Recently Released Market Study: China Petrochemicals Report Q1 2013

New Energy market report from Business Monitor International: "China Petrochemicals Report Q1 2013"


Boston, MA -- (SBWire) -- 03/08/2013 --BMI's China Petrochemicals Report Q113 examines the short-term growth trends that are in play across the local industry as it ramps up capacity in an increasingly volatile export environment. This report analyses the latest developments and projects throughout the petrochemicals sectors and looks at how capacity growth could affect global markets. It also examines the performance of leading operators and their risk management and growth strategies.

In 2012, petrochemicals demand growth underperformed the expansion of the wider economy. The country's domestic consumption of ethylene was estimated at 32.5 million tonnes (mnt) for 2012, growing at a slower annual pace of 3.8% compared with 4.9% in the previous year. Growth in polymers was around 4%, according to BMI estimates, which was half the rate of GDP growth. Two factors were behind the slowdown in the petrochemicals market: the effects of the economic stimulus package of 2008-2010 which led to a surge in production and buying beyond what could be sustained in the mediumterm, leading to massive inventories, and the decline in industrial activity resulting from a slowdown in export trade. However, the effects on the industry have been more limited, with exports and output holding up well. While BMI estimates that ethylene production shrank 3.7% year-on-year (y-o-y) to 14.7mnt in 2012, primary plastics were up 10.6% to 52mnt and plastic products grew 7.6% to 59mnt. Nevertheless, there was a perceptible shift in plastics output growth performance through the year, deteriorating to zero growth by Q312.

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BMI has revised the following forecasts/views:

- Despite the increase in capacity, the outlook for the Chinese petrochemicals industry in 2013 is clouded by oversupply in the real estate sector and a large inventory overhang in the manufacturing sector. On the upside, political uncertainty has abated as a result of the conclusion of the changeover in leadership of the ruling Chinese Communist Party.
- Growth in ethylene demand over the medium-term should lead to consumption rising above 40mnt by 2017, fuelled in large part by consumption of LLDPE. PE production will account for around 58% of overall ethylene demand. Meanwhile, Chinese ethylene capacity in China will increase to 33.7mn tpa by 2017, a rise of 56% from 2012.
- In BMI's Asia Petrochemicals risk/reward ratings (RRRs) matrix, China scores 80.5 points, unchanged from the previous quarter. However, it has been knocked off its first place, having been overtaken by South Korea, which is now 0.9 points ahead due to a rapid improvement in its market and country risk scores. China is just 0.4 points ahead of Japan and any decline in country risk score could push it into third place.

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