Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Perspective: Making the best of working from home
      Nypro's Gordon Lankton left the plastics industry a better place
      Recognizing Plastek Industries for all-around excellence
      Let's look forward, rather than back, to mark COVID anniversary
    • Kickstart: Yes, this 'paper' bottle is really plastic, and yes, it's a bad look
      Kickstart: Plastics ready to take flight on Mars
      Kickstart: Let's hear it for leftovers
      Kickstart: Big data, big bowls and consumer packaging
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • PE resin trends highlighted in Shell report
      Dow's Lowry honored by World Economic Forum for sustainability work
      Africa impacts new colors from Ampacet
      Plaskolite marches into madness with its own online bracket
    • Climate debate in Washington increasingly includes plastic
      There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
    • Want prices? Introducing historical resin pricing, now available in a downloadable form
      A new annual ranking: Top processor gains
      Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
    • Working from home: Rugrats edition
      Nypro's Gordon Lankton left the plastics industry a better place
      Let's look forward, rather than back, to mark COVID anniversary
      Virtual pitfalls derail exhibits for builders' trade show
    • PEX pipe maker Uponor donates $30,000 for Texas storm relief
      Virtual pitfalls derail exhibits for builders' trade show
      PPI puts $200 bounty on exhumed HDPE conduit
      Raise the roof: Housing starts hit a 12-year high
    • Perspective: Making the best of working from home
      Perspective: The Materials Wars: Is plastic actually better?
      Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Video: Structural foam molding
      Structural foam molding: Flexibility for processors
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - April 2021
      Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Bandera
      Bandera US was born for the North American market
      Sponsored By Ensign Equipment
      Filling systems customized for any process or budget need
      KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei retools in US with investment from parent ownership
      Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
    • KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
    • Sponsored By ENGEL Machinery
      Tailored maintenance for injection molding machines and robots
      Sponsored By ENGEL Machinery
      Improve maintenance efficiency with e-connect.monitor
      Sponsored By ENGEL Machinery
      Maximum precision for lowest shot weights
      Sponsored By ENGEL Machinery
      Even more cost effectiveness for small precision parts
    • Shell Polymer
      Sponsored By Shell Polymers
      Food and beverage trends impacting the polymer industry
      Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
April 05, 2021 09:04 AM

China sees energy opportunities in post-COVID recovery

Rubber & Plastics News Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    IHS Markit

    Xu

    The country that first experienced the wrath of the coronavirus pandemic has been one of the first to recover, both in the overall health of its society and in regard to its economy.

    At the beginning of the decade and because of the crisis, nearly all global crude oil and chemical companies experienced some type of price volatility and demand shock along the supply chain, according to experts with IHS Markit, a London-based research and information firm.

    The early downturn and subsequent recovery was especially true as it related to oil and gas production, according to a panel of experts at the World Petrochemical Conference, conducted virtually March 8-12.

    "China is expected to recover and rebound after the pandemic, with an expected GDP growth of 7.8 percent this year," said Yating Xu, a senior economist with IHS Markit. "The growth drivers, however, have switched dramatically from investment to consumption, a trend we expect to continue."

    Within China, vaccinations should continue to improve this faster-than-expected economic recovery, Xu said.

    "Policy tightening is the main challenge for the short term," she said. "For the longer term, China will be dependent on effective regulatory reforms, and here the pandemic effect could be more permanent, as the government wants to maintain stability. Expect consumption upgrades and manufacturing upgrades, with a shift away from investment. Supply chain restructuring could provide avenues for future growth in China. China will be one of the least-affected and fastest recovering economies."

    Xu added that the pandemic could intensify income inequality in the country, which boasts the world's largest oil, gas and petrochemical economy (though the country is dependent upon the U.S. for its ethane capacity).

    In particular, the COVID-19 crisis has impacted the MDI space, or diphenylmethane diisocyanate industry, as plant closures and outages, as well as upstream pricing volatility, curbed MDI production in 2020, according to the panelists who spoke during the WPC March 12 panel.

    MDI is used mainly in polyurethane foams, which comprise about 80 percent of world consumption. Foams are used in insulation, packaging, refrigeration, automotive, furniture and construction applications.

    "MDI consumption continues to go up," said Ming Ye, general manager of marketing for polyurethane producer Wanhua Chemical Group Co. Ltd., who discussed how China arrived at its decision to diversify into other segments—namely ethane and propane downstream production.

