Chemical Machinery Industry Maintains High-speed Growth During the "11th Five-Year Plan" Period
According to recent analyses, the machinery industry in China is expected to maintain an average annual growth rate of 12% to 15% during the "Eleventh Five-Year" period and up to 2020. However, the development of different sub-sectors within the industry will show varying degrees of growth. Key sectors such as petrochemical general equipment and high-tech manufacturing, including CNC machine tools, are likely to continue experiencing rapid expansion.
Zhang Jiaming, director of the Information Department at the China Petroleum and Petrochemical Equipment Industry Association, recently pointed out that the chemical machinery sector has struggled with losses for a long time. One major factor contributing to this was the heavy reliance on imported large-scale petrochemical equipment. However, in 2004, the industry saw a significant turnaround, with production and sales surging and reversing the previous loss trend.
The main reasons behind this positive shift include strong domestic and international demand for oil and chemical equipment. In 2004, there was a sudden surge in demand for chemical machinery, particularly for hydrogenation units used in refining processes. As crude oil prices rose, refineries sought to maximize the production of lighter fuels like gasoline, diesel, and kerosene, leading to a boom in the construction and upgrading of hydrogenation equipment.
At that time, over 100 hydrogenation units were already in operation, with an additional 45 under construction or newly built between the second half of 2004 and the first half of 2005. This sharp increase in demand created a supply gap, leaving many manufacturers struggling to meet orders. As a result, sales for chemical machinery companies rose significantly, with some reporting a 30% increase in the first half of 2004. Major players like Jinxi Chemical Machinery Group and Dalian Hydrotreating Reactor Manufacturing Co., Ltd. experienced both rising revenues and improved profitability.
Another key factor driving the industry's recovery was technological advancement. The successful development of new technologies and products has enhanced the competitiveness of Chinese petroleum and chemical equipment in both domestic and global markets. For example, Shandong Hualu Hengsheng Chemical Co., Ltd. completed a trial run of a large-scale nitrogen fertilizer localization system, marking a breakthrough in reducing reliance on imported equipment. This system, based on coal and designed and manufactured domestically, achieved a 94.5% localization rate and cost significantly less than its imported counterparts.
Additionally, improvements in industrial restructuring and enterprise optimization have contributed to higher efficiency and profitability. It is now anticipated that the chemical machinery industry will see sustained growth, moving away from long-term losses toward more stable and sustainable development.
According to the China National Chemical Equipment Association, with the continued growth of the petrochemical industry during the "Eleventh Five-Year Plan," the chemical machinery sector is expected to enter a promising phase of development. Several key trends are expected to emerge: traditional high-quality products will maintain their market share, such as large-scale ammonia synthesis equipment and high-pressure vessels. Equipment for energy-saving upgrades and product restructuring will see increased demand. Energy-efficient units and environmental protection technologies will become new growth areas. Large-scale petrochemical equipment will drive further expansion, and storage and transportation solutions, like railway tank cars and truck tankers, will gain greater market presence to meet growing needs.
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