Capacity of PTA Rises Rapidly

By John Zheng   

Rapid output growth

The PTA (purified terephthalic acid) sector in China has
developed drastically in recent years. By the end of 2006 there
were twelve PTA producers in China with a total capacity of over
6.9 million t/a. The output was 6.1 million tons in 2006, an
increase of 9.7% over 2005. The 450 thousand t/a PTA project in
Sinopec Yangzi Petrochemical Co., Ltd. started production in
2006 and the capacity of PTA in the company increased to 1.05
million t/a. (CCR2006, No. 35) The 600 thousand t/a PTA project
(the second phase) in Zhejiang Hualian Sunshine Petrochemical
Co., Ltd. also started production in 2006. (CCR2006, No. 30) With
the completion of the 600 thousand t/a PTA project (the first
phase) in Ningbo Mitsubishi Chemical Co., Ltd. (CCR2006, No. 10)
and the PTA expansion project (from 270 thousand t/a to 800
thousand t/a) in CNPC Liaoyang Petrochemical Co., Ltd. (CCR2007,
No. 12), the capacity of PTA in China is already more than 8.0
million t/a today.
   As the PTA market in China has a huge supply gap, some
companies plan to construct and expand PTA units. The 1.5 million
t/a PTA project in Xiamen Xianglu Petrochemical Co., Ltd.
launched construction in November 2006 and is planned to start
production at the end of 2008. (CCR2006, No. 34) Judging from
the status of projects being constructed or planned for
construction, the capacity of PTA in China will increase by 9.4
million t/a from 2007 to 2010. With the completion of new PTA
projects, the gap in the PTA market will be gradually narrowed.
   PTA in China is almost totally used in the production of
polyester. Owing to the rapid development of the polyester
industry, especially the drastic development of private
enterprises in southeastern coastal areas, the demand for PTA
in China has always maintained a trend of rapid growth. The
output of polyester in China was around 14.0 million tons in 2005,
consuming around 12.0 million tons of PTA. The consumption of
PTA in the production of engineering plastics such as PBT
(polybutylene terephthalate) was only around 60 thousand tons.
If only such status has no change, the development of PTA will
be restricted by the polyester production.

Stable import increase

Despite the rapid capacity growth, the imported amount of PTA
has increased constantly due to the brisk demand for downstream
product polyester. According to customs statistics, the total
imported amount of PTA was 7.004 million tons in 2006, an
increase of around 510 thousand tons over 2005 and the imported
amount accounted for around 53.4% of the apparent consumption.
   China imported 5.553 million tons of PTA in the form of
general trade in 2006, accounting for around 79.3% of the total
imported amount and the proportion was basically equal to that
in 2005. The amount imported in the form of processing trade was
around 1.103 million tons, accounting for around 15.7% of the
total imported amount and the proportion was around 3.0
percentage points higher than that in 2005. Private enterprises
in China have constructed quite a lot of polyester projects in
recent years and the demand for PTA is quite big. As these private
polyester producers basically have no upstream units, raw
material PTA they need has to depend on import. Enterprises
importing PTA are mostly private enterprises and joint venture
enterprises located in southeastern coastal areas.
   Major PTA import sources for China in 2006 were peripheral
countries and regions. The amount imported from Korea, Taiwan
province, Japan, Indonesia, Thailand and Saudi Arabia accounted
for 96.4% of the total imported amount.
   PTA imported from abroad is mainly consumed in southeastern
coastal areas in recent years because these areas are polyester
production bases. Regions with a considerable imported amount
of PTA in 2006 included Zhejiang province, Jiangsu province and
Shanghai and the imported amount accounted respectively for
44.8%, 35.9% and 9.8% of the total imported amount.

Sustained high price in 2007

The market price of PTA in China had some fluctuations at a high
level in 2006. It gradually came down after a peak in August.
The average monthly price of PTA in East China was RMB8 764 per
ton in 2006.
   The price of PTA as raw material of polyester is mainly
influenced by the raw material cost, the downstream demand and
the supply change. It displays different features in different
periods of the prosperity cycle in the global petrochemical
industry. The improvement of the world economy in recent years
has stimulated a rapid demand growth. The drastic price rise of
crude oil and naphtha in the international market has led to a
constant price rise of olefins and in turn a price rise of
downstream products such as ethylene oxide and PTA. It is
expected that the crude oil price in the international market
will remain to be relatively high in 2007 and the price of PTA
will maintain a high level.
   Besides, the 800 thousand t/a PX (para-xylene) project in
Haicang of Xiamen, Fujian province once became the focus of
attention. The construction of the project is already postponed
today. (CCR2007, No. 16) According to the information released
by the State Environmental Protection Administration, the
conclusion of the environmental impact evaluation will be taken
as a reference to the decision on the further execution of the
PX project.

Table 1  Major PTA Producers in China  (thousand t/a)
Producer                                    Capacity
Xiamen Xianglu Petrochemical Co.             1 200
Zhejiang Hualian Sunshine Petrochemical Co.     1 200
Sinopec Yangzi Petrochemical Co.             1 050
Sinopec Yizheng Chemical Fiber Co.               950
CNPC Liaoyang Petrochemical Co.                  800
Ningbo Mitsubishi Chemical Co.                   600
Zhejiang Yisheng Petrochemical Co.               600
Zhuhai Biyang Chemical Co.                       500
Sinopec Shanghai Petrochemical Co.               400
Sinopec Luoyang Petrochemical Co.               325
Sinopec Tianjin Petrochemical Co.               300
Jinan Zhenghao Advanced Fiber Co.               100
Source: CNCIC

Table 2  PTA Projects Being Constructed or Planned for
Construction in China      (thousand t/a)
Company
   &