WRITE for ATol ADVERTISE MEDIA KIT GET ATol BY EMAIL ABOUT ATol CONTACT US
Asia Time Online - Daily News
             
Asia Times Chinese
AT Chinese



    China Business
     Mar 24, 2006
Over-investment in chemicals raises risks

BEIJING - Due to sustained and rapid growth of investment in the chemical industry, the growth of production capacity of some chemical products has far exceeded domestic demand. The risk of investment in China's chemical sector is accumulating, according to a report on China's chemical industry in 2005 published by the Economic Forecast Department of the National Information Center recently.

Excessive growth of investment in China's chemical industry is mainly manifested in four aspects:
  • The actual investment in fertilizer and pesticide sector has



    grown rapidly, accounting for over 75% of the total investment in chemical industry as a whole.
  • There are too many chemical raw materials and fertilizer manufacturing projects in construction at present, accounting for over 60% of the total.
  • The number of newly launched pesticide and rubber projects has grown by over 45% year-on-year, which indicates that the production capacity of these products will further expand in the next few years, and may be enough to meet or even exceed the market demand.
  • As many rubber and special chemical products projects that have been launched in the past few years will go into operation soon, the number of projects that have been completed is increasing.

    The report analyzes that overgrowth of investment has dragged down profit rated in the chemical industry. Due to surplus production capacity, the profit rate of basic chemical raw materials production has slipped rapidly to be 3.58% in 2005, 2.3 percentage points lower year-on-year.

    The synthetic materials sector even reported a profit drop of 11.7% in the year, and the rate of profit on sales revenue was 5.32%, 2.6 percentage points lower than in 2004.

    As for fertilizer production, though the profit/sales rate increased by 1.5 percentage points to reach 7.65% in 2005, the loss coverage was 20.32%, 1.2 percentage points higher.

    The report also points out that investment in the chemical industry in China is shifting from eastern coastal areas to the underdeveloped middle and western areas.

    (Asia Pulse/XIC)

    •  

     
     



    All material on this website is copyright and may not be republished in any form without written permission.
    © Copyright 1999 - 2006 Asia Times Online Ltd.
    Head Office: Rm 202, Hau Fook Mansion, No. 8 Hau Fook St., Kowloon, Hong Kong
    Thailand Bureau: 11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110