Demand for PC Increases Rapidly


PC (polycarbonate) is an engineering thermoplastic with
excellent comprehensive properties. It has the advantages of
great strength, high toughness, good heat resistance, light
weight, excellent workability and stable color and is therefore
extensively used in several sectors: automotive,
electronic/electric, construction, office equipment, packaging,
sports ware, medical/health care and household utensils. PC can
also be used to make PC copolymers or alloyed with other monomers
or resins to improve its properties.

Global investment focus

Stimulated by the rapid growth of the automotive, construction
and compact disk sectors, PC consumption in China has increased
rapidly in recent years. The apparent consumption of PC was 200
thousand tons in 2000 and increased to 730 thousand tons in 2005
- an average annual growth of 29.6%. The average annual growth
of demand is expected to be 10% -15% from 2005 to 2009. PC
production units in China, however, are small in scale, have
outdated production technology and produce poor quality PC. The
net imported amount of PC increased sharply from 211 thousand
tons in 2001 to 714 thousand tons in 2006 - an average annual
growth of 27.6%.
   The huge supply gap of the PC market in China has attracted
numerous overseas investors. Foreign PC producers have not only
constructed production units in Mainland China, they have also
constructed large units in Taiwan province, Korea and Thailand
with Mainland China as the target market.    
   Bayer and Shanghai Chlor-Alkali Chemical Co., Ltd. have
established a joint venture company. The two sides have made a
joint investment of US$560 million and constructed a PC unit in
the Shanghai Chemical Industry Zone. The first phase already
started production in September 2006 and the capacity is 100
thousand t/a. The second phase will expand the capacity to 200
thousand t/a and will be completed and put on stream in 2008.
   Teijin Chemical of Japan is the second transnational company
constructing PC units in China after Bayer. The 50 thousand t/a
PC unit constructed in Jiaxing of Zhejiang province already
started production in May 2005. (CCR2005, No. 19) The capacity
of the unit was expanded to 100 thousand t/a at the end of 2006.
The company plans to make an investment of 11.0 billion yen
(around US$106 million) and construct the third PC production
line in Zhejiang province. The project has a capacity of 60
thousand t/a and will be put on stream in March 2009. Teijin
Chemical also plans to expand the capacity of the PC composite
unit in Shanghai from 43 thousand t/a to 63 thousand t/a before
December 2007. (CCR2007, No. 3) Mitsubishi Gas Chemical also
plans to construct a 100 thousand t/a PC unit in China.
   Some domestic companies also plan to launch PC projects.
PetroChina Jilin Petrochemical Company Ltd. plans to construct
a 200 thousand t/a PC unit in 2007.   CNPC Lanzhou Petrochemical
Company Ltd. plans to make an investment of RMB1.538 billion and
construct a 100 thousand t/a PC unit. Nanjing municipal
government plans to construct a 100 thousand t/a PC unit in
Nanjing Chemical Industry Park and the project is at the
promotion stage today.
   The rapid growth of the PC market in China from 2000 to 2005
was mainly promoted by the demand increase in
electronic/electric products, hollow sunlight boards, CD and
DVD compact disks, non-disposable drinking water pitchers and
other food containers. The consumption structure of PC in China
today is 41% for electronic/electric products and computer
components, 26.3% for hollow sunlight boards, 13.1% for CD and
DVD compact disks, 10.5% for pitchers and food containers and
9.1% for composite materials and automobiles.
   In foreign countries the automotive sector consumes much of
the PC, but in China PC consumption in this sector is relatively
low. The automobile industry in China will develop rapidly in
the next few years. According to expert projections, China's
automobile production will increase from 5.07 million in 2005
to 10.0 million in 2010, making China the second largest
automobile producer, with the United States remaining first. The
growth of demand for automobile engineering plastics such as PC
resin will be boosted. In addition, China will become a major
supplier of compact disks, office equipment and laptops to the
world. The demand for PC in these sectors is also expected to
grow rapidly.

Long-time import dependence and sustained high price

Because of the constant market demand growth, the China's import
of PC has increased rapidly in recent years. It increased from
266 thousand tons in 2001 to 899.3 thousand tons in 2006 - an
average annual growth of 27.6%. The completion of the large PC
units constructed by Teijin of Japan and Bayer of Germany to
serve the China market has failed to slow the growth of imports.
   It is expected that with the completion of more PC units the
supply deficit in China will be eased over the next few years,
but the domestic market demand still cannot be satisfied. Great
quantities of PC will still have to be imported from surrounding
countries such as Singapore, Thailand, Japan and Korea.
   The price of PC in China hovered around RMB16 000 per ton from
2002 to the first half of 2004 and the market was relatively
stable. The price started to increase in the second half of 2004
and reached around RMB35 000 per ton at the end of 2004, more
than double the price of 2003. The price of PC remained high in
2005, peaking at RMB38 500 per ton. The price of PC dropped in
2006 on the basis of the price in 2005, but was still in the range
of RMB30 000-35 000 per ton. Main reasons for the high price
included the supply deficit in the PC market and the rising price
of crude oil. As the price of crude oil in the international
market will remain high, the price of PC in China is expected
to be high in the next few years.

Import and Export of PC in China from 2001 to 2006  (thousand
tons)

Year    Import    Export
2001    266.0    54.8
2002    415.4    72.6
2003    534.8    89.5
2004    729.8    117.7
2005    730.8    132.1
2006    899.3    185.4
Source: CNCIC