In 2010, the petrochemical industry is facing the "three ridges"

“The pick-up in 2009 will not be an illusion, it is more difficult to grasp, but the biggest challenge this year is the uncertainty of the market.” Vice president of marketing of a chemical company expressed concern about the petrochemical market in 2010. Li Yongwu, president of the China Petroleum and Chemical Industry Association, also clearly stated that 2010 is a “complex year” for the oil and chemical industries. He said: "Now, everyone has a sense of urgency in the tone structure and a sense of crisis in the way of transition. But how to adjust and how to switch, the vast majority of companies have no idea."
The reporter learned from interviews with companies, associations and related consulting agencies that the disorderly development of the industry, the slow recovery of demand, and the obstruction of exports have become the “three hurdles” for the operation of the petrochemical industry this year.
The worry of capacity
Zhao Jungui, vice chairman and secretary-general of the Petrochemical Association, wrote a few days ago that the investment enthusiasm of some industries with relatively overcapacity is still high, and the pressure on the adjustment of the industry structure is highlighted. From the perspective of the current industry, many industries and products are facing the contradiction between relative excess production capacity and insufficient market demand.
According to statistics from the Petrochemical Association, in 2009, China's caustic soda industry, the average operating rate of less than 70%, less than 80% soda ash, phosphate less than 70%, PVC only about 54%, methanol plant operating rate is less than 40%. At the end of 2009, the ammonia, coke, calcium carbide, and methanol industries were listed by the country as a list of areas with excess production capacity and redundant construction controls, and the relative overcapacity of urea, phosphate fertilizers, soda ash, caustic soda, and polyvinyl chloride was also highlighted.
At the same time, investment in many traditional industries is still accelerating. According to statistics, in 2009, investment growth in phosphate fertilizers, pesticides, rubber products, inorganic alkalis, paints, pigments, and other industries all exceeded 32%, which is much higher than the average growth rate of industrial investment.
According to the National Development and Reform Commission, at present, there are currently 31 national calcium carbide projects under construction, with a capacity of 7 million tons, 25 methanol projects, and a capacity of 8.6 million tons. After all these projects are put into production, the contradiction between overcapacity will be further aggravated. In addition, a number of coal chemical projects have been planned in various places. The reported total investment in coal-to-oil, coal-to-olefin, and coal-to-natural gas projects has exceeded RMB 1 trillion.
Zhang Wenlei, secretary-general of the China Chlor-Alkali Industry Association, said: "As of the end of 2009, China's caustic soda plant capacity has reached 27.93 million tons. In the first half of 2010, the domestic production capacity of new caustic soda projects will reach 2.975 million tons, and will increase 3 million tons in the second half of the year. In 2010, China's caustic soda industry has increased its production capacity and the pressure of insufficient demand has increased. The growth rate of demand is much lower than the growth rate of production capacity. The domestic caustic soda industry will start operating under the premise of continuously increasing production capacity. Face greater variables."
“The impact of the international financial crisis on the fluorine chemical industry in China is very large, resulting in a severe contraction of demand, an increase in inventories, and an insufficient operating rate.” said Mei Shengfang, secretary general of China Fluorosilicone Industry Association.
Demand
Feng Shiliang, deputy secretary-general of the Petrochemical Association, said: "Because of the slow start of market demand, business operations will remain difficult in 2010."
In 2009, although the apparent consumption of some major chemical products continued to rise, the driving force for effective demand was still insufficient and the company’s inventory increased. As of the end of December 2009, the inventory of chemical fertilizers, some petrochemical products, “two alkalis” and refined oil products, and sales companies have remained high. Under the impetus of rising international crude oil prices, chemical companies are also facing the pressure of rising costs.
Despite the difficulties in the recovery of industrial market demand, Feng Shiliang still favors good factors. He believes that the downstream industry will continue to support the growth of demand in the petrochemical industry. The main reason is: It is estimated that the demand for electricity in the whole society will increase in 2010. 9%; total civil aviation traffic volume will increase by 13% to 16%; machinery industry will increase by 15% on the basis of 2009 total output value growth of 13.8%; light industry industry will increase by 13.5% of total output value in 2009, 2010 The year strives to maintain growth; the textile industry's domestic market in 2010 is expected to continue the growth of 9.7% of total output value in 2009; the building materials industry will grow by about 20% in 2010; and the apparent consumption of domestic refined oil products will increase by 5% to 6%.
The resistance of the exit
"The import shock has been increasing, and foreign trade exports have been severely hampered," said Feng Shiliang. In his opinion, the problem of export obstruction will plagued the chemical industry for a long time.
According to customs statistics, in 2009, the import volume of organic chemical products in China increased by 50.3% year-on-year, of which ethylene and methanol imports increased by 35.1% and 268.8% respectively; imports of synthetic resin increased by 25% year-on-year, among which polyethylene, polypropylene, and polychlorinated Imports of ethylene rose by 64.8%, 51.8% and 73.5% respectively year-on-year. Some industry insiders believe that the sharp increase in imports of petrochemical products is one of the most important reasons for the sustained downturn in the domestic market. At the same time, due to the lack of external demand and trade protectionism, China's petrochemical exports have been severely hampered. Last year, China’s exports of inorganic and organic products decreased by 10.1% and 7%, synthetic resins decreased by 18.3%, and chemical fertilizers decreased by 7%. The large increase in imports and the decline in exports have greatly exacerbated the competition in the domestic market, and have also exposed the problems of China's petrochemical industry being large but not strong, international competitiveness, and the overall quality of the industry to be improved.
The data shows that in 2009 China's chemical industry encountered a total of 20 cases of trade friction, which greatly exceeded the level of previous years, and became an important cause of the decline in the export of some petrochemical products in China in 2009. After the announcement of the US tire special security case in September last year, China’s exports of tires decreased by 17.2% in September from September. In November, the Chinese tire companies’ sales to the North American market almost stagnated. In October, after an investigation into the special safeguards for China's soda ash products, China's soda ash exported to India fell drastically from 30,000 tons per month to 10,000 tons. In addition, the United States has adopted retaliatory measures for China's soda ash exports to other regions, and the export situation of soda ash will be extremely severe in the coming period.

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