Recent Market Trends in China Chemical Industry

Reformation in the Chemical Industry

1. A total of 20 fields will be encouraged, including technologies, equipment, products and industries that meets people’s needs for a better life and promotes high-quality development.

2. Thirteen fields will be limited, including those whose production capacity, process technology, equipment and products are backward in technology and need to be supervised and improved.

3. Twelve fields will be weeded out, including those whose technologies, equipment and products do not comply with relevant laws and regulations and do not meet the conditions for safe production,  and those waste resources seriously and pollute the environment.

Relocation! Chemical manufacturing is transferring from south to north.

Shandong, Hebei and Jiangsu Province on the east coast and Qinghai Province in the west are the main production areas of chemical industry. Diversified chemical companies gathered in Shandong and Hunan Province and Yangtze River Delta, which also shows regional concentration and accelerates the fast growth of industry giants.

Chemical enterprises are mostly distributed along the coast and the river. According to the data, about 30% of China's chemical enterprises are located in the lower reaches of Yangtze River, which reached a peak of 31.79% in 2010. Although it has dropped a little since then, 28% of chemical enterprises are still located in this area by 2017.

It is worth noting that from 2005 to 2015, the number of chemical enterprise showed a significant reduction, decreasing from 5.39% to 2.92%, and the industry’s contribution to GDP also decreased from 11.3% to 9.8%.

The current rectification is quite different from the one from 2010 to 2011. This time, the rectification is strong and rapid. The number of closed companies and industrial parks is too large for large enterprises to expand capacity in a short time. It will be a cold winter for the industry in the short term, but a chance to transform in the long run.

How does the environmental improvement impact chemical enterprises? Take those on the Yangtze River Basin as an example.

From the perspective of regional economy, the Yangtze River Economic Belt is home to nearly half of the country's chemical enterprises, that is, it is tough to carry out pollution treatment and environmental modification. In order to make the Yangtze River become a veritable "golden waterway", it is necessary to move industrial enterprises away from the river, adjust the layout, and complete the evolution from "quantity" to "quality".

Statistics show that from 2005 to 2017, about 50% of the chemical enterprises in China are located in the Yangtze River Economic Belt, and the overall proportion has not changed much.

Along the river, the lower reaches (Shanghai, Jiangsu, Zhejiang and Anhui Province) have always been the "leader" in the past 13 years, and the total number and output value of chemical enterprises have far exceeded those of the upper reaches. The middle reaches (Hubei, Hunan and Jiangxi Province) rank second, followed by the lower reaches (Guizhou, Yunnan and Sichuan Province, and Chongqing Municipality). 

From 2010 to 2011, a large-scale clean-up of polluting chemical enterprises were carried out in the lower reaches of Yangtze River,  targeting mainly small scale enterprises with large safety risks. However, some eliminated enterprises in the lower reaches seized the chance to move to the upstream, which was prohibited.

Chemical enterprises are mostly distributed along the coast and the river. According to the data, about 30% of China's chemical enterprises are located in the lower reaches of Yangtze River, which reached a peak of 31.79% in 2010. Although it has dropped a little since then, 28% of chemical enterprises are still located in this area by 2017.

It is worth noting that from 2005 to 2015, the number of chemical enterprise showed a significant reduction, decreasing from 5.39% to 2.92%, and the industry’s contribution to GDP also decreased from 11.3% to 9.8%.

The current industrial reorganization begins in Jiangsu Province, a major chemical province with the country's second largest economy .

According to the analysis of the economic operation of the petrochemical industry in Jiangsu province in 2017, the total output value of the chemical raw material and chemical products manufacturing industry was 1852.099 billion yuan, and the GDP of Jiangsu was 8586.976 billion yuan. Obviously, Jiangsu is the pillar in China’s chemical industry.

There is no direct relationship between the quantity and the output value. If effective rectification can be carried out to make the chemical industrial chain stronger, the competitiveness will be enhanced.

The current rectification is quite different from the one from 2010 to 2011. This time, the rectification is strong and rapid. The number of closed companies and industrial parks is too large for large enterprises to expand capacity in a short time. It will be a cold winter for the industry in the short term, but a chance to transform in the long run.

Impacts of Xiangshui Explosion on the Price of Chemical Raw Materials

The price of m-phenylenediamine, a dye intermediate, is still rising sharply. Currently, the market price of m-phenylenediamine has exceeded RMB150,000/ton. Where the price will go will be determined by the market demand. It is expected that m-phenylenediamine will continue to be in a high rising state in the near future. Some disperse dyes have been out of stock, some reaction dyes are also in short supply, including disperse violet 93, disperse blue 293 and disperse red.

Some domestic dye intermediates manufacturers, except few factories in Qinghai and Hubei Province, have stopped production, including Hangzhou Zhijiang Advanced Material Co., Ltd., Zhejiang Jihua Group, and ShangHai Anoky Group Co., Ltd. The sharp rise of dye intermediates affects the whole chemical industry chain. Some raw materials have been in a continuous rise since March.