Analysis on the development trend of PE raw material capacity of plastic raw materials in China

The increase in production capacity in 2009 was mainly affected by macroeconomic policies. Since the outbreak of the financial crisis in 2008, the state has introduced policies such as the 4 trillion investment stimulus plan, the ten major industrial revitalization plans, improving people's livelihood, and stabilizing exports. Implementing policies related to structural tax reductions such as consumption-based value-added tax, and allowing enterprises to deduct new purchased machinery and equipment and VAT taxes, thereby reducing the investment cost of enterprises and further promoting innovation in the PE industry. The implementation of a series of measures has greatly accelerated the commissioning of domestic plastic raw material PE projects. In 2009, the new capacity of PE was about 2.2 million tons.

The peak of capacity expansion in 2014 was mainly affected by the commissioning of domestic coal-to-olefins projects. China's coal resources are relatively abundant, but conventional resources are basically in the situation of “multiple coal, lack of oil, and less gas”. If divided by per capita, energy possession is at a lower level. At present, China's naphtha is mainly used for olefins. Its biggest feature is its excessive dependence on petroleum. In recent years, with the rapid development of the economy, China has become a major oil consumer. Since China became a net importer of oil in 1993, the proportion of imported oil has continued to increase. By the end of 2009, China’s foreign oil dependence has exceeded the “international warning line” of 50%, and China’s oil gap has increased year by year. The smooth operation of the national economy and the sustainable development of society have brought new challenges. With the sharp rise in crude oil prices and the intensification of domestic supply and demand conflicts, the tight supply of olefin raw materials has spawned the rise of China's coal-to-olefins industry. According to statistics, in 2014 China's PE production capacity increased by 2.1 million tons, of which coal-based polyethylene production capacity increased by 1.5 million tons, accounting for up to 71.4%.

Since 2015, China's plastic raw material PE production capacity has been slower. On the one hand, PE production capacity has increased rapidly in 2014. On the other hand, international oil prices have shown a downward trend in 2014 and have remained at 50-60 in 2015-2017. The dollar/barrel is hovering, so the cost advantage of coal-to-olefins enterprises is gradually weakening, and profits are also falling, which has led to the postponement of coal-to-olefin projects planned for production in China. In 2017, domestic PE plants only started production of 250,000 tons of tubular high pressure and 120,000 tons of high pressure reactors with a capacity of 820,000 tons, both of which are coal-based PE production capacity.