China Increases Ethylene Production 100% by 2005

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The following is an advisory by Industrialinfo.com (Industrial Information Resources, Inc; Houston, Texas). Despite slowing global economies and decreasing chemical prices, the Chinese government has decided to increase ethylene production. The State Economic Trade Commission (Beijing, China) maintains that demand for ethylene in China will increase 8.5% per year with an expected yearly demand of 15 million tons by 2005, an increase of 40%. China produced 4.7 million tons in 2000 and plans to increase yearly capacity to 9 million tons by 2005. China's Tenth Five-Year Plan (2001-2005) for national economic growth proposes, that if China is successful in increasing its production capacity, then 60% of the projected Chinese ethylene demand will be satisfied.

In order to achieve the goal of doubling production capacity, China is and will continue to expand and add new production units. China Petrochemical Corporation (SINOPEC) (Beijing, China) and Petrochina (Beijing, China), who are responsible for 80% of the ethylene production in China, will complete nine expansion projects at existing chemical complexes totaling approximately 1.54 million tons per year in additional capacity. These expansions are scheduled to come online between late 2001 through 2003. There appears to be great optimism in the petrochemical market of China. However, this push by China to increase production through foreign joint ventures must be taken with caution, according to Stephen Rhoads, Industry Specialist for Industrialinfo.com.

Additionally, China has recently opened their petrochemical market to foreign investors. BP, BASF, and Shell among others, have formed joint ventures with key Chinese chemical producers to construct three grassroot ethylene complexes producing over 2.3 million tons per year. These foreign investors have received government approval and should begin construction by mid 2002.