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Chemicals

I. Agricultural Chemicals

MARKET OPPORTUNITIES

China’s accession to the WTO has provided benefits to U.S. fertilizer exporters. On accession, tariffs dropped 6% from the 11% import duty rate. On October 10, 2012, China’s Ministry of Commerce (MOFCOM) released the 2013 fertilizer import tariff rate quotas (TRQs). The total 2013 TRQs will be 3.3 million tons of urea imports, 6.9 million tons of diammonium phosphate (DAP) and 3.45 million tons of nitrogen, phosphorus, and potassium (NPK) compound fertilizers. Of the TRQs, 2.97 million tons of urea, 3.52 million tons of DAP and 1.76 million tons of NPK are for state trading while non-state trading TRQs will be 330,000 tons of urea, 3.38 million tons of DAP and 1.69 million tons of NPK. The import volumes within the quota are levied an import duty of 1%, while imports exceeding the quota are levied a duty of 50%.

Based on the WTO commitment, China started to allow foreign companies to gain the right to retail and distribute fertilizers on December 11, 2006. China’s fertilizer circulation field will face more fierce competition. In the telephone interview with a U.S. fertilizer exporter, its experts held that it is a great positive move and will untie their company in China market. Fertilizer exporters should apply to MOFCOM for license to be authorized to retail and distribute fertilizer in China. It will bring more business opportunities to U.S. exporters in China.

BEST PROSPECTS

Fertilizers
The local producers have yet to meet the growing local market demand, especially for phosphate and potassium fertilizer, which are limited natural resources. China still must rely on importing fertilizers in large quantities.

  • Nitrogen fertilizer
  • Phosphate fertilizer
  • Potash fertilizer

Pesticides
High efficiency, low toxicity pesticides have strong market prospects. Although domestic output of pesticides satisfies local demand in most areas, domestic production of high efficiency herbicides, high-efficiency and low-toxicity insecticides and fungicides cannot meet the demand both in terms of quantity and quality. Some raw pesticides and intermediates rely on imports, such as aniline with o-dihydroxybenzene, furphenol and tripoly-nitrogen-chlorine dialdyl. It is imperative for China to stop the application and production of highly-toxic pesticides, especially organo-phosphorous biocides, since the high-toxic pesticides take up about 36% of the country's total consumption.

  • Herbicides
  • Environmentally safe insecticides
  • Biopesticides
  • New technologically advanced pesticides

Because the Chinese government now emphasizes environmentally sound technologies, pesticides will have to meet new requirements.

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II. Industrial Chemicals

MARKET OPPORTUNITIES

Over the past several years, China has experienced steady growth in both the import and export of chemicals. According to the International Council of Chemical Associations, China is the eighth largest chemical importing nation and the twelfth largest chemical exporting nation in the world. The United States is the only leading exporting country that enjoys a slight trade surplus with China in the area of chemicals. It is expected that China will continue rely on imports in the foreseeable future.

BEST PROSPECTS


Fine and Specialty Chemicals

The fine and specialty chemical industry is a development priority within China’s chemical sector. Fine chemicals are composed of high purity components, and are used for personal hygiene, medical purposes, or water treatment, whereas specialty chemicals are manufactured for a specific use, such as adhesives or dyes. Both types are produced in lower volume than bulk chemicals.

The Chinese fine and specialty chemical industry still remains highly fragmented. The top ten producers control only five percent of global capacity. Currently, domestically produced fine and specialty chemicals cannot satisfy China’s rapidly growing demand. As a result, China needs to import many types of fine and specialty chemicals, while also investing in domestic production facilities and encouraging cooperation with foreign corporations for certain chemical projects.

The development of the fine and specialty chemical industry has been restricted by the shortage of applied research, technical services, marketing expertise, and funds. Domestic products often cannot provide the range of products needed nor meet quality requirements for chemicals used in the production of export goods.

