Petroleum Resin Industry Discusses "Winter" Strategy

China Drying News reported that the 9th Petroleum Resin Industry Exchange Conference will be held in Beijing on December 19. Delegates felt that domestic petroleum resin companies are experiencing a “winter” of shortage of raw materials and sluggish markets, and companies can only develop if they focus on the research and development and production of high-end products.

The director of the Department of Petroleum Resins of the China Chemical Industry Management Association and Chairman of Shandong Qilong Chemical Co., Ltd. Hao Shouzeng reported the grim situation of the current petroleum resin industry. He pointed out that this year's weakness in the petroleum resin market has been especially strong in previous years. The domestic petroleum resin market as a whole is experiencing “cold winter”, and the domestic and foreign market demand has been in a weak state. On the one hand, international crude oil prices are still under tremendous pressure, WTI prices oscillate, and Brent oil prices oscillate. On the other hand, the domestic cracking C5 and C9 markets continue to maintain a steady downtrend under the influence of oil prices, and the bearish factors dominate the market.

Raw materials are the most concerned issues for participants. The petroleum resin raw materials come from the by-products C5 and C9 in the ethylene production process. These two by-products are not adequately supplied by the market and have become one of the bottlenecks restricting the long-term development of petroleum resin companies.

The phenomenon of homogenization of products is serious, there is no industry standard for product quality, and low-level redundant construction also plagues enterprises. Some delegates pointed out that although the industry is small, there is still a tendency of excess capacity. At present, some newly-built petroleum resin installations have new technology and advanced equipment, and adequate supply of raw materials, and they have strong competitiveness. This has put pressure on some old-established petroleum resin companies and has also created a potential surplus.

At present, high-end products are in short supply, but domestic companies cannot meet market needs. It is understood that the annual output of the petroleum resin industry is around 500,000 tons, but high-end products still need to be imported from abroad. It is understood that the domestic price of petroleum resins is between 7,000 and 8,000 yuan/ton, and that of imported products is around 3,000 dollars/ton, a difference of 2 to 3 times. Foreign companies often import low-end products from China, then sell them back to the Chinese market for high profits after processing and purification.

Delegates believe that to survive the "winter", it is imperative that strict industry standards be formulated to form a scientific and complete standard system to guide enterprises in standardizing production. The market prospect of petroleum resin in daily products and medical products is very broad. Enterprises should vigorously develop high-end petroleum resin products.

The conference was hosted by China Chemical Industry Management Association and was organized by Shandong Qilong Chemical Industry Co., Ltd.

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