M R E RP R A K T E OT

Intermediate

Pinacolone Export increases rapidly

By H o u L esh an Pin aco lo ne is an i mp o rt an t p est icid e and ph arm aceu ti cal i nt erm edi ate. I n t he p est icid e secto r it is m ai n ly u sed t o p ro d uce f u ng i ci d es, pl ant gro w t h regu l at ors and i nsect ici d es su ch as t r i a d i m e n o l , d i c l o b u t r a zo l , t r i ad i m e f o n , p ac l o b u t r az o l , u n i co n a zo l e, t e b u co m a zo l e an d triapent heno l. T hese p ro du ct s al l featu re hi gh eff ect , l ow to xicity, system ic eff ect an d b road sp ect ru m an d h ave st ab le d em an d grow th . Yancheng Bi ao xin Chemical Co., L td ., Yan chen g D i l ly Ch em i cal Co ., L t d ., Yach e n g L vye Ch e m i cal Co ., L t d ., Yan chen g Lim in Chemical Co., L td. and Yancheng Kaip u Ch emi cal Co., Lt d. are m aj o r p ro d u c er s o f c l i m b a zo l e , tebu comazole an d chloropi nacolo ne in Chi na and t h e demand o f p in acol on e in each p rod ucer is mo re t han 100 to ns a year. Tri azo le p esti ci d es i n Chi n a h ave d evelo ped stab ly an d t here has been a stab le d em and i n recen t years. It is ex pected th at t he con sum pti on of pin acol one in Ch ina w ill reach 4.9 th ousand t on s in 2010 w it h an average annu al g ro w t h of 7%. T he con su mp ti on in the pestici de sect or and t he p harm aceu t i cal sect or w il l be 3.6 t ho u san d ton s and 1.3 thou sand tons resp ectively w it h an average an nu al g ro w t h of 6% and 10%. am ou n t o f p in acol o n e i n Chi n a w as arou n d 1 t h o u san d t on s i n 2005, an i n cr eas e o f n ea rl y 5 00 t o n s o v er 2004. I t i s ex p ect ed t h at t h e o ut p u t o f pi nacol on e i n Ch i na w il l sti l l main t ai n a ro b ust i n crease i n t h e n ex t 5 y ear s an d t h e av er ag e an n u al g ro w t h w i ll b e h ig h er t h an 15%.

I nadequate raw material supply

T he pi n aco l on e p ro du cti o n i n Ch in a m o s t l y u s es i so p en t e n e a s ra w materi al . I so pent ene accou nts f or 1%3% o f th e feed st ock i n catalyti c cracki ng un i ts of ref in eri es and 10% - 30% of C5 reso urces. Du e to pro b lem s i n tech no lo gy and eco no mi cs, ho w ever, th e comp rehen sive u til izati on of C5 reso urces includ ing isopentene is sti ll at t he i ni t ial st age i n Ch i na. Th e o ut pu t i s on ly several t ho u sand to ns a year. Th ere i s a seriou s sup ply d efi ci t and a drastic p rice flu ctu at ion i n t he do mest i c m a rk e t . T h e u n ce r t ai n t y i n i so pent en e im po rt sou rces i s th e maj or facto r f o r t he p rice f l uct uat io n i n t he p in aco l on e market . T h e p ri ce o f p i n aco l o n e in t h e d om est i c market w as RM B28 000 - RM B36 000 p er to n in 2005. Wi th ad van ces in th e com prehensi ve uti lizati on of C5 resou rces, t he su pp l y d ef ici t of p in aco lo n e w i l l b e g radu all y eased an d b o th t h e sup pl y an d t h e p ri ce w i ll b eco m e st ab l e i n th e next f ew years.

S table domestic demand

Chi na h as 8 p in acol on e prod ucers to d ay an d t h e t o t al cap aci t y w as 9.2 t h o u s an d t / a i n 2 00 5 . J i a n g s u Ji an n o n g A g ro ch e m i cal Co ., L t d ., Z han gj i ag ang Free T rad e East Pesti ci d e Ch em i cal I n t ern at i o n al T rad e Co ., L t d . an d Suzh o u H uaf en g Fi n e Ch em i cal Co ., Lt d . h ave a rel at i vel y hi gh o ut pu t. T hese co mpanies u sual ly al so p ro d u ce d o w n st ream pro d uct s an d so m e p rod u cers p ro d u ce p i n acol on e to t al ly f o r th ei r o w n u se. Th e co n su mp ti on of p in aco lo ne i n Ch in a w as 3.5 th ou sand t on s in 2005, in clud ing 2.7 thou san d to ns i n th e pesti ci de sect or an d 800 t on s i n the p harmaceut ical secto r. Pin acol one in Chi na i s m ain l y u sed to pro d uce p est i cid e cl im bazo le and o rg an ic i nt ermedi at es tebu co mazo le an d chl o ro pi n aco lo ne.

