China Chemical Quarterly reports
A series of reports focused on China’s chemicals sector.
China Fertilizer: Growing into compound & sustainability
Agriculture is vitally important in China and the government is increasingly regulating agrochemicals for higher performance and environmental protection. The penetration of compound fertilizer is expected to increase due to favorable government policies with a targeted share of 40% in 2015 under the Fertilizer 12th Five-Year Plan. Based on the contrasted import/export dynamics to monitor by nutrient, report indicates that, although opportunities will be generated from compound fertilizer and sustainable solutions, domestic players urgently need to anticipate changes in international trade flow that may affect not only their export business but also their domestic market. From the supply structure perspective, China fertilizer industry is highly fragmented except in K fertilizer. The Chinese fertilizer industry is going to face major challenges in the coming years. Superior sales & marketing capabilities will become even more critical to defend market share and protect margin.
China coal-to-olefin (CTO/MTO): Exploring for the new El Dorado
China's Energy Policy 2012 White Paper issued by the State Council in October 2012 interprets China's dependence on foreign energy sources as a major threat. For example, the proportion of imports in total Chinese oil consumption rose from 32% in 2000 to 57% presently, which makes China vulnerable to potential risks from international transportation and oil price fluctuations. In line with the intent of the country's feedstock diversification strategy, alternative routes to produce olefin, whether coal-based (CTO) or directly methanol-based (MTO), are currently explored to complement the oil (naphtha) route.
While China's CTO business shows preliminary potential with a broad range of industry players are currently trying to enter this area, the CTO industry still presents many challenges and risks, such as the price and quality consistency of coal, water supply accessibility and costs, MTO technology stability and maturity, superior sales and forward integration capabilities. Carbon tax is another major uncertainty of the economic viability of CTO projects.
China water treatment chemicals: Surfing the solution wave
On 9 July 2012, China's State Council outlined seven Strategic & Emerging industries together with their associated components of the 12th Five-Year Plan. The guidelines enhance the importance of water treatment within Energy Saving & Environmental Protection, one of the seven Strategic & Emerging industries.
In this instance, in order to secure competitive advantage and meet the evolution of the demand in terms of water treatment chemicals, Chinese water treatment chemical players will need to move from commodity chemicals to specialty chemicals, if not up to solutions and services. Any of these initiatives will require R&D and technical service capabilities as key success factors for building their future profitability and sustainable growth.
Commercial seed in China: Plow and plant today for harvesting tomorrow
Deloitte China Chemical sector team will release Chemical Quarterly on a regular basis to share forward-looking points-of-view on numerous business lines such as materials science, crop science and environmental science etc.
This edition focuses on China's commercial seed industry with in-depth analysis. The article indicates that China's commercial seed sector is attractive and promising, yet active Chinese players need to ramp up urgently R&D in biotech seeds to anticipate increasing penetration of foreign products despite high entry barriers.
- Growing market demand, with low penetration of biotech seeds
- Highly fragmented industry with consolidation underway
- R&D as the key lever for Chinese players to capture future value