China plans to restrict imports of petrochemical equipment

China's top economic planning agency is planning to limit imports on petrochemical equipment to secure local machinery producers a larger market share.

According to a proposal by the National Development and Reform Commission (NDRC), no less than 75 percent of the equipment used in the petrochemical industry should be sourced from domestic producers by the end of the 11th five-year-plan period (2006-2010), the Shanghai Securities News reported Friday.

The NDRC is soliciting advice from local petrochemical companies including the China National Petroleum Corporation (CNPC) and the China Petrochemical Corporation.

The proposal may bring 75 billion yuan worth of orders for domestic machinery producers as the petrochemical industry spends around 100 billion yuan in equipment procurement annually, an official with the CNPC said, declining to give his name.

The proposal on further promoting home-made large-scale petrochemical equipment requires petrochemical firms to submit a list of equipment they plan to buy for new projects.

It said China will ban the import of equipment that can be made by domestic producers and is already widely used, while limiting those that can be made in China but are not widely used, with tax policies.

On the banned list are hydrocrackers with an annual production capacity ranging from 800,000 tons to 2 million tons, 700,000-ton-charge gas compressors, and 300,000-ton-propylene compressors.

Also on the restriction list are one-million-ton-charge gas compressors and 600,000-ton-PTA air compressors.

Chinese manufacturers have the ability to produce world-class petrochemical equipments, said an unnamed expert who participated in the formulation of the proposal, adding the petrochemical industry lags behind the power, metallurgy and steel industries in buying domestic-made production facilities.

China has imported 18 large-scale items of equipment for ethylene projects and PTA projects in the past 20 years. Currently most of the equipment for the ethylene projects with a production capacity of more than one million tons comes from imports, the expert added.