Clamshell Blog

2010, China will adhere to the expansion of domestic demand, especially consumer demand, continue to encourage home appliances, automobiles, agricultural machinery, preferential policies for energy-saving products, plastic raw materials, demand will continue to grow. The main varieties of plastic raw material of polyethylene, for example, consumption in 2010 will reach 16.37 million tons.

While the cost impact of the Middle East will continue, China – ASEAN Free Trade Area of the implementation of zero tariff and the domestic release of this new capacity concentrated three “mountains” will be increases in the prices of plastic raw materials resistance, but by the long-term crude oil prices and the economy continues along the healthy, stable development of the support rail, plastic raw material market will maintain an upward trend.

Impact is still low-cost Middle East

As the domestic demand of plastic raw materials higher, while the domestic product variety and quality of plastic raw materials can not participate in international competition, export volume is small, so our country is a net importer of plastic raw materials. Middle East 2010 will be an influx of plastic raw materials in China is expected that this will impact the domestic industry of plastic raw materials.

China Engineering Plastics Association statistics show that the second half of 2008 to 2009 in the first half, despite the financial crisis, China’s plastics processing industry on the actual demand for raw materials continues to increase by 20%. In sharp contrast, China’s actual production of plastic raw materials manufacturers have reduced by 20% year on year. Chinese plastics market has been incremental imports of basic digestion. 2009 surge in imports of plastic raw materials, only the first three quarters of the imported 21.977 million tons, an increase of 20.8%. As long as the situation of China’s large imports of the same, the international market of plastic raw material weakness appears to be difficult.

Increase in imports of plastic raw materials for various reasons, one of the major foreign dumping. With the use of low-cost Middle East have in-place crude oil production of petrochemical products, the second half of 2009, the global petrochemical industry, including our products are subject to the impact from the Middle East. With raw material of the great advantages of low-cost competition, the rapid expansion of the Middle East polyethylene capacity by 2010 will reach 26 million tons, while its domestic consumption accounted for only 30% to 40%, most of the export, the main export target country is China. Middle East polyethylene price USD 150 per tonne lower than the country around, is the company that can resist it. Compared with polyethylene, polypropylene and PVC in the Middle East the cost advantage is not very obvious, but capacity will also have a certain growth.

China – ASEAN to implement zero tariff

Since January 1 this year, China and ASEAN products will be the implementation of a series of 10 state-owned trade “zero tariff”, including polyethylene, polypropylene. China’s plastic products export tariffs will be reduced simultaneously, which is bound to downstream enterprises to increase in export orders. It is learned that there are already many companies started early beachhead market, trading significantly active, which also made a number of weak market demand of plastic raw materials situation improved.

But with lower import costs, the domestic polyethylene, polypropylene market will also face competition from imported materials and the impact of the ASEAN countries, the domestic raw material market pressure, imported materials and the escalation of conflict between domestic materials. China – ASEAN Free Trade Area into operation on the domestic industry of plastic raw materials in the long run, will speed up industrial restructuring and optimization, to improve domestic competitiveness of their products; from short-term, will be produced on the domestic market price rise resistance, or even cause the market price down significantly.

Concentration of the release of the domestic expansion of production capacity

At the same time, domestic large-scale production of plastic raw material intensive projects are also put into operation. Last year, Fujian Petrochemical Company with 40 million tons annually of polyethylene, polypropylene, Tianjin ethylene annual output of 30 tons of linear low density polyethylene unit, annual output of 300,000 tons Dushanzi high-density polyethylene, 600,000 tons of linear low density polyethylene and other devices have been put into operation, will be put into operation in 2010 with the Zhenhai Refinery and other projects, two years of China’s petrochemical industry will add production capacity of 5.6 million tons of plastic raw materials, an increase of up to 38%.

Coal chemical industry of plastic raw materials is also gradually. According to the current under construction and approved the construction of coal chemical project progress before the end of 2010 after another 3-4 sets of coal chemical project in operation, additional annual production capacity of 300,000 tons of polyethylene, polypropylene, 1.3 million tons. With rising oil prices, coal-olefins and polymers have certain cost advantages, a certain pressure on the market.

With the expected economic recovery and rising demand, the domestic is now in the cut-off or semi-shutdown state of plastic raw material production facilities will resume production, or increase capacity utilization. With the rapid expansion of production capacity, production is growing, the influx of imported materials, plastic raw material market will inevitably shift from the seller’s buyer’s market, the intensity of competition can imagine.

In summary, despite the growth in domestic demand, but the influx of imports and domestic production release will form a concentrated surge of resources, the plastic raw material industry in 2010 gross margin for optimism. On the other hand, crude oil, ethylene market price of plastic raw materials play an important role. U.S. and world economy based on the expected continued improvement, the U.S. Energy Information Administration that global oil consumption will make economic recovery began to rebound, and the monthly average price of crude oil this year, raised to 81 U.S. dollars a barrel. Ethylene is bound to bring oil prices lift, plastic raw materials prices will rise out of the market. Although short term prices up space is limited, but the long term, with crude oil, the gradual uplift of the cost of ethylene, polyethylene and other plastic materials will not be renewed strength in the distant days of 2010, the overall upward trend seems to remain. To this end, plastic raw material industry to higher value-added, high-quality products that meet the market demand advantage.