    In 2019, Ye said Wanhua announced a significant investment in MDI capacity in China, to the tune of 800,000 metric tons between plants in Ningbo and Yantai. Wanhua has built a 500,000 ton expansion at Yantai, with a planned 300,000 tons in Ningbo, though the latter capacity increase remains on hold.

    "Wanhua transformed in the post-COVID era, with strong growth in revenue and profit, a difficult trend to complete in terms of a capital market," Ye said.

    Factors for the MDI consumption increase include "explosive growth," especially in terms of the polyurethane market that has experienced a "flurry of entrepreneurship" attempts.

    "The economy in China is booming since everything reopened," Ye said. "It is also important that we have enough capacity to seize this opportunity—this is essential—and we have consistently outdone other players in terms of capacity."

    Tanveer Rahman, head of chemicals, oil and gas in Southeast Asia for HSBC, added clarity to the possible state-owned enterprise (SOE) and privately owned enterprise (POE) partnerships and investment opportunities in the oil and gas industry.

    The life sciences and electro-chemical industries continue to be a forward-looking focus for China, the world's biggest market for both.

    And the messages are straightforward, Rahman said.

    "China is probably the last bastion of size and significant growth, and it is being done in an orderly way," he said. "China stands out from the crowd. The impact of COVID is everywhere, but China is more insulated."

    With a population of 1.4 billion people and increasing wealth levels, demand allows companies to thrive. And the socialist nation encourages policies for POEs to pursue growth themselves.

    "There has been a real proliferation in SOEs, and an even greater proliferation of POEs, as well as the opportunities that come with that growth. Companies have developed their own technologies, with new power generation areas to pursue," Rahman said. "POEs offer more choices than SOEs. Larger companies like ExxonMobil Corp. and Royal Dutch Shell P.L.C. have partnered on the SOE side in China, but the key is understanding the partnership, the relationship. The pioneering nature of POEs provides an interesting area for a partnership. China has been resilient, with a very impressive rise in the oil and gas markets."

    But with a reliance on ethane imports, mostly from the excess capacity of the feedstock in the U.S., China does have a sustainability challenge with its reliance on coal.

    "There is also a single-use plastic ban, which will be increasingly tightened over the next few years," Rahman said. "That could lead to gains in the agri-chemical space."

    The key for China is how it can differentiate itself in a pioneering manner.

    "About 90 percent of the technical developments have been from China, Korea and Japan. Energy security is a factor, and western investors can play a role in filling this technical gap," he said.

    And sustainability—understanding China's impact on future generations—remains a major issue, a solution that could come through a combination of wind power and bio-based products, eco-friendly coatings, lighter weight materials for autos in the electric vehicle revolution, and resource recycling and reclamation.

    Xizhou Zhou, IHS Markit vice president and managing director for global power and renewables, said China President Xi Jinping's stated goal of achieving zero carbon emissions for the country in the next 40 years is bold, but not unachievable, especially through SOEs that already are implementing such state-mandated benchmarks.

    "The chemical sector continues to grow and the economy continues to grow," he said. "This is a huge challenge for a country that is still growing."

    Zhou noted that this growth means people and companies will be using more energy at the same time the country seeks clean energy solutions. About 44 percent of carbon emissions come from coal plants in China, with chemical companies producing the second-highest amount of greenhouse gases. Third in fossil fuel use is transportation.

    "Other major economies have peaked or plateaued," he said. "We need to replace fossil fuels with clean energy, and these are all very big asks."

    Zhou said the Texas power failures this past winter should serve as a warning to China in the coming years, as well.

    "How do we ensure that there is enough capacity in the power sector? We need to have reserve capacity, and that means building more power plants, on-site generation units and transmission lines," he said. "China is one big grid and state capacity can ensure this, especially for industries that offer products 24/7."

    If a country can streamline its electricity supply toward a more eco-friendly end, Zhou said, it can begin to electrify industries that were not previously electrified, like transportation and others.

    "We are trying to clean up our electricity supply by using as much non-fossil fuel as possible," he said. "China is a big consumer, but it also is the biggest renewable market in world, with solar, wind and other technologies. This is the journey that China is embarking on—and it is not easy. There needs to be creativity in all sectors working on this with urgency.

    "This creates other opportunities in other parts of economy, and these things bring jobs and tax revenue to other sectors."

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions