MARKET DEVELOPMENT
China's Detergent Chemicals Imports Remain Strong Despite Market Constraints
China's Detergent Chemicals Imports Remain Strong Despite Market Constraints
28/11/2014 (Companiesandmarkets.com) - The Chinese detergent chemicals sector saw healthy import demand in recent years, driven by strong growth in the liquid detergents market. However, the Asian market suffered a setback at the end of last year following the impact of Typhoon Yolanda, one of the strongest tropical cyclones ever recorded. The typhoon caused a series of facility outages in Southeast Asia, including a shutdown at a major Chinese manufacturing plant, driving volatility in Palm Kernel Oil (PKO), a chemical predominantly used in the production of laundry detergent.
More recently, concerns regarding slower economic growth in China arose against the background of weaker demand from key Chinese market participants. Despite these concerns, Asia remains the major hub for fatty alcohols - long chain aliphatic alcohols typically used as key ingredients in detergent manufacturing - accounting for over 55% of production in 2013. Asian companies also accounted for 75% of new capacity during 2013 and 2014, with two Chinese companies being in the top 10 in terms of global fatty alcohols capacity expansion since 2013. Ho Tung, based in Jiangsu added 80kt/yr of additional capacity this year and Zhejiang Jiahua, based in Zhejiang, added 135 kt/yr in the second half of last year.
Industry data indicates that China's demand for fatty alcohol imports averaged over 10 per cent in the period 2009-2013. Imports accounted for over 50% of total consumption in 2011, although imports suffered a substantive drop in 2010 following higher domestic production. On the other hand, imports in 2013 rose by over 18% in 2013. Palm oil prices saw a gentle decline in the first eight months of 2013. While demand was fairly reasonable, the upside of palm oil prices was capped by favourable soft oil crops.
Despite recent robust performance in the Chinese detergent chemicals market, demand for oleochemicals remains influenced by an uncertain global and regional macroeconomic outlook. In this context, access to European markets will continue to be constrained by the anti-dumping duties imposed on most supplies from Indonesia and India (the two largest consumption markets for palm oil) as well as other Asian countries. In addition, China's import demand will depend on the growth of its economy. Such potential constraints considered, as a conservative estimate, import demand in China for detergent chemicals is likely to remain robust, despite rising domestic capacities.
More recently, concerns regarding slower economic growth in China arose against the background of weaker demand from key Chinese market participants. Despite these concerns, Asia remains the major hub for fatty alcohols - long chain aliphatic alcohols typically used as key ingredients in detergent manufacturing - accounting for over 55% of production in 2013. Asian companies also accounted for 75% of new capacity during 2013 and 2014, with two Chinese companies being in the top 10 in terms of global fatty alcohols capacity expansion since 2013. Ho Tung, based in Jiangsu added 80kt/yr of additional capacity this year and Zhejiang Jiahua, based in Zhejiang, added 135 kt/yr in the second half of last year.
Industry data indicates that China's demand for fatty alcohol imports averaged over 10 per cent in the period 2009-2013. Imports accounted for over 50% of total consumption in 2011, although imports suffered a substantive drop in 2010 following higher domestic production. On the other hand, imports in 2013 rose by over 18% in 2013. Palm oil prices saw a gentle decline in the first eight months of 2013. While demand was fairly reasonable, the upside of palm oil prices was capped by favourable soft oil crops.
Despite recent robust performance in the Chinese detergent chemicals market, demand for oleochemicals remains influenced by an uncertain global and regional macroeconomic outlook. In this context, access to European markets will continue to be constrained by the anti-dumping duties imposed on most supplies from Indonesia and India (the two largest consumption markets for palm oil) as well as other Asian countries. In addition, China's import demand will depend on the growth of its economy. Such potential constraints considered, as a conservative estimate, import demand in China for detergent chemicals is likely to remain robust, despite rising domestic capacities.