Excessive capacity to digest international chemical giants compete for domestic demand cake

On May 19, Premier Wen Jiabao of the State Council presided over the State Council Executive Meeting to study the policies and measures for the deployment of “new-for-new” policies for the deployment of automobiles and home appliances.
“This is a good news for the plastics industry, but I guess it should not be effective this year.” Bo Hao Lun, CEO of Borouge Marketing Corporation, said on May 20 when he was interviewed by our reporter. “First to Depot, and then depots place orders according to market demand, and then they can pass on to the upstream raw material suppliers. This will take some time.”
At the same time, the latest research report of the United States Chemical Markets Alliance (CMAI) shows that by 2010 global excess production capacity of ethylene will reach 17 million tons per year, accounting for about 15% of global demand. The large excess of production capacity is mainly due to the large-scale production of new ethylene production capacity.
With global demand still sluggish and excess production capacity, the international chemical giants have hoped to place themselves in China's domestic demand market.
Competition for Domestic Demands On May 8th, the China Association of Automobile Manufacturers announced the production and sales data of Chinese automobiles in April. In April, the production and sales of automobiles continued the growth trend in March, with production and sales of 1.157 million and 1.153 million respectively, a month-on-month increase. 5.61% and 3.91%, respectively, year-on-year increase of 17.9% and 25%, once again creating a new high monthly sales.
Coincidentally, on the same day, the foundation stone laying ceremony of ExxonMobil Chemical China R&D Center was held in Shanghai. This is an important symbol of the continuous growth of ExxonMobil Chemical's business in China.
ExxonMobil Vice President and President of ExxonMobil Chemical Co., Ltd. Li Lihao said: “The establishment of Shanghai R&D center is an important step to support the rapid growth of high-end product sales, which will expand ExxonMobil to Asia. The ability of regional customers to provide innovative solutions also further demonstrates our long-term commitment to China and Asia.” He predicted that in the next 10 years, 60% of the global petrochemical industry's growth will come from Asia, of which China will occupy at least half of its share.
"China is the world's largest polyolefin market in the future, and it is also an important strategic market of Borouge." You Zhaolin strongly agrees. "Despite the current global economic downturn, Borouge still invests heavily in China, the Middle East and other Asian regions." Fully demonstrates our firm determination to expand the global market."
It is understood that on December 18 last year, Borouge invested 29.8 million US dollars to build an integrated manufacturing center in Haigang Development Zone, Fengxian District, Shanghai, as one of its three “remote centers” in the world. Its products are mainly supplied to local customers. “The factory that was built in Shanghai in December last year has already had extensive business cooperation with Shanghai Volkswagen, Shanghai GM, FAW-Volkswagen and other companies.” On May 19, Liu Wei, vice president of automotive products division of Borouge Group, gave an example to reporters. Road.
According to Yu Zhaolin, the future investment of Borouge in China will focus on infrastructure, automotive and high-end packaging. “In the Chinese government's stimulus plan, 60% of the funds will be allocated to infrastructure, including large amounts of water, Gas and industrial pipeline projects, as well as electricity and telecommunication cable demand, so this will be our investment focus in the future.” Travel also revealed that in addition to supplying new production capacity, production capacity in Shanghai’s production base has reserved some of its production capacity for home appliances. The industry, "the application of plastics in household appliances is very extensive, like the United States, Gree and other well-known domestic brands, we have begun to contact."
In response, Liu Lirui, vice president of the United States Life Electric Division, told our reporter on May 19th that Midea has always maintained good relations with many foreign raw material suppliers, such as BASF. “They sell the base materials to us, Then we re-produce. So we can reduce the cost, but the current ratio is not very high."
The digestive capacity of international chemical giants behind Hua Chih march is to digest the current global excess production capacity.
At the end of last year, Iran’s JPC consortium invested US$2.2 billion and the world’s largest ethylene plant with an annual ethylene production capacity of 1.32 billion tons was put into operation in Iran. In addition, the factory also produces 300,000 tons of propylene, 600,000 tons of polyethylene, 300,000 tons of polypropylene, 440,000 tons of ethylene glycol and other compounds each year. For a time, it touched the industry's nerves on global overcapacity.
CMAI expects the global ethylene market demand this year will remain at the level of about 115 million tons / year, "the entire global petrochemical industry can only take measures to reduce production to deal with the plight of oversupply." It is understood that BASF nationwide about 100 devices were used to reduce production, and the Chongqing MDI project was postponed. However, it invested US$900 million to accelerate the Yangzhou-Pak Phase II project in Nanjing.
Borealis' 2008 financial report shows that due to the sharp drop in market demand, the company's 2008 full-year net profit fell by 55% year-on-year to 229 million euros. The company had a net loss of 122 million euros in the fourth quarter of 2008, more than half of which was a year-end inventory loss.
Mark Garrett, CEO of Borealis, pointed out: “Borealis is facing three major negative impacts, including the financial crisis, declining demand from major end-users and the recent launch of some large-scale polyolefin plants.”
According to the "Borouge 2" plan, by 2010, the production capacity of polyolefin products will increase threefold, ie, 2 million tons per year. In addition, Borouge expects to produce an additional 2.5 million tons of polyolefin products annually, according to the "Borouge 3" plan, which is a new phase of the capacity expansion plan.
In this regard, You Zhaolin admits that there is indeed a surplus in global ethylene production capacity. “On the one hand, China’s own production capacity is also growing. The Chinese government also wants to reduce imports.” But he believes that China’s demand for high value-added plastics is still high. "There are still many market opportunities, and Borouge's projects in the Middle East and Asia have not been affected, and there is no need to postpone the commencement of production."
According to Fu An, chairman of the Guangdong Plastics Industry Association, the actual production of plastic products in Guangdong last year was 8.38 million tons, accounting for 22.6% of the country's total, and an increase of about 800,000 tons compared with 2007, but the year-on-year increase declined. According to Fu, "In recent years, the adjustment of Guangdong's industrial structure has enabled Guangdong's plastics industry to develop high-end products such as electrical appliances, automobiles, packaging, building materials and other industries. The state has issued ten key industry revitalization plans and will give plastics industry a number of applications. Bring huge business opportunities."
You Zhaolin believes that in the process of competing with other international chemical giants, Borouge with a Middle East background has a certain advantage in costs. “The head office has great support on finance and raw materials.” But he emphasized that Borouge did not In the process of low-cost dumping, "In fact, the cost has been increased in the process of injecting technology into the product."

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