China Achieves Self-sufficiency for Isocyanate

By Zhangyue, China National Chemical Information CenterIn 2011, the actual supply of isocyanate in China increased substantially with decreased imports and increased exports, and a good balance developed between outputs and demand, which ends China's long dependence on imported isocyanate. The TDI supply is now expected to exceed the demand significantly in 2012, which is certain to bring about an abrupt reshuffle in the industry followed by ongoing restructuring. Thus enterprises have to explore the overseas market for sustainable development. In terms of technology development, China's TDI production still trails multinational's operations in energy conservation, environmental protection and production costs. In the future, China's TDI industry should promote technical upgrading of existing installations and vigorously develop novel production processes at a scale of 150 000 to 300 000 tons a year.
   In 2012, China will become a world-class MDI producer and Yantai Wanhua Polyurethanes Co., Ltd, (Yantai Wanhua) will become one of the world's leading MDI production enterprises. MDI production will be more concentrated by the end of this year.

TDI Capacity Boosts and Consumption of Flexible PU Foam is Optimistic

In 2011, China's TDI capacity had a substantial growth, with total capacity reaching 760 000 t/a. Newly built capacity of about 310 000 t/a was added, of which 250 000 t/a in Shanghai was built by Bayer (Shanghai) Polyurethane Co., Ltd and 50 000 t/a in Shandong province was built by Yantai Juli Isocyanate Co., Ltd China's TDI manufacturers operating in 2011 are listed in table 1. In the same year, China consumed 560 000 tons of TDI, increasing 8% year on year. Flexible polyurethane foam accounted for 68% of total TDI consumption, followed by the elastomer and coatings (Figure 1).
   The main application of TDI, flexible polyurethane foam is in turn mainly used in the furniture industry, in sofas and mattresses, and in the automotive industry, for vehicle seats, etc. Driven by the demand from auto makers, furniture makers and other downstream industries, the flexible polyurethane foam market was pretty good in 2011.
   In 2011, as the 250 000 t/a TDI project of Bayer (Shanghai) Polyurethane Co., Ltd began full-load operation, China finally had an adequate TDI supply nationwide plus 20 000 tons of TDI exports (up 156% year on year), but only 72 000 tons of imports (down 38% year on year). Imported TDI was sourced mainly from Korea, Japan and Poland, which together supplied 74% (Figure 2). Export destinations were widespread, but the main ones were Taiwan, the United States and Hong Kong.
   Africa and the Middle East are the world's major TDI import regions, with most consumption satisfied by imports. But China's exports to these regions have been quite limited so far – only 178 tons to Africa and 51 tons to Middle East in 2011, accounting for 0.9% and 0.3% of its total exports. TDI prices rose sharply in Africa and the Middle East markets due to tight supply during the winter of 2011-2012, thus China has a great opportunity in these two regions.  


Table 1 TDI Capacity of Manufacturers in China  (thousand tons)

Company    2011    2012(E)    Remarks
Bayer (Shanghai) Polyurethane Co., Ltd    250    250    Startup in June 2011
Shanghai BASF Polyurethane Corporation    160    160    
Gansu Yinda (Juyin) Chemical Co., Ltd    100    100    
Cangzhou Dahua Co., Ltd    80    150    Expanded by 70 000 t/a in April 2012
Yantai Juli Isocyanate Co., Ltd    80    80    Newly built 50 000 t/a in Oct. 2011
Norinco Group Liaoning Beifang Jinhua     50    50    
    Polyurethane Corporation
Blue Star Chemical Co., Ltd    40    40    10 000 t/a expansion and technological
            transformation project in April 2011
Fujian Southeast Electrochemical Co., Ltd    0    100    Due for operation in 2012
Total    760    930    
Source: CNCIC

