Following more than 20 years of rapid development, there is now a serious excess of production capacity in China's chemical engineering industry (with the exception of certain specific products such as LNG). In a recent article, Mr Ma Yue, V.D. Engineer Piping Division in Hualu Engineering, China, gave a frank view of the severe under-utilization of installed capacity which has led to reduced economic efficiency for many enterprises.
Since the beginning of the 1990s and especially after 2000, China's government has made large-scale investments in various industries. Production capacity thus saw high rates of growth in parallel with major improvements in product quality. In addition, in order to deal with the American financial crisis and European debt crisis, China's government increased the scale of its investments. The table below shows production volume and industry operation rates for several typical chemical engineering products in 2014.
An overview of China’s fertilizer, methanol, PVC, polysilicon, and ethylic acid industries in 2014
||Output (10,000 tons)
||Operation rate %
The result of this rapid development has been the creation of economic problems as well as very serious environmental pollution. Land, water, and air have all been polluted to varying degrees, causing a series of serious ecological problems. Taking air pollution as an example, severe smog issues now occur in most areas across the country. In 2014, Beijing recorded that as many as 60% of days were marked by polluted air quality. This is in turn driving ahead investments in the nuclear power generation industry, which promises clean energy production and a way to combat air pollution, while benefitting the corrosion resistant alloy market.
Just like in other countries, there are sure to be stage-based adjustments following this rapid industrial development. In the beginning of 2014 the Chinese government implemented strict controls on industries experiencing serious production over-capacity. Investment has dropped significantly in chemical engineering, with many construction projects halted or delayed. The demand by these industries for stainless steel, nickel, nickel based alloys, zirconium, zirconium alloys, titanium, and titanium alloys has likewise dropped precipitously.
Chinese produces of stainless steels face several major challenges, in addition to over-capacity. Read Mr Ma’s full article to find out more.
Photo caption: There are 28 nuclear power reactors under construction in China, each requiring 3,000 tons of austenitic stainless steel, zirconium and zirconium alloys, and nickel based alloys. Photo ©Westinghouse 2014