Said B2B plastic portal plastemart.com, director, Kavita Shah: There will be a big gap between demand and supply in China, especially because of higher consumption ahead of the Olympics 2008. China is known to be facing shortage of petroleum and petrochemical products. The countrys plastic consumption will go up by 51 per cent to 25 million metric tonne (mt) by the end of 2005 and its production capacity of the commodity will increase by 74 per cent to 15 million mt leaving a gap of 10 million mt. By the end of 2006, Chinas import of HDPE, LDPE, LLDPE and PP will account for 50 per cent of its total consumption. The booming market demand will offer a huge market for petroleum and chemical industry in and outside China.
Further, China is expected to set up major petrochemical projects, promoted by Sinopec and CNOOC, the state-owned petrochemical companies. These projects are likely to be in collaboration with multinationals, such as BASF, BP and Shell.
China Petroleum and Chemical Corp (Sinopec) had recently signed a contract with BP Chemicals to build a petrochemicals complex, expected to develop the capacity to produce 900,000 tonne of ethylene a year, the largest of its kind in Asia when it goes on stream in 2005. Under the $2.7-billion deal, BP Chemicals controls 50 per cent, Sinopec takes a 30 per cent stake, subsidiary Shanghai Petrochemical Co takes the remaining 20 per cent. The $4-billion project between the China National Offshore Oil Corp and the Royal Dutch/ Shell Group in Guangdong Province will produce 800,000 tonne of ethylene annually by 2005.
Germanys BASF and Sinopec are constructing a $2.65 billion integrated petrochemicals site to turn out 6,50,000 tonne of ethylene annually by 2005. The 50:50 joint venture is to be the nations third largest petrochemicals plant.
Once these projects are completed, China is expected to have an annual capacity to produce 5.5 million tonne of ethylene by 2005. China is expected to continue importing petrochemicals even after the mega-projects become functional. Imports also are expected to be more economical due to lower import tariff that China is expected to have in the light of its entry into WTO from 2001.
There have been two other major petrochemical projects which were on the drawing board for quite some time. However discussions at the recent China Chemical Industry Conference indicate that these projects are not likely to go ahead at least in the near future.