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The two giants make moves into the high-end polyolefin market. China’s two major polyolefin producers – Sinopec and CNPC – will focus on improving synthetic technologies as well as making their products more specialized and functional, aiming to enter the high-quality materials market and adjust their product portfolio. This is information obtained by a reporter at the 2006 China Plastic Industry Development (International) Forum held in Yuyao on November 7–8. Wu Haijun, director of Sinopec’s Chemicals Division and manager of Sinopec’s Chemicals Sales Branch, said at the meeting that Sinopec and CNPC account for about 58% of China’s total production capacity for five major types of resins. Compared with foreign and private enterprises, among the five major general-purpose resins, the two groups have an advantage in polyolefins. In 2005, Sinopec’s polyolefin production amounted to 6.9453 million tons, accounting for 81% of the company’s total synthetic resin output. 'During the 11th Five-Year Plan period, Sinopec will continue to regard polyolefins as one of its core business areas, advance their technological upgrades, enhance their competitiveness overall, and achieve the specialization and functionalization of their products. Among them, polyethylene production will be focused on increasing the output of specialized materials such as pressure-resistant pipes, cables, large hollow products, high-strength films, and wide-width sheets; polypropylene production will focus on increasing the output of functional materials with features like transparency for food packaging, elastic castability, and low heat-seal strength along with high tear resistance. At the same time, scale-up of polyolefin production should be achieved, and through measures such as phasing out or restructuring, the small-scale, energy-intensive batch liquid-phase bulk polypropylene production process should be gradually phased out. In 2005, the share of production capacity from Sinopec’s batch process plants dropped from 23% in 2001 to 15.17%. Zhou Shimin, deputy general manager of CNPC Sales Company, believes that although polyolefin products in China are in short supply in the domestic market, the entire industry remains at the lower end of the international division of labor and global industrial chains. With lower tariffs and greater diversity among market players, competition will intensify further; as a result, Chinese polyolefin products face the challenge of improving their quality and strengthening their core technologies in order to achieve industrial upgrading. Currently, there is a strong demand in China for high-quality polyolefins and engineering plastics. CNPC will focus on customer needs to provide better products. Li Yongwu, president of the China Petroleum and Chemical Industry Association, said that although China’s ethylene production capacity increased by 70% during the 10th Five-Year Plan period and the polyolefin industry has developed to a certain extent, there is still a significant gap in terms of overall technical and equipment standards. A considerable number of high-end products need to be imported, and at present China’s imports of polyolefins account for more than 30% of the total global trade volume. The unreasonable structure of China’s polyolefin products, with a predominance of mid- and low-grade products, a shortage of specialty materials, and a lack of core technologies, are prominent problems facing the domestic polyolefin industry. Therefore, accelerating independent innovation and raising the quality of products is key for China’s polyolefin industry to maintain its competitiveness and achieve sustainable development.