest China    -
   Subtotal    460    460    460    460
Total    4300    5580    7720    9660

    China's polyolefin capacity expanded fast in 2009 and 2010, with 14 new or expansion projects being launched, of which 6 projects have a capacity of more than 500 000 t/a, including new polyolefin projects built by Zhenhai Ethylene, the Sinopec-Exxon Mobil-Saudi Aramco joint venture (Fujian), the Sinopec-SABIC Company (Tianjin), Panjin Ethylene, Dushanzi Petrochemical, Dagang Petrochemical, Jinxi Petrochemical, and Yan'an Refining and Chemical. The new capacity also included Shenhua's coal-to-chemicals plant in Baotou. In all, China's polyolefin capacity increased 6.81 million t/a during the period, with an annual growth rate of 25%. A total capacity of 4.48 million t/a was added in north China, northeast China and northwest China, which accounted for 64% of the nation's total new polyolefin capacity during the period. South China and east China increased capacity by 1.58 million t/a and 750 000 t/a, respectively. No new capacity was added in central China during the period. The 6.81 million t/a new polyolefin capacity include 3.53 million t/a for PE (low density, high density and linear) and 3.28 million t/a for PP. See Table 3 for China's new polyolefin capacity statistics during 2009-2010.
   In the next five years, China's polyolefin capacity will still grow at an unprecedented rate. About 630 000 t/a of new capacity will be added per year. China's PE capacity is estimated to reach 13.69 million t/a by 2015, and China's PP capacity will reach 18 million t/a by 2015. By then, China will become the world's largest PP maker.
                                                    
Table 3 China's new polyolefin capacity during 2009-2010                    (thousand t/a)
Region    Company    Subtotal     Subtotal     PP&nb