MDI Capacity Grows

In 2011, the number of Chinese MDI manufacturing enterprises remained at three - Yantai Wanhua Polyurethanes Co., Ltd, Bayer (Shanghai) Polyurethane Co., Ltd, Shanghai Lianheng Isocyanate Co., Ltd, with a total capacity of 1.39 million tons, nearly equal to that of 2010. But the actual MDI supply raised 30% compared to 2010, as the 30 000 t/a MDI project of Yantai Wanhua in Ningbo was operated tentatively in 2010 and became productive only in 2011. It is estimated that Yantai Wanhua will add another 600 000 t/a MDI capacity in 2012, which will bring China's total MDI capacity to 1.99 million tons a year when fully operational.
   China's consumption of polymeric MDI in 2011 was about 940 000 tons, including 630 000 tons in refrigerators and freezers, which accounted for 67% of total consumption; China's pure MDI consumption was 420 000 tons, of which the manufacture of shoe soles and PU slurry consumed 270 000 tons, 64% of the total, and spandex makers consumed 12% of the total. China's favorable policies greatly supported the household electrical appliances industry since 2009 and reached a peak in 2010. Then the appliance industry returned to rational development in the second half of 2011. Building insulation holds the most potential for increased MDI consumption, but large-scale application of MDI in this field still needs some development. Considering China's national conditions and consumer behavior, polystyrene board/extruded plate will continue to dominate the insulation market for a while, and rigid polyurethane foam insulation materials still require a certain promotion period.
In foreign trade, China's imports of MDI totaled 382 000 tons in 2011, of which 269 000 tons was polymeric MDI, 113 000 tons was pure MDI, the two combined reduced by 17% year-on-year; China's total MDI exports was 237 000 tons, of which 192 000 tons was polymeric MDI, 46 000 tons was pure MDI, all together growing 11% year on year. China's main sources of imported MDI are Japan and South Korea, with 193 000 tons from Japan and 86 000 tons from Korea in 2011, 51% and 22% of China's total MDI imports respectively. Export sources are relatively dispersed, and the top three export destinations are Taiwan, the United States and South Korea, with 34 000 tons, 23 000 tons and 23 000 tons of exports respectively. (Figure 3 and 4)
   Brazil conducted anti-dumping investigations in June 2011 on the import of polymeric MDI from China. The polymeric MDI exported to Brazil and amounted to 7 723 tons in 2010 and 12 000 tons in 2011, respectively, accounting for only 4.5% and 6.3% of China's total polymeric MDI exports. Thus, Brazil's anti-dumping investigation has had no material effect on China's MDI export activities.

Domestic R&D on ADI is at an early-stage

Aliphatic diisocyanate (ADI) includes HDI (hexamethylene diisocyanate), H12MDI (hydrogenate diphenylmethane-4,4'-diisocyanate), IPDI (isophorone diisocyanate), etc. And HDI accounts for about two thirds of all ADI output. Other important special isocyanate esters include 1,5-naphthalene diisocyanate (NDI), Xylylene Diisocyanate (XDI), TMXDI. These products are irreplaceable in their usual applications, with good market prospects in various other application areas due to their unique structure. China is still at an early stage of developing special isocyanates in R&D, production and marketing applications.


Table 2 MDI Capacity of Manufacturers in China (thousand ton)

Company     2011    2012(E)    Remarks
Yantai Wanhua Polyurethanes Co., Ltd    800    1 400    Local enterprise
Bayer (Shanghai) Polyurethane Co., Ltd    350    350    Bayer’s subsidiary
Shanghai Lianheng Isocyanate Co., Ltd    240    240    Joint venture
Total    1 390    1 990    



HDI

In 2011, global HDI production capacity was about 190 000 tons, and consumption was 120 000 tons. Of that, China consumed 30 000 tons, with annual growth rate of over 15%. China had only one HDI producer at the very beginning – the 30 000 t/a HDI units of Bayer in Shanghai. Most of the HDI needed in the Chinese market was exported at high prices. Ningbo Wanhua Polyurethane Co., Ltd completed the pilot run for 3 000 t/a HDI production line in 2011, and is expected to be able to produce 15 000 tons of HDI in 2012. Bayer also plans to expand the existing 30 000 t/a HDI capacity to 50 000 t/a in the future.
Chinese HDI players have never ceased R&D for HDI production processes. In 2006, after 10 years of research, Gansu Yinguang Chemical Industrial Co., Ltd produced high quality HDI with a purity of 99.81%. Its quality was world class, with purity 0.31% higher than the international standard. In 2011, Shandong Runxing Chemical Technology Co., Ltd successfully developed the non-phosgene processes HDI and electrochemical synthesis of adiponitrile, and realized industrialization by a 1000 t/a production line.

H12MDI

H12MDI is mainly used in high-end downstream segments such as aqueous polyurethane dispersion, plastic coatings and transparent elastomers. At present, China's domestic market is still in an early development stage and consumers of H12MDI depend completely on import. In 2011, the global capacity for making H12MDI was 20 000 to 30 000 tons, consumption was about 10 000 tons, and the market was dominated overall by Bayer and Evonik Degussa.

IPDI

IPDI is used mainly in automotive finishes, rocket propellants, anti-corrosion coatings, light-cured coatings and adhesives.  The world's capacity to make IPDI in 2011 was 60 000 tons and consumption was about 50 000 tons. The market is occupied mainly by a few multinational companies like Evonik Degussa.