Status Quo and Prospects of China's Synthetic Resins Industry   

By Zhang Fuqin, China Petroleum Planning & Engineering Institute

Capacity and production grows fast

During the "Eleventh Five-Year Plan" period (2006-2010), China's synthetic resins output was constantly increasing. In 2010, it reached 43.609 million tons, up 18.3% year on year, of which the output of polyethylene (PE) was 9.858 million tons, up 28.6% year on year; polypropylene (PP) 9.168 million tons, up 13.5%; polyvinyl chloride (PVC) 11.301 million tons, up 11.3%; polystyrene (PS) 1.553 million tons, up 40.0% (growing fastest among various types of synthetic resin); and ABS 338 000 tons, up 15.0%.
   In 2010, several large-scale polyolefin plants were put into operation in China. Tianjin Petrochemical's new 1 million t/a ethylene project came on line in January 2010, including a 300 000 t/a HDPE unit, a 300 000 t/a full-density PE unit and a 450 000 t/a PP unit. Panjin Petrochemical's new 450 000 t/a ethylene project got into run in February 2010, including a 300 000 t/a HDPE unit and a 250 000 t/a PP unit. Zhenhai Refining & Petrochemical's new 1 million t/a ethylene project was put into production, including a 450 000 t/a LLDPE unit and a 300 000 t/a PP unit.
   In 2010, some coal-to-olefins plants in China started up. Shenhua Group's methanol-to-olefins project in Baotou, Inner Mongolia was put into operation, including a 300 000 t/a HDPE unit and a 300 000 t/a PP unit.

Consumption will continue to increase

From 2006 to 2010, driven by household appliances, clothing, electronics, automotive, real estate and other downstream industries, the consumption of China's three major synthetic resins (PE, PP and PVC) continued to grow. In 2010, China's apparent consumption of synthetic resins was 71.356 million tons, up 10.5% year on year, increasing by 68% compared to 2005, of which the consumption of PE was 17.058 million tons, up13.6% year on year; PP 12.953 million tons, up 6.2%; PVC 12.546 million tons, up 6.0%; and ABS 2.452 million tons, up 1.7%.
   In 2010, the consumption of LDPE and LLDPE in packaging films accounted for 59% of the total demand, cables 3%, injection molding films 9%, pipes 3%, clothing 6%, agricultural films 17%, and others 3%. The consumption structure of HDPE was: packaging films 20%, blown films 22%, injection molding films 18%, cables 3%, fiber 11%, pipes 15%, and others 11%.
   The packaging industry is the largest consumer of synthetic resins. During the "Twelfth Five-Year Plan" period (2011-2015), the market demand for new packaging products will keep growing, but the growth of demand for general packaging products will shrink significantly. The more and more bulk transportation for cement in China will cut down the demand for cement packaging materials. Large container packaging is becoming popular, food safety standards become increasingly strict, and environmental protection also becomes a trend. All these factors will affect the use of synthetic resins in the packaging industry. In the Chinese market, PE and PP are still the main varieties of synthetic resins for the packaging sector. PVC is only applied to the packaging of non-food products. BOPET (biaxially-oriented polyester) will replace BOPP (biaxially-oriented polypropylene) to some extent due to its lower price.
   For the agriculture industry, the demand growth for synthetic resins will mainly come from agricultural water pipes and livestock sheds in the future.
   In the construction sector, varieties of synthetic resins commonly used are PVC, HDPE and EPS (expandable polystyrene). The development of urbanization and infrastructure will lead to the growing demand for synthetic resins. PVC is still the mainstream plastic used in the construction sector. The demand for HDPE in the sector will maintain rapid growth. EPS will have a huge market potential in the wall insulation and other areas.
   The electronics industry is also a driver for the synthetic resins demand growth. In China, the output of electronic micro-computers is expected to reach more than 200 million units in 2011, and the output of refrigerators, color TVs, washing machines and air conditioners will grow 8% to 10% annually over the next years from 2011 to 2015. The demand for HIPS (high impact polystyrene sheets) in the TV industry will grow relatively steadily in the future, and that in household appliances, computers and accessories is expected to increase slightly.
   Daily necessities are also an important consuming area of synthetic resin. It is expected that the demand for synthetic resins in this area will increase a little in coming years.
   With the accelerating industrialization and urbanization in China, the demand for petrochemicals will maintain rapid growth. Driven by downstream industries such as packaging, agriculture, construction, electronics and daily use sector, the demand for synthetic resins will continue to increase in the next five years. It is expected that by 2015, China's PE production capacity will reach 15.88 million t/a, but the annual demand for PE will get to 21 million tons, indicating about 5.12 million ton in shortage. PP production capacity will increase to 16.98 million t/a by 2015, but the annual demand for PP will be 17.8 million tons, about 820 000 tons in shortage.

Self-sufficiency will further increase

Driven by the rapid development of advanced materials and emerging industries, the import volume of high-grade synthetic resins increased rapidly in China. Statistics show that in 2010, China's total synthetic resins import volume reached 30.694 million tons, up 2.6% year on year. But the imports of PE, PP and PVC in 2010 were down 0.7%, 7.1% and 22.7% year on year, respectively. At the same time, driven by the development of emerging industries, the imports of epoxy resins and polycarbonate increased significantly, reaching 310 000 tons and 1.264 million tons in 2010, respectively, up 31.6% and 23.1% year on year.
   In 2010, the self-sufficiency rate of synthetic resins was 61.1% in China, of which the self-sufficiency rate was 57.8% for PE, 70.8% for PP, 90.1% for PVC, 66.2% for PS and 13.8% for ABS.
   In the next few years, certain new ethylene projects and matching units at Dushanzi Petrochemical, Fujian Refining & Petrochemical, Tianjin Ethylene, Zhenhai Refining & Petrochemical, Wuhan Petrochemical and Sino-Kuwait Refinery & Petrochemical Complex will be put into operation, and several new coal-to-olefins and polyolefin projects will also get into run. Thus, by 2015, China's self-sufficiency rate of synthetic resins will increase to 75%.