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Jim Weinrauch, an analyst at Singapore-based Naphtha Information Services LLC, said about global ethylene supply: "Ultimately, all production capacity will flow to the rapidly growing Chinese market."
Despite the current supply shortage due to the increasing demand for ethylene in China, some analysts worry that China's demand will eventually fail to meet excessive expectations.
Weinrauch said: "China has attracted the attention of all companies in Asia and the Middle East. In Asia, there is only China, a large importer, which is clear at a glance."
QuGuangdong, an analyst at Beijing-based chemical industry research company SRIConsulting, predicts that China's domestic ethylene supply will increase by 9.5% per year from now until 2015.
The new plant under construction includes CNPC's plant in Fushun, Liaoning Province, which is scheduled to start production in 2010 and produce 0.8 million tons of ethylene per year. This year, another PetroChina plant was approved by the National Development and Reform Commission of China and will double the annual capacity of its ethylene cracker to 1.2 million tons.
Qu said that regardless of foreign developments, China will establish its own production capacity. Weinrauch said that China’s self-sufficiency trend will leave foreign producers behind.
Weinrauch said: "Technically speaking, demand has gradually emerged. But the Middle East should continue to think about whether China needs to [build more] crackers while it is still expanding."
He said: "In the Middle East, when real production capacity is established, China is advocating self-sufficiency. In this way, the space for everyone will not be great."
Although some companies were prepared in advance for the drop in demand for ethylene imports, Qu still cautioned that there will be no weakening of the positive situation in the next few years.
Qu said: "I estimate that several crackers will be built before 2010, but some of the plant construction may be delayed until around 2015. This delay will also ease supply and demand tensions."
Gao Chunyu, senior director of Sinopec Consulting, said that this development has met with many obstacles.
Gao said: “Many companies are quite unhappy with signing engineering contracts. Although this is a worldwide problem, it has already had an impact on China.â€
He said that the new cracking plants in China are constantly emerging and the shortage of engineering personnel is also becoming more serious.
When talking about the new factory in China, he said: “The construction of the new plant is still in progress, but its speed has slowed down.†Although this is a global issue, as long as China continues to rely on exports, downstream companies will find prices Still high.
Although there are new cracking plants in operation, Qu cautions that importing materials will no longer be the only factor affecting the price of ethylene derivatives.
He said: "International oil prices will also cause price fluctuations, so future capital costs will also increase."
China's demand growth triggers expansion of ethylene suppliers
Ethylene supplies are being established throughout the Middle East and Asia. New cracking plants have been put into operation, and older plants have continued to expand. With the increase in supply, most companies have set their sights on China.