Polyurethane: Developing Rapidly
By Zhang Jie

According to statistics made by China Polyurethare (PU) Industry
Association, the consumption of PU in China reached 3.05 million
tons in 2005, an increase of 16.9% over 2004. The consumption
of PU was more than 3.5 million tons in 2006. The drastic
consumption growth of PU coatings, thermoplastic PU elastomers
(TPU) and casting PU elastomers (CPU), polyurethane fibers and
synthetic leather sizing agents is the major driving force for
the rapid development of the PU industry in China.

Rapid consumption growth

The consumption growth of PU in China is twice the GDP growth
in recent years. The growth of PU was however slowed down during
2005-2006. How long the rapid growth can last has become a matter
of great concern in the world in 2006. Sufficient evidence shows
that at least before 2015 the PU consumption in China will
maintain an average annual growth of around 15%. The most
convincing evidence is that despite a rapid increase of the
per-capita PU consumption in China it is still lower than the
world average level, let alone advanced countries.

Energy conservation in construction: providing huge
opportunities

The Chinese Government has enforced the implementation of codes
and standards for energy conservation in construction. The total
energy consumption in urban construction is requested to be down
by 50% in 2010 and by 65% in 2020. To attain such a goal, PU
materials with the best heat insulation property must be used.
Around 65% of MDI (diphenylmethane diisocyanate) was used in
construction heat insulation in the United States in 2005
whereas the proportion was only less than 10% in China. Based
on the target for the energy conservation in construction,
around 30 billion m2 construction heat insulation materials will
need to be used in China in 2020. Of the total the demand of outer
wall heat insulation materials will be 24 billion m2. The average
construction area in China will be around 2.0 billion m2 a year
and the consumption of outer wall heat insulation materials will
be 1.6 billion m2. If 10% of outer wall heat insulation materials
use PU rigid foams, the demand of MDI will increase by more than
250 thousand tons a year and the demand of polyether will also
increase. Due to the high cost, however, the application of PU
rigid foams and its replacement of EPS (expandible polystyrene)
will take a long time.

Responsible care: becoming a new focus

As China has become a large isocyanate producing country in the
world, "responsible care" in companies has aroused widespread
attention. Isocyanates such as MDI and TDI (toluene diisocyanate)
need to use highly toxic phosgene in the production. In case of
production, storage, transportation and use without sufficient
protective measures, injuries would be caused to public safety
and environment including the possibility of inducing asthma and
allergy. How to provide the best protection to the safety of
workers and the public and at the same time take care of the
interests of producers and the development of the sector has
become a matter of the greatest concern.

Export: suffering setback

After the restriction imposed by the United States and the EU
on the export of textiles from China in 2005, the export of shoes
met the restriction from the EU in 2006. Great efforts made by
domestic companies failed to change the final result. The
setback suffered in the export of shoes and textiles has
inevitably affected major downstream sectors such as sole
undiluted liquid, synthetic leathers and PU fibers.
   The recovery of transit trade can partially offset the
negative effect of the export restriction, but it is imperative
for sectors of sole undiluted liquid, synthetic leathers and PU
fibers to raise product grade, improve performance, open new
export markets and further tap domestic markets.

Automobile industry: promoting demand growth

The automobile industry is one of the major application sectors
for PU materials. The output of automobiles in China was 6.153
million units in 2005, an increase of 13.0% over 2004. The
proportion of sedans was 48.1%. The consumption of PU materials
in the EU is 18-20kg per car and is still on the increase. The
consumption of PU materials in China is only around 5.3kg per
car. There is therefore a huge potential for consumption growth.
According to the statistics, the output of automobiles in China
was 7.385 million units in 2006, an increase of 20% over 2005
and the proportion of sedans also increased further. The growth
of the PU consumption in the automobile industry was more than
20% in 2006. It is expected that the output of automobiles in
China will be close to 10 million units a year before 2010. In
the Eleventh Five-year Program (2006-2010), automobiles are
requested to have small weight and energy conservation. With the
rapid increase of the automobile output and the gradual
dissemination of the automobile small-weight technology, the
development prospect of PU materials in the automobile industry
will become even brighter in future.

Environmental friendly products: being a priority in research
and development

With the gradual improvement of environmental protection laws
and regulations and the constant growth of people's
environmental protection awareness, the production of
water-based PU coatings, adhesives and synthetic leather sizing
agents using water to replace organic solvents has become a
priority in research and development. Many new products were
developed and highly acclaimed in the market in 2006. For example,
water-based PU coatings for children's rooms have been quickly
accepted in the market.
   Along with the growth of the GDP and the improvement of
people's living standard, the demand of famous-brand shoes,
fashion clothes, high-grade furniture and household/office
decoration will increase constantly and the PU consumption will
be greatly promoted. Owing to the development of tourism and
hotel sectors and the preparation for the holding of the Olympic
Games and the World Expo, the expansion of related markets and
especially hotels will greatly stimulate the PU consumption. For
example, around 200 thousand rooms in several thousand hotels
will be decorated and retrofitted during 2006-2008. A huge
potential market will therefore be provided to the PU sector.

Consumption of PU Raw Materials and Products
     in China from 2005 to 2006      (thousand tons)
                2005    Growth over 2004 (%)    2006
Raw materials    1 719    13.8    >1 950
  MDI           462     15.6
  TDI             368     12.9
  Polyether polyol    889    13.2
Products         3 050    16.9    >3 500
  Foams           1 200    14.3
      Flexible foams    650    14.0
 &nb