Domestic demand for ethylene and other petrochemical products did not increase as much as last year

The increase in domestic demand for petrochemicals such as ethylene will be significantly lower this year than last year, and demand growth will be reduced from double digits to single digits. This is the judgment of two groups of people.

PetroChina and Sinopec related sources said that the sharp increase in demand for domestic petrochemical products in 2009 was the result of the superposition of many factors. For example, due to the impact of the financial crisis, the price of domestic petrochemical products declined, which led to a decrease in the use of waste plastics in downstream plastics processing enterprises, and increased the use of new materials, thereby increasing the consumption of ethylene equivalent by 1.3 million tons; in 2008, the demand was reduced, not Less downstream companies drastically reduced inventory, and unexpectedly strong demand growth in 2009 caused these companies to reset their inventory, thereby increasing the ethylene equivalent consumption of 800,000 tons. In addition, the reduction in production of polyvinyl chloride by the calcium carbide process last year provided the market space for the ethylene process, thereby increasing the ethylene equivalent consumption by 1.1 million tons. It is through the combined effects of these factors that the domestic demand for ethylene, synthetic resin, and synthetic rubber increased by 27%, 19%, and 22% respectively year-on-year.

This year, although the downstream industry still maintains a good momentum of development, the rise of international trade protectionism will make it more difficult to export some downstream products in China. For example, the European Union's REACH regulations and other green and technical barriers have begun to exert force. The poor tire exports caused by the United States to China’s special security protection case will be further manifested this year. There are also anti-dumping investigations on chemical products in some countries. At the same time, some of the factors that have contributed greatly since 2009 will be weakened or even disappeared. For example, the use of used plastics will increase again, the calcium carbide process PVC utilization rate will increase, and downstream companies will no longer reset their inventory. The demand for petrochemical products slowed down. The two major groups expect that the demand for ethylene, synthetic resin and synthetic rubber will increase by only 3%, 6% and 8% this year, which is much lower than last year.

It is based on this slowdown in demand growth. Some experts are pessimistic about the price trends of the two major petrochemical products, polyethylene and polypropylene, in the second half of this year. They predict that prices will be between 8,000 and 12,000 yuan/ton, which is not only much lower than that since 2008. The highest price of 16,500 yuan, its average price is also lower than the average price from January to April this year.

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