R apid export growth

T he exp o rt amo u n t o f p i naco lo n e i n Ch i n a h as i n creas ed rap i d l y i n recen t years. It s d o w n stream p rod u ct s such as tebu co mazol e have al so b een exp o rt ed in great q u an t it ies. I t is th e m ai n fact or f or p ro mo t i n g t h e d rast i c o u t p u t g ro w t h o f p i n aco l o n e i n Chi na. T he o u tp ut of p i naco lo n e w as 2.1 t h o usan d t o n s i n 2003, 3.5 t ho u sand t o n s i n 2004 and 4.5 t h o u san d t o n s in 2005. T he n ew l y ad d ed o u t p ut i s m ost l y f or exp o rt . Th e ex p ort

Epichlorohydrin Demand Increases Rapidly

Basic supply/demand balance in the world
T h e ca p a ci t y o f e p i ch l o ro h y d r i n (ECH ) i n t h e w o rl d w as m o re t h an 1.3 m i l l i o n t / a i n 2005. 62 % o f t h e c ap ac i t y w as d i s t ri b u t e d i n t h e U n i t ed St at es, West ern Eu rop e an d Japan . T he capaci t y i n D ow , So lvay an d Sh el l acco un t ed f o r arou n d 51% o f t he w o rld to t al . M aj o r ECH exp o rt co u nt ri es in th e T h e U n i t ed St at es, West ern Eu ro p e w o rl d a re t h e U n i t e d St a t es a n d an d Jap an are m a j o r co n su m p t i o n Japan . Asi a an d East ern Eu rop e are reg i o n s. Wi t h t h e d e vel o p m en t o f m aj o r i m p o rt reg i o n s . T h e su p p l y e p o x y r es i n a n d p o l y ca r b o n at e an d t h e d em an d Table 1 Major ECH Produ cers in C hina (thousand t/a) i n We st er n Eu Producer Capacity r o p e a re b a s i Chlor-Alkali Plant of Sinopec Qilu Petroc hemical Co. 32 ca l l y b a l a n c ed . Epox y Res in Plant of Hunan Yuey ang Petrochemical Co. 34 T here i s an o verTianjin Chemic al Plant 28 a l l s u p p l y/ d e Shandong Dongy ing Liancheng Chem ical Co. 20 m an d b al an ce i n Total 114 t h e w o rld t o d ay. Source: CNCIC Chemdata

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CHINA CHEMICAL REPORTER Augus t 16, 2006

Organics

M R E RP R A K T E OT
2003/5 Monthly Average Price of ECH in Shanghai Market (RMB/ton)

sect o rs, th e d em an d of ECH in A si a an d esp ec i al l y Ch i n a i s g ro w i n g rap id l y. Th e ap paren t co n su m pt i o n o f ECH i n Chi n a reach ed 200.4 t h ou san d t o n s i n 20 05, an i n cre ase o f 17. 5% o ver 2004.

