High End Textile Raw Materials Market Again! This Time, It Was Petrochina That Had Run Away With The Private Chemical Giant.

The market for high-end textile materials is coming back again. This time, the addition of firewood is PetroChina.

In August 22nd, PetroChina announced that it will choose Honeywell UOP to build the world's largest single PX unit in the new comprehensive petrochemical plant in Jieyang, Guangdong. The new desorbent light aromatics unit will produce 2 million 600 thousand tons of p-xylene (PX) annually, so that the PX capacity of PetroChina will double.

It is reported that 98% of the world's PX is used for the synthesis of purified terephthalic acid (PTA), which is the leading raw material for polyester industry. In the past, the domestic PX market was mainly represented by PetroChina and Sinopec, while the PTA market was dominated by private enterprises, and there was a certain degree of asymmetry in the industry chain.

Today, along with Hengli, Hengyi, Rongsheng and Sheng Hong, a large number of private enterprises are competing for the large-scale petrochemical and integrated projects. The industrial chain extends to the upstream and is rapidly occupied the domestic PX market share.

On this occasion, CNPC intends to build the largest single PX device in the world, indicating that the prelude to competition between state-owned enterprises and private enterprises in the field of PX has been opened. Data show that in the next few years, China's PX production capacity will show a blowout growth. At that time, there will be a bloody price war at home.

And private oil refining and chemical business, why PetroChina beach PX?

"We produced more than 1 million tons of PX last year," Wang Qi, director of Yangzi Petrochemical aromatics plant, was satisfied with the performance of his factory. In 2018, Sinopec launched the whole system to increase PX and defend PX market share. Yangzi Petrochemical aromatics plant has an annual production capacity of 900 thousand tons per year. By extending the overhaul cycle and stable operation, the effective production time is increased and over 10%. However, this increase is still limited compared with the huge imports. According to statistics, PX imported 14 million 440 thousand tons in 2017, accounting for 59.2% of total domestic consumption, and over 55% in 3 years. Mainly from Korea, Japan and other countries and regions. China has missed the window of opportunity for the coordinated development of PX and PTA since 2005, resulting in a shortage and oversupply of PX and PTA, resulting in a profit margin of about 60% of the aromatics product chain concentrated in the PX link, while the excess PTA in the domestic market is struggling. According to statistics, in 2018, PX theory made a profit of 779 yuan / ton; in the first 11 months of 2018, the domestic import PX was about 14 million 400 thousand tons, a record high, and the benefit was taken away by foreign manufacturers.

With the arrival of the upgrading stage of consumption in China, automobile, household appliances, textile, real estate and other industries will continue to develop. In the future, the demand for petrochemical products represented by ethylene and p-xylene (PX) will have larger room for growth. At present, China's ethylene equivalent consumption level is about 31 kg / person. Referring to the law of equivalent ethylene consumption in developed countries and regions, taking into account the characteristics of China's industrial structure, consumption and population structure, it is estimated that in 2050, China's ethylene equivalent consumption level reached 60~70 kg / person's saturation value.

China's ethylene feedstock structure is similar to that of Europe, and petroleum based materials account for more than 80%. With the development of coal to olefins, methanol to olefins and natural gas to olefins, China's ethylene feedstock structure has diversified. Nevertheless, the petroleum based olefin route is dominated by the product diversification and product chain integrity before 2050, accounting for more than 60%. At present, China's fiber consumption is 28 kg / person, of which about 1/3 is used for textile export processing. Even if part of the textile industry is transferred to foreign countries, China will still account for a larger share of global textiles because of the strong competitiveness of China's textile industry. It is estimated that after 2040, fiber consumption will gradually reach a saturation value of 40~50 kg / person. The growth of ethylene equivalent demand and fiber demand is driving the continuous increase of chemical oil, and is expected to be saturated in the next 2045-2050 years.

It is understood that PetroChina currently owns Liaoyang Petrochemical 700 thousand tons / year, Urumqi Petrochemical 1 million tons / year, Sichuan Petrochemical 750 thousand tons / year PX capacity.