Organic Chemicals
Organic chemicals constitute another promising export market in China. Major organic chemical products in China include ethylene, propylene, styrene, and polyvinyl chloride. The main hindrance of Chinese organic chemical production is inefficient factories with obsolete technology. As a result, organic chemical imports have been increasing steadily since 2000.

Synthetic Materials
Synthetic materials, including high quality fibers and rubbers, also present a significant export opportunity. Many Chinese chemical factories currently produce these products, but at a rate only sufficient enough to fulfill about half of domestic demand per year. Local products are also inconsistent in quality and can be highly toxic. Foreign products have a good reputation in the China market for their good quality and after-sales service. For example, China’s main tire manufacturers all use imported accelerants because of their consistent levels of quality.

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III. Plastic Materials and Resins

MARKET OPPORTUNITIES

China is the largest plastics production and consumption country in the world since 2010. Special engineering plastics and other resins that possess special physical and chemical properties are used widely in various industries. U.S. engineering plastics products have high-technology input and are very competitive in the local market. However, U.S. firms now face stiff competition from Japan, Korea, Taiwan, and Germany. In recent years, imports of general plastics from the U.S. dropped sharply due to price competition and the close relationship between Asian competitors and China. Meanwhile, China has been the largest importer of engineering plastics for a number of years. In 2012, the engineering plastics consumption volume in China was about 2.995 million tons, an increase of 10.5% over 2011.

BEST PROSPECTS

Synthetic Resins

China needs to import large amounts of synthetic resins to meet local market demand. In 2012, China imported USD 46.186 billion of plastics in primary forms, USD 4.434 billion of plastics products, USD 6.404 billion of scrap plastics materials, USD 2.126 billion of plastics processing machinery, and considerable amount of plastics additives. Imports from the United States represented 9.53% of the total, just behind South Korea, Taiwan, and Japan. China’s imports of PVC reached a value of USD 14.96 million in 2012, a decrease of 4.05% over 2011.

Due to rapidly expanding production capabilities, PVC supplies have overtaken demand. China’s imports of PVC have also been decreasing by 10% a year since 2004. In 2006, government’s tightening macroeconomic policy has hit the real estate industry, decreasing construction demand for PVC; ongoing global economic troubles in the wake of the 2008 financial crisis and the Euro Zone crisis continue to affect this sector In 2012, China produced 13.181 million tons of PVC, an increase of 1.77% year-on-year, imported 940,000 tons, decreasing 10.51% year-on-year, and exported 385,600 tons, increasing 4.9% year-on-year.

The local market requires imports of general-purpose thermoplastic resins, including polyamides (PA), polyether, polyethylene (PE), polypropylene (PP), polystyrene (PS), acrylonitrile butadiene styrene (ABS), and polyvinyl chloride (PVC). This market is subject to fluctuation of up-stream supply and down-stream market demand.

In 2012, plastics and plastic products ranked as China’s 4th largest import category (Harmonized Schedule 2-digit level) from the United States, with a total value over 1,442 million USD.

The top 3 Chinese plastic imports are:

Polyether

Polyamides

Self-adhesive Materials

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IV. Petrochemicals

For more details, visit the US Commercial Service China site under the heading “Oil and Gas”.

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Useful Websites

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U.S. Commercial Service Contacts

Beijing Office:
Tel: (86-10) 8531-3000
Fax: (86-10) 8531-3701
Zheng Xu
(Agricultural Chemicals)
Michael Wang
(Industrial Chemicals/Plastics and Resins)

Shanghai Office:
Tel: (86-21)6279-7630
Fax: (86-21)6279-7639
Ken Shen

Guangzhou Office:
Tel: (86-20)3814-5000 (switch board)
Fax: (86-20)3814-5310

Angela Han (Agricultural Chemicals)

Sophie Xiao (Plastics and Resins )

Lena Yang (Petrochemicals)

Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Ling Chen

Shenyang Office:
Tel: (86-24) 2322-1198
Fax: (86-24) 2322 2206
Yang Liu

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