Rapid demand growth

Source:CNCIC Chemdata 20000 19000

2003

2004

2005

18000 (1 ) E p o x y r esi n : 17000 Th e m ajo r con sum p16000 15000 ti on sect or for epo xy 14000 Serious supply deficit in China re si n i s t h e e l e c13000 12000 t r o ni c / el ect r i c 11000 Ch i n a h as 4 ECH p ro d u cers t o d ay sect o r. O t h er co n 10000 9000 w it h a t ot al cap aci t y o f 114 t h ou san d su mpt ion sectors i nJan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. t / a. T h e o u t p u t w as o n l y 90 t h o u - cl ude co atin gs, co msan d t o n s i n 2005 and f el l f ar sh o rt p o s i t e m a t er i a l s , o f t he d o mesti c m arket dem an d. Th e co nstru ct io n m at eri al s and adhesi ves. th e p rod uct ion of epo xy resin and synp r o d u c t se l f -s u f f i ci e n cy rat e w a s Th ese sect ors h ave develop ed rap id ly t het ic gl ycerin in th e p ast an d sm al l o n l y 44.9% in 2005 an d i m p o rt h ad i n recen t years an d th ei r d eman d o f am oun ts w ere also used in the synth et o b e m ad e i n g re at q u an t i t i es t o ep ox y resin h as i ncreased con st an tl y. si s o f chlorhyd rin ru bber. Ow in g t o t he b ri d g e t he su p p l y d ef i ci t in t h e d o - T h e d eman d of ECH i n ep o xy resi n con st an t ap p li cati o n ex pan sio n an d reach ed aro un d 180 t ho usan d to ns i n d rast i c d em an d i n crease o f ep o x y m est i c m arket . T h e h u g e m ar k et d e f i ci t , t h e 2005. It is ex p ected t h at ep o xy resi n resin , th e co nsum pt io n prop orti on o f so u n d d ev el o p m e n t p ro sp ect an d w i ll remai n t he m ajo r con su m p ti o n EC H i n ep o x y re si n h a s re ach ed arou nd 90%. t h e sat i sf act o ry p ro f i t m arg i n h ave sect or f or ECH in th e next few years. (2 ) Sy n t h e t i c g l yc er i n : T he g lycat t r act ed m an y d o m est i c f i rm s t o co n st ru ct n ew EC H u n i t s. Ji an g su eri n prod uct io n in Chi na main ly u ses Heavy import dependence Yan g n o n g Ch em i cal Gro u p st art ed t h e f at h ydro l ysis p ro cess. T h e d et o make access t o t he ECH m arket . mand o f ECH i n t hi s secto r w i ll th ere- A ccord in g t o th e cust om s stati sti cs, I t s 30 t h o usan d t/ a ECH u n i t i s ex - f ore have no g reat in crease. t h e t ot al i m p o rt am o u n t o f ECH i n ( 3 ) C h l o r h y d r i n r u b b e r : Ch i na w as m o re th an 110 t h o usan d p ec t ed t o s t art p ro d u ct i o n i n t h e seco n d h al f o f 2006. Jian g su A np o n Ch lo rh ydri n ru b b er i s a n ew variet y to ns in 2005, an increase o f 13.3% over El e ct ro ch em i ca l Co ., L t d . al so i n - o f syn t het i c rub b ers. I t h as com p re- 2004. T he im p ort amo u nt accou n ted t en d s t o i n vest RM B260 m i l l i o n i n h e n s i ve p ro p er t i e s su c h as h e at f o r 5 5 . 3 % o f t h e a p p a r e n t resistance, oi l resi stance, w eat her re- c o n su m p t i o n . Ba se d o n i m p o r t t he co n st ru ct i on of a 20 t h ou san d t / a ECH u n i t . Th e p ro j ect p assed t h e si st ance an d o xi dat io n resistan ce and so urces, th e im port w as mai nl y made ev al u at i o n o rg an i ze d b y Ji a n g su is ext ensivel y u sed in auto mobi le, avi a- from Jap an, Ko rea, Russia an d Taiw an En vi r o n m en t al En g i n eer i n g Co n - t io n an d spacefl ig h t sect ors. Th e do - p ro vi n ce. su l t i n g C en t er i n ea rl y 2 006. C o n - m esti c demand i s main ly sat isfi ed b y Th e price of ECH in Chi na h as p rest r u ct i o n h a s al r ead y st ar t ed an d i mp o rts t od ay. T h e co nsu m pt i o n o f sented an o verall ri sin g t ren d i n recent t h e p ro j ect i s ex p ect ed t o co m p let e ECH i n th e chl orhydrin ru bb er secto r years. Th e p rice of im port s p rod uces a an d p u t o n st rea m i n Ju n e 200 7. w as arou nd 4 t ho usand t on s in 2005. great imp act on th e dom esti c m arket. (4 ) O t h e rs : Th e co nsu mp t io n o f The pri ce of ECH in China had n o great Bl u est a r N e w Ch e m i ca l M a t eri al s ECH in o ther sect ors such as gl ycid ol fluctuatio ns in the fi rst half of 2005. The Co ., L t d. l aun ch ed a 30 t h ou san d t / a ECH pro j ect in Yan ch en g , Ji ang su et her, p ap er ad di t i ves, fl am e-ret ard - Mi nistry of Com merce mad e a prelim ip ro vi n c e i n Ju l y 20 06 . W i t h t h e i ng ag ent s, io n ex ch ang e resi ns an d n ary rul in g o n Sep temb er 21st , 2005. co m p l et i o n o f t h ese p ro j e ct s, t h e su rf actan t s w as aro u nd 8 th o u san d I t w as d ef in ed th at th ere w as du mp su p p l y d ef i ci t o f ECH i n Ch i n a w i l l to ns i n 2005. i ng i n t he im p o rt of ECH ori gi n ated ECH i n Ch in a w as mai nl y used i n f ro m Ru ssi a, Ko rea, Jap an and t h e b e eased i n t h e n ex t f ew years. U ni t ed St ates an d i t w as d eci ded t o take t emp orary anti dump ing measures Table 2 Supply and Demand of ECH in Ch ina in Recent Years (thousand tons) i n t h e f o r m o f g u a ra n t e e f u n d . Year 2001 2002 2003 2004 2005 (CCR2005, No . 28) Th e p ri ce of ECH in Output 44.7 60.0 90.0 73.0 90.0 Import 35.5 43.7 69.1 97.7 110.8 t h e d o mest ic m arket st art ed t o ri se Ex port 0.7 0.2 0.3 0.2 0.4 sh arpl y an d has been m ai nt ai ned at a Consumption 79.5 103.5 158.8 170.5 200.4 hi gh l evel ever si nce.

Source: CNCIC Chemdata

CHINA CHEMICAL R EPORTER

August 16, 2006

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