Overall, the PX capacity of PetroChina is much lower than that of Sinopec, or even less than the 4 million 500 thousand / year PX capacity of Hengli petrochemical, which has recently been put into operation. And followed by the construction of PX production capacity, as well as Zhejiang Petrochemical phase 4 million tons / year, Heng Yi Brunei 1 million 500 thousand tons / year, Sheng Hong Petrochemical 2 million 800 thousand tons / year and other large-scale private enterprise projects.

PetroChina intends to build the largest single PX device in the world, which is to make clear positioning in order to adapt to changes in resources, market and industrial policies.

As early as 2017, PetroChina made clear that the Guangdong petrochemical project of the Central Committee of the CPC was eventually adjusted to the integrated scheme of refining aromatics and chemical industry. After adjustment, the Guangdong petrochemical project will be built in accordance with the 20 million ton / year oil refining +260 million ton / year aromatics +120 million ton / year ethylene project.

As the largest oil refining and chemical integration project in PetroChina, which is the most important unit of Sinopec Guangdong Petrochemical 20 million ton refining and chemical integration, the 2 million 600 thousand ton / year aromatics project is of great significance.

It is reported that the PX plant is expected to be put into operation in 2021 and is basically at the same time as the two phase of Sheng Hong petrochemical and Zhejiang petrochemical company.

Competition for high-end textile raw materials market: three to two competition!

Dalian Hengli Petrochemical 4 million 500 thousand ton / year PX production plant has been put into commercial operation, and has led the private capital of PTA industry to develop to its upstream PX. This indicates that the domestic PX market change has already begun. According to statistics, by 2020, more large-scale and updated technology PX production facilities, including Zhejiang petrochemical, Hengli petrochemical and Sheng Hong petrochemical, will be built and put into operation. The total capacity of the 3 enterprises will reach 14 million 500 thousand tons, accounting for 68% of the new capacity. At that time, the domestic PX market will present a new pattern of coexistence of three state-owned enterprises, imports and private enterprises.

In the first half of 2019, Dalian's 4 million 500 thousand ton / year aromatics plant was put into operation, and its production capacity of p-xylene (PX) was 5 times higher than that of Yangzi Petrochemical, which was the largest aromatics in Asia for more than 20 years. By 2020, China's new PX production capacity will reach 21 million tons / year, with a total capacity of 33 million 700 thousand tons, and the actual output is basically equivalent to that of 28 million 500 thousand tons / year. This may be the first Domino dominion to start the adjustment of the domestic PX industry pattern, with the result that more than 55% of the total import volume has been gradually squeezed out of the Chinese market. The competition in the domestic PX market will duplicate the pattern that PTA has experienced, namely, the competition from state-owned enterprises, imports and private three feet, to the two strong enterprises of state-owned enterprises and private enterprises, and to a certain extent, the situation led by private enterprises.

The total capacity of Sinopec 9 enterprises is 4 million 930 thousand tons / year, which is basically the same as that of Dalian Hengli PX450 which has just been put into operation, and it is also lower than the average capacity of neighboring countries. However, the superiority and inferiority of the share dispute depends to some extent on the matching characteristics of the product chain. Sinopec has 3 million 300 thousand tons of PTA capacity, self digestion part PX, part of the market entry, and the product chain has obvious advantages. Sinopec is also further optimizing and matching resources: the new 1 million ton / year PX plant will be put into operation with its own aromatics technology in Hainan. After more than 10 years, it plans to invest more than 3 million tons / year PTA plant again. Yangzi Petrochemical and other large scale PX installations have territorial advantages compared with imported ones. Compared with the new private enterprises, the equipment has completed depreciation, as well as the advantages of refining and chemical integration and the advantages of resources optimization of enterprise groups. Therefore, even for production continuity considerations, most of the existing capacity of state-owned enterprises can not be withdrawn. The new PX giants, such as Hengli and Yisheng, are also the main producers of PTA. Their PX production will first meet their raw material needs of downstream PTA and replace their previous imports. With the additional tariffs and logistics costs, imported products are inferior to local firms in terms of competition. This means that China's domestic PX market will eliminate imports.

The tripartite confrontation exists only in the process of new domestic capacity growth, and it is temporary. The final outcome may be the competition between the two state-owned enterprises and private enterprises. But at least for a certain period of time, the private enterprises will copy the evolution pattern of PTA, dominate the PX market, and build the upstream and downstream matching enterprise clusters.