Formaldehyde Capacity Is Surplus

By Liu Guofeng    

Stable demand growth    
in the world

There were around 600 formaldehyde producers in the world in 2004
with a total capacity of around 36.7 million t/a. Borden is the
largest formaldehyde producer in the world. BASF, Hoechest and
Georgia-Pacific follow closely behind. The total output of
formaldehyde in the world was around 26.7 million tons in 2004
and the total consumption was around 26.5 million tons. The
capacity and the consumption are mainly distributed in North
America, Western Europe and Asia. In the global consumption, the
proportion is 20% for North America, 31% for Western Europe, 34%
for Asia and around 15% for other countries and regions. The
average annual growth of the capacity and the consumption in the
world was 2.3% and 3.1% respectively from 2000 to 2004.
   Thermosetting resins such as urea-formaldehyde resin,
phenol-formaldehyde resin and melamine-formaldehyde resin are
the largest consumption sector for formaldehyde and the
consumption accounts for more than 60% of the total. The
consumption proportion is around 46% for urea-formaldehyde
resin, around 12% for phenol-formaldehyde resin and around 6%
for melamine-formaldehyde resin. Consumption sectors with the
most rapid demand growth include urea-formaldehyde resin, POM
(polyoxymethylene) and MDI (diphenylmethane diisocyanate).
   It is expected that the demand of formaldehyde in the world
will maintain at an average annual growth of around 3.1% in the
next few years and reach 31.5 million tons in 2010.

Greater production
concentration in China

By the end of 2005, the total capacity of formaldehyde in China
was already more than 11.7 million t/a, holding the first place
in the world. The capacity in Shandong province was the highest,
being 1.98 million t/a. Guangdong, Jiangsu and Hebei provinces
came next. According to incomplete statistics, the total output
of formaldehyde in China reached around 6.8 million tons in 2005.
   The formaldehyde sector in China has developed rapidly in
recent years. A group of large-scale production units have been
completed. There are already around 60 producers with a capacity
of over 50 thousand t/a (inclusive), accounting for 16% of the
total number of producers. Their total capacity is around 5.0
million t/a, accounting for around 42% of the national total.
Large-scale units completed in recent years include a 200
thousand t/a unit in Jiangsu Taicang Kingboard Chemical Co., Ltd.
and a 160 thousand t/a unit in Hebei Kaiyue Chemical Co., Ltd.
   Due to features of the product itself, except for solid
formaldehyde with high concentration, liquid formaldehyde (37%)
has high freight in transportation and easy quality
deterioration in storage. The import and export amount of
formaldehyde in China is therefore relatively small and the
consumption in the domestic market is basically identical to the
output.

Need of downstream expansion

The major consumption sector for formaldehyde in China was the
adhesive sector in 2005 and the consumption in this sector
accounted for more than 40% of the total. The
phenol-formaldehyde resin sector comes next. Besides,
formaldehyde can also be used to produce pentaerythritol, POM,
urotropine, paraformaldehyde, 1,4-butanediol and MDI.
Adhesives, POM, paraformaldehyde, MDI and polyols will become
the most important sectors for the consumption growth of
formaldehyde in future.

     (1) Adhesives
Adhesives are the most important consumption sector for
formaldehyde in China. Major products include urea-formaldehyde
resin varieties, phenol-formaldehyde resin varieties and
melamine-formaldehyde resin varieties. They are mainly used in
timber processing, molding plastics, coatings, textiles and
paper treatment agents. It is expected that the demand of these
adhesive varieties in China will reach around 5.2 million tons
in 2010 and the demand of formaldehyde in this sector will be
around 3.6 million tons.

     (2) POM
POM is an important general-purpose thermoplastic engineering
plastic with many excellent properties. It is extensively used
in automobile, electronic/electric, industrial machinery and
agricultural sectors. With the rapid development of
electronic/electric and automobile sectors in recent years, the
demand of POM has increased constantly. The demand of POM in
China is already more than 190 thousand tons a year today. It
is expected that the demand of POM in China will reach 300
thousand tons in 2010. POM will become one of the formaldehyde
downstream products with development priority in the next few
years. The total capacity of POM in China will reach 250 thousand
t/a in 2010 and the demand of formaldehyde in this sector will
be around 750 thousand tons at that time.

    (3) Paraformaldehyde
Paraformaldehyde is an important pesticide intermediate. The
domestic output still can not meet the market demand today. The
import amount of paraformaldehyde in China was 42 thousand tons
in 2005. Quite a few domestic companies have planned to launch
paraformaldehye projects. It is expected that the capacity of
paraformaldehyde in China will reach around 130 thousand t/a in
2010 and the demand of formaldehyde in this sector will be around
400 thousand tons at that time.

     (4) Polyols
Polyols produced with formaldehyde as raw material mainly
include pentaerythritol, neopentyl glycol and 1,4-butanediol.
Besides, formaldehyde is also used to produce trimethylol
propane. These products have a brisk domestic market demand and
a bright development potential. It is expected that the demand
of formaldehyde in 2010 will be around 500 thousand tons for
pentaerythritol, around 250 thousand tons for trimethylol
propane, around 440 thousand tons for 1,4-butanediol and around
70 thousand tons for neopentyl glycol. The demand of
formaldehyde in polyols production will therefore reach around
1.26 million tons in 2010.

     (5) Urotropine
Urotropine is mainly used as curing agent for
phenol-formaldehyde resin plastics, catalyst for amino resin
plastics, curing accelerator for rubbers and anti-shrinking
agent for textiles. It is also used to produce insecticides and
explosives. In the consumption composition of urotropine in
China, the consumption in the use as plastic curing agent and
in explosives accounts for more than 70% of the total. A
considerable portion is used for export. The consumption of
urotropine in China is 55 thousand tons a year today, needing
to consume around 190 thousand tons of formaldehyde. It is
expected that the demand of formaldehyde in urotropine
production will reach around 250 thousand tons in 2010.

     (6) Others
Besides, the consumption of formaldehyde in phenol-formaldehyde
resin plastics, MDI, antiseptic agents, long-acting
slow-release fertilizers and water treatment agents will also
maintain a stable growth. It is expected that the demand of
formaldehyde in other sectors will reach around 2.74 million
tons in 2010.
   The formaldehyde market in China will expand stably in the
next few years and the demand of formaldehyde is expected to
reach around 9.0 million tons in 2010.
   After many years' development, the formaldehyde sect