Prospects of High-end Specialty Chemicals in China (Part One)

By Zhang Fang, China National Petroleum & Chemical Planning Institute

I. Status quo

1. Specialty Chemicals

In 2012, the gross production value of China’s specialty chemical industry exceeded RMB2 trillion. Coatings contributed most to the gross production value, about RMB290 billion. Meanwhile, total domestic output of specialty chemicals exceeded 100 million tons. The volumes of coatings, adhesives and concrete additives produced were each more than 10 million tons. China imported about 10% of its specialty chemicals and more than half of its electronic chemicals in 2012.

2. High-end specialty chemicals

Two major types of high-end chemicals are high-end specialty chemicals (mainly high-performance eco-friendly organic or inorganic materials) and new high-performance polymeric materials.
   In China, about 30% of the specialty chemicals consumed can be classified as high-end specialty chemicals, and one third of the high-end specialty chemicals are imported. The development of high-end specialty chemicals will be focused on the following two aspects:
   On one hand, the development of high-performance electronic chemicals and fluoro coatings should be given priority. On the other hand, other high-end specialty chemicals, such as safe food additives and feed additives, eco-friendly adhesives (such as urea-formaldehyde glue with low formaldehyde emission), plastics additives (such as halogen-free flame retardants and lead-free heat stabilizers) and water treatment agents (including eco-friendly corrosion inhibitors such as polyaspartic acid), should also be developed.

II. Development trends in various application fields

Typical high-end specialty chemicals include electronic chemicals, safe food additives, feed additives, eco-friendly adhesives, high-performance surfactants, high-end water treatment agents, eco-friendly plastics additives, rubber chemicals, high-performance concrete additives, high-end coatings, high-performance inorganic pigments, nano-fillers, high-end dyes, high-end pesticides and intermediates. For the most part, the applications are evident in these terms.

1. Electronic chemicals

Among all specialty chemicals, China is least self-sufficient for electronic chemicals. On one hand, the development of these chemicals has met technical barriers; on the other hand, the product life cycle of such a chemical is relatively short due to the fast technical progress of electronic product development. Currently, the market scale of electronic chemicals in China has exceeded RMB30 billion, while the self-sufficiency rate is below 50%.
   1)Electronic chemicals for integrated circuits (IC)
   Electronic chemicals used in the IC industry include photoresists, high-purity reagents, high-purity (specialty) gases and packaging materials. At present, the major types of lights used in China include the G and I lines, having wavelengths of 436 nm and 365 nm respectively. In the future, photoresists that can be used for 248 nm and 193 nm wavelengths will be developed. As for the high-purity reagents and gases used in China’s IC industry, all products containing ppm (parts-per-million) levels of impurities are produced in China; some ppb-level products (parts-per-billion) can be produced here; ppt-level products (parts-per-trillion) are all imported, and will be given development priority in the future. For IC encapsulation materials, polyimide and liquid epoxy encapsulation materials with high-purity, multi-functionality, excellent heat resistance, low viscosity, low water absorption and low stress should be developed.
   2)Electronic chemicals used in printed circuit boards
   These chemicals can be classified in three categories according to their application fields – those used in rigid plates, those used in flexible plates and those used during processing. The first category mainly contains specialty resins such as high-end epoxy resin, polyimide resin, bismaleimide-triazine, thermosetting polyphenylene oxide and cyanate resin. The second category includes polyimide membranes, specialty polyester membranes and conductive coatings. The third category mainly includes dry film photoresists and liquid photosensitive solder resists.
   3)Electronic chemicals used for the production of flat panel displays
   These chemicals can be classified in two categories according to their application fields – those used in liquid crystal displays (LCD) and those used in plasma displays. The former mainly include high-end liquid crystal materials for thin-film-transistor (TFT) and polarizer for TFT-LCD. The latter is mainly fluorescent powder for large-screen color plasma display panel (PDP).
   4)Electronic chemicals used for the production of new energy batteries
   These chemicals can be used in the production of high-power lithium batteries, solar cells and hydrogen fuel cells. Currently, the chemicals used in high-power lithium batteries – including electrodes, electrolytes and separators – can be mass produced. Their development in the future depends on the trend of powering electric vehicles – i.e., the competition between lithium batteries and fuel cells. For chemicals used in solar cells, polyvinyl fluoride (PVF) back sheets should be developed urgently. For chemicals used in fuel cells, the development of fluoride proton exchange membranes deserves priority.
   5)Electronic chemicals used for the production of color printers
   These chemicals are mainly used for the production of photographic developer (commonly known as toner). Developer for black and white printers has achieved self-sufficiency in China, while those for color printers are still commonly imported.

