Production Continued to Increase with Higher Prices

By Feng Shiliang of CPCIA

In the first two months of 2006, China's petroleum and chemical industry remained going up in production. Among the 65 kinds of petrochemical products that have been tracked by CPCIA (China Petrochemical and Chemical Industry Association), 54 kinds increased in the output compared with the same period of 2004. In February, pulled by the soaring crude oil prices, 80 of 155 chemicals being tracked had a higher price than that in January 2006.

Production

According to the statistics released by the National Bureau of Statistics of China, in the first two months of 2006, the accumulative total output of crude oil reached 29.727 million tons, a rise of 2.5% over the same period of 2005, and that of natural gas jumped by 35.1% to 10.61 billion m3.     The crude oil processing amount was 48.484 million tons in the first two months of 2006, an increase of 3.9% over the same period of 2005, therefore the accumulative output of oil products has a growth of 4.7% to 29.24 million tons. Among the oil products, the output of gasoline in the first two months of 2006 was 9.26 million tons, an increase of 2.5% over the same period of 2005, while the diesel output rose by 6.7% to 18.442 million tons.    In the first two months of 2006, the chemical fertilizers output increased by 11.5%, in which the potash fertilizers dedicate the highest rise of 51.5%. Pesticides production climbed up by 17.5%, compared to the same period of 2005. The rapid growth was mainly due to a rise of 26% for the herbicides.   Due to the expanded capacity, the output of the main organic chemical materials increased rapidly in the first two months. Methanol and acetic acid, in particular, rose by 35.2% and 41.7% respectively over the same period of 2005. The output of ethylene increased by 25.8% to 1.408 million tons in the first two months.    The inorganic chemical materials except sulfuric acid had output growth of over 10%. Among them, the output growth was 33.8% for caustic soda, 10.7% for soda ash, and 20% for calcium carbide.     With several ethylene crackers putting into operation, the capacity of synthetic resins moved up rapidly. Major resins had high growth rate in the first two months in response to strong demand, for instance, the output of polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) increased by 21.7%, 20.3% and 19.1% respectively. Synthetic rubber's output gained as high as 5% in the first two months, but the output of synthetic fibers dropped by 0.7%. After rapid increase in the past two years, the output growth rate of tires decreased by 20.6 percentage points to 9.7% in the first two months, while the rubber shoes production still increased rapidly with the output growth rate being 27.3%.

Prices

Promoted by the various factors, the global crude oil price fluctuated at high level throughout February 2006. The average spot prices of Blent crude oil reached US$60.9 per barrel, an increase of 34.6% over the same period of 2005, while the average spot prices of WTI crude oil rose by 31% to US$62.6 per barrel. Pulled by the price rise of crude oil, the price of oil products in the international market increased rapidly. Among them, the price of gasoline in February 2006 reached US$65.1 per barrel, showing an increase of 21.1% over that in February 2005, while the price of diesel rose by 29.4% to US$71.4 per barrel.   Inorganic chemical materials showed different price changes according to the strong or slack demand. In February, the prices of caustic soda in flake and soda ash stood at RMB2 410/t and RMB1 570/t, with a drop of 9.7% and 10.3% respectively compared with the same period of 2005.   The oil price hovered at a high level, quite a few organic chemical materials displayed a price decline impacted by the capacity increase both at home and abroad. Methanol and purified terephthalic acid (PTA) prices have a decrease of 12.1% and 31.2% respectively compared with the same period of 2005. CPCIA also reported that the prices of propylene, butadiene and toluene in February 2006 presented a certain rise.     While it is approaching the period of spring's planting, the demand of fertilizers has gradually increased, promoting the fertilizer price to climb up. The average price of urea in February was RMB1 710/t, an increase of 3.6% over that in January. However, due to the steady output increase and restricted export, urea price in February dropped by 3.9% compared with the same period of 2005.    Among the five main kinds of general-purpose synthetic resins (PE, PP, PVC, polystyrene and acrylonitrile-butadiene-styrene) being counted in February 2006, PE is the only one with a price decline compared with January 2006. The prices of PVC and polystyrene had a rise of 2.9% and 3.2% over January 2006, while the PP and acrylonitrile-butadiene-styrene prices also had a slight increase.    Since the beginning of 2006, the price of natural rubber has constantly increased.     In February 2006, in particular, the price of natural rubber reached more than RMB20 000/t, hitting the historical record, and brought a great pressure on the rubber consuming sector. The prices of synthetic rubbers also showed an overall price increase compared with those in the same period of 2005, among which the price rise was 12.2% for styrene-butadiene rubber and 10.2% for cis-1,4-polybutadiene rubber.