Future growth in the Chinese polyolefins market is likely to match the overall growth of that nation's economy.
That prediction - coming from market analyst Frank Zhao of Chemical Market Resources Inc. in Houston - actually is a bit of a downgrade from recent years in which Chinese polyolefins grew at an even faster rate.
In 2005, for example, polyolefin demand in China grew 11.2 percent, while overall gross domestic product climbed 9.9 percent. Between 1996 and 2005, polyethylene demand in China tripled to 12.9 billion pounds, while PP demand increased fourfold to 14.2 billion pounds.
``The next 10 years will see more moderate and sustained [polyolefins] growth than the previous decade,'' Zhao said at Flexpo 2006, held in Galveston.
Increased use of recycled polyolefins also is biting into overall Chinese polyolefin use.
In the last year, Chinese processors have increased their use of recycled PE and PP by 20 percent.
As a result, total polyolefin consumption is higher than virgin consumption, Zhao said.
Plenty of ethylene feedstock will be needed to accommodate this growth, and suppliers are reacting with plans to build more than 25 billion pounds of ethylene capacity in China between 2005 and 2010.
Those moves effectively will double the country's ethylene capacity. The Chinese government's most recent five-year plan also requires new ethylene crackers to have at least 1.8 billion pounds of annual capacity.
State-owned resin makers Sinopec and Petrochina combined control of 97 percent of China's PE production and 87 percent of its PP works, but the two companies are looking for joint ventures with global polyolefin players.
Petrochina also is adding polyolefins capacity in Dushanzi in Northwest China and Daqing in Northeast China.
And even though China will continue to need imports to meet its demand, Zhao cautioned that new capacity will narrow that gap.
``Some polyolefin expansions in other parts of the world were done on the idea that China will take however much resin you make,'' he said.
Zhao also pointed out that although China is in transition from a government-planned economy to a free market, the government still sets natural gas prices and quotas for recycled imports and makes policies for plastic construction materials.
Upgrading polyolefin technology also is a national goal for China, he added.
``Overall polyolefin technology in China is still behind the curve but is becoming more competitive,'' he said.