I-3 Current Production Situation of Aniline in China

In recent years, China’s aniline production has maintained a strong growth rate. As of
Jan.2008, there have been mainly 20 aniline producers in China, with a total output of 690.5kt
in 2007. The CAGR (compound average growth rate) of aniline production was 24.08% from
2000 to 2007.

Along with the strong growth of aniline production in China, aniline production became surplus
in the market in 2007. To deal with this, China has to export large quantity of aniline. For
example, China increased the exported volume of aniline from 692 tonnes in 2006 to 47,699
tonnes in 2007.

Currently, aniline manufacturers pay more attention to the market dynamic, especially the MDI
market, and duly adjust their aniline production. In other words, Chinese aniline production
grows rational.

FigureI-3-1 The output of aniline in China from 2000 to 2007

…………..

In 2007, China’s aniline production capacity has increased by 110kt over previous year.

Table I-3-1 The capacity expansion situation of producers in 2007

Expansion capacity,
Company Province Schedule
tonnes
Shandong Jinling Shandong 30,000 Mar. 2007

Jiangsu SP Chemicals Jiangsu 50,000 Middle of 2007

Jiangsu Yangnong Jiangsu 30,000 In 2007

Total 110,000

In 2008, new production facilities of aniline with the capacity 330 kt are under construction in
China according to the current plan.

…………

¾ Situation of manufacturers

As of Jan. 2008, CCM has totally contacted 27 aniline manufacturers who claimed that they
produce aniline. The production status for them is listed as follows:

Table I-3-2 The aniline production status for 27 manufacturers

Status Active Idle Stopped Not
Total
manufacturers manufactures manufacturers produce
Quantity 20 1 4 2 27
 The production of aniline is mainly controlled by large-scale manufacturers. The detailed
information is listed as follows.

Table I-3-3 The production concentration of aniline in 2006 and 2007

Classification Top 3 companies Top 5 companies Top10 companies Total,
Year Quantity, Kt Percentage, % Quantity, Kt Percentage, % Quantity, Kt Percentage, % kt

2006 260 47.10% 338 61.23% 453.5 82.16% 552

2007 290 42.00% 403 58.36% 566 81.97% 690.5

I-4 New Aniline Projects under Construction or Projects to Be Constructed

Even though aniline supply began to exceed its demand gradually, most domestic companies
hold positive attitude towards the market prospect of aniline and plan to expand or build new
aniline production.

Generally speaking, minor aniline manufacturers in China tend to keep their current capacity
stable. Some big aniline manufacturers tend to expand their capacity to improve their
competitiveness. Meanwhile, the new aniline manufactures that have launched aniline
production have their own sales channel and don’t worry about their aniline sales. However,
along with the expanding aniline capacity and intense market competition, some small-scale
manufacturers would be washed out in the market.

………

The newly increased capacity of aniline reaches 330 kt in 2008. The detailed progresses are
listed as follows.

Table I-4-1 The new built aniline production

Company Location Planned capacity, kt Schedule Remark

Shandong Haihua Group Failed on its trial run in 2007 because of catalyzer;
Shandong 50 Finish in Apr. 2008
Co. ,Ltd. no nitrobenzene equipment

150 (the first stage) Finish in Oct. 2008

Jilin Connell Chemical Co., Ltd. Jilin They don’t worry about the sales of aniline
150 (the second stage) Finish in 2009

Jiangsu Yuquan Chemical Co.,

Jiangsu 30 Undetermined Under construction; Nitrobenzene 50kt/a
Ltd.

Total 380

I-6 Raw material of aniline

I-6-1 Nitrobenzene

In China, nitrobenzene production could use coking benzene and petroleum benzene (pure
 benzene) as raw material. The product of former one is called coking nitrobenzene, and the
latter one is called petroleum nitrobenzene. The coking nitrobenzene cannot be used to
produce aniline because of the high impurity content.

…………….

As of January 2008, there have been 26 active nitrobenzene producers, 20 producers of which
produce both nitrobenzene and aniline.

About 96% of nitrobenzene is produced by aniline producers, and most of them are consumed
internally. This also means that most of nitrobenzene is used to produce aniline.

TableI-6-1-1 List of the nitrobenzene producers that produce aniline and nitrobenzene (Unit:
tonne)
Code English name Abbreviation Location Status’08 Cap.'08 Output'07 Raw material
1 Sinopec Nanjing Chemical Industry Co., Ltd. Nanjing Chemical Jiangsu Active 216,000 141,000 pure benzene

2 Shanxi Tianji Group Fangyuan Chemical Co., Ltd. Shanxi Tianji Shanxi Active 183,600 135,000 pure benzene

Jiangsu SP
3 Jiangsu SP Chemicals (Taixing) Co., Ltd Jiangsu Active 202,500 114,000 pure benzene
Chemicals

Organic Chemical Plant of Lanzhou Chemical Lanzhou

4 Gansu Active 94,500 81,000 pure benzene
Industry Corporation Petrochemical

5 Hebei Jiheng Chemical Co., Ltd. Hebei Jiheng Hebei Active 108,000 71,000 pure benzene

6 Shandong Jinling Chemical Co., Ltd. Shandong Jinling Shandong Active 81,000 58,000 pure benzene

7 Jiangsu Leasty Chemical Co., Ltd Jiangsu Leasty Jiangsu Active 67,500 47,000 pure benzene

8 Zhangqiu Riyue Chemical Industry Co., Ltd. Hebei Riyue Hebei Active 67,500 47,000 pure benzene

9 Shanghai Lianheng Isocyanate Co., Ltd. SLIC Shanghai Active 220,000 43,000 pure benzene

10 Jiangsu Meilan Chemical (Group)l Co., Ltd. Jiangsu Meilan Jiangsu Active 33,750 24,000 pure benzene

11 Yantai Wanhua Polyurethane Co., Ltd. Yantai Wanhua Shandong Active 27,000 24,000 pure benzene

12 Jintian Enterprise (Nanjing) Co., Ltd. Jintian Nanjing Jiangsu Active 27,000 21,000 pure benzene

13 Shandong Huahong Chemical Co., Ltd. Shandong Huahong Shandong Active 100,000 59,200 pure benzene

14 Henan Kaipu Chemical Co., Ltd. Henan Kaipu Henan Active 40,500 20,000 pure benzene

Chongqing
15 Chongqing Changfeng Chemical Factory Chongqing Active 28,000 21,000 pure benzene
Changfeng

Jiangsu Yancheng Xinquan Chemicals Industry Co.,

16 Yancheng Xinquan Jiangsu Active 20,250 14,000 pure benzene
Ltd.

Handan New
17 Handan New Sunshine Co., Ltd Hebei Active 20,250 14,000 pure benzene
Sunshine

18 Shandong Dezhou First Chemical Co., Ltd. Shandong First Shandong Active 21,000 13,500 pure benzene

19 Hebei Zhongji Zhengyuan Chemical Co., Ltd. Hebei Zhongji Hebei Active 17,550 12,000 pure benzene

20 Jiangsu Yangnong Chemical Co., Ltd. Jiangsu Yangnong Jiangsu Active 40,500 7,000 pure benzene

21 Zhejiang Haili Chemical Co., Ltd. Zhejiang Haili Zhejiang Idle 20,250 - pure benzene

Total 1,636,650 966,700