Panel discussion: A ‘New Horizon’ for China’s petrochemicals market in the post-pandemic period
Nigel Davis, ICIS Insight Editor
Amber Liu, Head of Petchem Analytics, Asia
Rachel Qian, Lead Analyst
ICIS Global Outlook Seminar - EPCA 2020 Virtual Conference
9 October 2020
China government claimed a new development pattern with domestic cycle as the main body and mutual promotion of domestic and international cycles
Stimulate
economy
Enlarge
investment
Raise export
tax rebate rates
Construction
Packaging
Agriculture
Consumer goods
Automobile
Textiles
Boost
consumption
Key consumption area
Easy Monetary policy
+
Fiscal policy
Domestic consumption
stimulus
New infrastructure
Home appliances
Drivers
Medical
Improvement on the
production efficiency
+ resources centralization
2
Source: ICIS Analytics
3
SINOPEC GUIZHOU ZHIJIN 300 2023
SINOPEC-SK WUHAN PC 300* 2021
Source: ICIS Supply & demand Database
Unit: KT/aNote：* shows expansion
Total over 19m tonnes from confirmed projects in China of additional ethylene capacity between 2020 and 2023
ChinaSHAANXI YANCHANG COAL YULIN EN. AND CH. 300 2020
QINGHAI DAMEI COAL INDUSTRY 300 2023
PETROCHINA TARIM CHEMICAL 600 2023
PETROCHINA LANZHOU PC 800 2023
WANHUA CHEMICAL GROUP 1000 2020TIANJIN BOHAI CHEM. GROUP 300 2021SINOPEC SABIC TIANJIN PC 300* 2021
SHANDONG SHOUGUANG LUQING PC 750 2021
JILIN CONNELL CHEMICAL 135 2020
HENGLI PC 1500 2020
LIAONING BORA/LYONDELLBASELL IND. 1000 2020
HEILONGJIANG HAIGUO LONGYOU PC 400 2020
ZHEJIANG PETROCHEMICAL 1400 2020
ZHEJIANG SATELLITE PETRO-CHEMICAL 1250 2021
NINGBO HUATAI WEALTHY POLYMER MAT. 600 2021
SHENGHONG REFINING & CHEMICAL 1100 2022
SANJIANG FINE CHEMICALS 1000 2022
ZHEJIANG PETROCHEMICAL 1400 2022
SINOCHEM QUANZHOU PETROCHEMICAL 1000 2020
SINOPEC ZHONGKE (GUANGDONG) REF.& CH. 800 2020
FUJIAN GULEI PETROCHEMICAL 800 2021
PETROCHINA/PDVSA 1200 2022
SINOPEC HAINAN PC 1000 2023
New capacity enjoy the integration advantage; squeezed margin might change producers’ behavior
4
Northeast Asia HDPE variable margin
Jan 2016 – Sep 2020, USD/tonne
Source: ICIS Analytics
128
169
388
422
453
500
Mideast US NorthwestEurope
NortheastAsia
SoutheastAsia
India
Ø 343
Average cost
Note: Variable cost, fixed cost & depreciation is not included-200
0
200
400
600
800
1,000
Jan-16 Sep-16 May-17 Jan-18 Sep-18 May-19 Jan-20 Sep-20
Global HDPE cost* competitiveness
Jan – Sep 2020, USD/tonne
High inventories will become normalization to reflect re-balancing progress between new supply and demand
5
China Costal MEG Inventory
Dec 2017 – Sep 2020, Unit: kt
Source: ICIS
0
200
400
600
800
1,000
1,200
1,400
1,600
Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
Previous inventory level
Current inventory level
Accelerated imbalance of MEG value chain
6
-10%
-5%
0%
5%
10%
15%
Global Polyester Fibre Demand Growth Rate
2006 – 2025, tonne, %
Source: ICIS Supply & demand database
Global MEG Supply & Demand, Operating rate
2019 – 2021, tonne, %
85
74
71
60
70
80
90
0
10,000
20,000
30,000
40,000
50,000
2019 2020 2021
Capacity Consumption Operating rate
MTO: High operating rate driven by attractive margin
7
0
500
1,000
Jan-20 Mar-20 May-20 Jul-20 Sep-20
Naphtha-based MTO-based
China CTO/MTO operating rate
Jan -Sep 2020, %
NEA naphtha-based VS MTO-based PP margin*
Jan - Sep 2020, $/tonnes
Note: Variable margin, fixed cost & depreciation is not included
Source: ICIS Analytics
0
40
80
120
Jan Feb Mar Apr May Jun Jul Aug Sep
MTO CTO
Thank you!
Amber Liu
Head of Asia Petchem Analytics
+86-21-5155 0140
Rachel Qian
Methanol, MEG
+86-21-5155 0263
Nigel Davis
Editor – Chemical Insight
+44 020 8652 3397
