By David Reed, UT EditorLondon-While the recent growth in polyurethane use in the People's Republic of China has been running at double-digit levels, and the industry there now accounts for almost a quarter of global production, the highly fragmented structure of the Chinese polyurethane industry makes for a largely inefficient industry, claims a newly published report.Lack of [electrical] power, technical knowledge, latest equipment, and high wastage levels, all lead to an inefficient production base, says IAL Consultants, the specialised market research company. Many Chinese manufacturers are experiencing production difficulties due to power shortages, the report says, adding that this is expected to continue as the government there struggles to generate sufficient power to meet surging demand. Until sufficient power can be supplied, many manufacturers will continue to operate at low rates of efficiency, IAL asserts.In addition, global markets for the key raw materials-MDI (methylene diphenyl diisocyanate), aniline, PO (propylene oxide) and polyether polyols-are more or less in balance, so growth may also be restricted unless capacities are expanded, IAL reports. On MDI, the consultancy points out, no new capacity is expected until the end of the present year [in fact the Yantai Wanhua Polyurethanes Co. plant has just started up and should be supplying a large part of its full 260 000 tonne to the market in the coming few weeks. Ed.]. Similarly, PO capacity increases are needed, IAL suggests.As a result of these various pressures, the research consultancy says, growth rates in China are likely to moderate in the 2004-2009 period, perhaps averaging 7-8 percent a year. Even so, by 2009 IAL says the total PU use in China will approach 4 million tonnes.Northern China will see the largest growth in the 2004-2009 period, according to the IAL data, averaging 8.1 percent from its present 257 050 tonnes, marginally ahead of the 8-percent growth rates expected in eastern China and southern middle China. But the last two regions will continue to dominate the country's business: they now account for, respectively, about half (1 336 670 t) and one third (909 890 t) of the total Chinese PU consumption (2 688 320 t), IAL data shows.Elastomer applications dominate China's polyurethanes business, accounting for 32 percent of the 2.7 million tonnes used, the research consultancy reports. This is followed by the coatings sector, at 24 percent, flexible foams at 22 percent, rigid foams at 14 percent, with adhesives and sealants accounting for the balance.The IAL report, titled Polyurethane Chemicals and Products in China, 2nd Edition, costs €5950 (over $7000) from IAL Consultants. For more details, contact: Cathy Galbraith,, IAL Consultants, CP House, 97-107 Uxbridge Road, Ealing, London W5 5TL.Telephone: +44 (0) 20 88 32 77 80; Fax: +44 (0) 20 85 66 49 31; Email: [email protected], or visit IAL's website: www.ialconsultants.com"