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Strong growth in China's chemical industry During the first half of 2006, China's petroleum and chemical industries were surveyed. The investment in fixed assets was 213.36 billion yuan, which was a year-on-year increase of 6 percentage points over the national average, reaching 36.3%, and a further acceleration. According to the analysis of Asian Development Bank (ADB), the growth rate of chemical production in China will fall from 15.5% in 2005 to 12.5% ​​in 2006 and 11% in 2007, but the growth momentum is still strong. China's 264 billion U.S. dollars/year chemical market is second only to the United States and Japan, ranking third in the world. In 2006, the total number of transactions in the Asia Pacific region of the chemical industry exceeded the rest of the world for the first time, and China accounted for nearly half of these transactions.
The modernized petrochemical complexes recently built in China are highly competitive even for Saudi Arabian producers that have unrivalled cost advantages for raw materials. The American Chemical Society believes that once several sets of world-scale integrated petrochemical complexes under construction in China are put into operation, Chinese chemical manufacturers will become important competitors in the global petrochemical industry.
India's speed of development Not only does China have growth potential, India and Eastern Europe are also developing markets. In 2006, India became the 12th chemical producer in the world, and its chemical industry sales are expected to increase from 32 billion U.S. dollars/year to 60 billion U.S. dollars/year in 2010. The total output value of India's chemical industry is 1.3 trillion rupees (28.3 billion US dollars), ranking third in Asia after Japan and China. As of 2006, India had 8 sets of ethylene complexes with a total production capacity of approximately 2.8 million tons/year.
The European Union stepped up ethylene expansion According to the OECD analysis and forecast, the EU GDP growth rate dropped from 1.8% in 2004 to 1.4% in 2005, but it rebounded to 2.1% in 2006. In the chemical industry, the growth rate of the output of petrochemicals dropped from 5% in 2005 to 3.5% in 2006. The performance of ethylene in Europe can be said to be the biggest bright spot this year.
In 2006, 24 million tons/year ethylene cracker in Europe produced 21.6 million tons of ethylene, and the average operating rate was 90%, but ethylene was still in short supply. In order to change the shortage, some European producers have increased investment in ethylene expansion. Shell's $150 million investment in the overhaul of the Moldijk ethylene unit in the Netherlands was completed in September. Total Petrochemical Company invested 400 million euros to increase the competitiveness of France's Karin and Gonfaver ethylene units.
High U.S. basic chemical revenues are plagued by rising energy prices. The U.S. GDP growth rate fell from 3.6% in 2005 to 3% in 2006, but chemical production is expected to grow rapidly in the coming years. According to the analysis of the American Chemical Industry Association (ACC), the operating rate of the US chemical industry in 2006 was higher than that in 2005 and is expected to reach 77.5% and 79% respectively in the next year. The benefits of the chemical industry will also rebound. In 2005, the net after-tax chemical industry income increased by nearly 31% to US$60 billion. The 2006 earnings will continue to increase by more than 12% to approximately US$67 billion, and it is expected to increase by approximately 7% in 2007. The rebound in profits was mainly due to the increase in the revenue of basic chemicals and petrochemical products. In 2005, the US petrochemical benefit, especially ethylene and its major derivatives, reached its peak. In 2006, it was still a year of rapid development.
Japanese companies are busy with export revenue According to ACC statistics, the growth rate of Japanese chemical production has dropped from 1.7% in 2004 to 0.7% in 2005, but the growth rates in 2006 and 2007 will be 1.7% and 1.9% respectively. Exports of products made by leading chemical companies in Japan to Asian countries, especially China, are still growing. The increase in product prices has made up for the increase in raw material costs. In view of the strong domestic and overseas demand in Japan, Sumitomo Chemical's operating profit rose by 28% to 68.2 billion yen in the first half of 2006. It is expected that net profit for the year will increase by 14% to 91 billion yen. Mitsui Chemicals' net profit for the year 2006 will increase from 35 billion yen in the previous year to 40 billion yen. Shin-Etsu's annual net profit increased by 13% to 150 billion yen.
Global Industry Advances in Recovery in 2006
Although rising energy prices have brought cost pressures to the petrochemical industry, the strong economic growth in China and other regions in Asia continues to drive strong demand for petrochemical products. The European Union, the United States, Japan, China, and India represent countries at different stages of chemical development. The performance of the region in 2006 was punctuated. In general, the global petrochemical industry advanced in recovery in 2006.