2. Safe food additives

Although China has become the world’s largest producer, consumer and exporter of food additives, the product structure still needs to be optimized and upgraded. Currently, developing safer food additives is imperative.
   Food additives are essential raw materials for food processing. As long as they are used reasonably, in line with regulations, they can promote food safety and dietary balance.
   China’s 1500+ legal food additives can be divided into three categories according to their origins: chemo-synthesized additives, natural extracts and bio-synthesized (mainly fermented) additives. Natural extracts and bio-synthesized additives are supposed to be safer than chemo-synthesized additives. The production costs of natural extracts are kept high by the limited supply of natural raw materials and non-perennial production.
   The following bio-synthesized additives should be given development priority:
   1) Lycopene produced through fermentation. In addition to its value in coloring effects, lycopene is also good for human health. The traditional production method of lycopene, extraction from tomatoes, is limited by the raw material resources and farming seasons. Lycopene produced through fermentation has properties similar those of the extract, plus it can replace chemo-synthesized coloring additives due to its low production cost.
   2) D-ribose. D-ribose is an important additive for sports drinks, since it quickly relieves muscle tension. It is a pharmaceutical to treat myocardial ischemia, improve the heart’s resistance to ischemia and promote the heart’s function. It is also an important pharmaceutical intermediate for the synthesis of vitamin B2. Currently, bio-synthesized D-ribose has been successfully industrialized in China and will be developed rapidly in the future.
   3) Sugar alcohols. Bio-synthesized sugar alcohols such as erythritol, xylitol, sorbitol, maltitol, mannitol and lactitol can be used as substitutes for sugar. Besides their sweetening effects, they can help human organs to function properly.

3. High-end feed additives

With its output of animal feed additives reaching almost 6 million tons in 2012, China became their largest producer and consumer. Domestic production capacity for some feed additives, such as mineral additives, vitamin additives and amino acid additives (except methionine), is in surplus. Some feed additives such as methionine are commonly imported. New, very safe feed additives should be developed according to the following two principles:
   1) Development of feed additives that are now heavily imported (such as methionine) must be accelerated, and national self-sufficiency for these additives should be achieved by 2015. China’s consumption of methionine exceeded 120 kt in 2012, and is expected to exceed 160 kt in 2015. Currently, Chongqing Unisplendour Chemical Co., Ltd. is the only producer of methionine in China. It has a 60 kt/a production unit. A 70 kt/a product unit will be put into production at the end of 2013 by Nanjing Bluestar Chemical Co., Ltd, which is planning to expand it to 140 kt/a in the phase II of the project. About 40% of Nanjing Bluestar’s output of methionine will be exported. China’s methionine industry is expected to achieve self-sufficiency by 2015.
   2) Development of new, very safe feed additives should be accelerated. Just like food additives, feed additives extracted from natural products or synthesized through bio-chemical reactions are supposed to be safer than those made through chemo-synthesis. New feed additives such as plant extracts, enzymatic preparations, microbiological preparations and organic trace elements are the future trend, although they account for only a small portion of the feed additives consumed in China currently.

4. High-end adhesives

As the world’s largest producer and consumer of adhesives, China produced over 15 million tons of adhesives in 2012. However, compared to developed countries, China still lacks the ability to produce eco-friendly high-performance adhesives. The following three types of high-end adhesives should be developed in the future:
   1) Eco-friendly adhesives (especially urea-formaldehyde adhesive resins). About two thirds of adhesive consumption is for wood processing. Urea-formaldehyde adhesives account for 90% of adhesives used for wood processing in China and over 50% of the country’s total consumption of adhesives. Therefore, developing eco-friendly urea-formaldehyde adhesives is vital. However, obstacles such as poor management, an unaware public and insufficient adoption of related technologies must be overcome. Although China issued Limitation of Harmful Substances in Indoor Decoration Materials, the implementation of this regulation is far from perfect, and many consumers still lack a basic understanding of the harm caused by toxic adhesives. In the future, as the technology improves, the price of eco-friendly adhesives will decrease and their consumption will increase significantly.
   2) Adhesives used in strategic emerging industries. Adhesives used in aviation, aerospace, solar cells and wind power should be given development priority.
3) Silicone adhesives. The application of silicone adhesives is restricted by their high prices. With the popularization of the production technology of silicone monomers, the prices of silicone rubbers and silicone resins have already decreased significantly, and thus the prices of silicone adhesives are expected to decrease soon. Besides, in an era of high oil prices, prices of petroleum-based adhesives also run high. In 2012, the prices of some types of silicone adhesives were lower than those of petroleum-based adhesives. Currently, silicone adhesives are beginning to replace traditional EVA and VAE adhesives in the furniture industry, and to replace traditional sealants made from ethylene propylene rubber in the auto industry.

5. High-end surfactants

Common surfactants include anionic surfactants, cationic surfactants, amphoteric surfactants, non-ionic surfactants and specialty surfactants (fluorine, silicon, boron and other special-element surfactants). China has become the second largest producer and consumer of surfactants after the United States. Currently, China has achieved self-sufficiency for ionic surfactants, while 20% of non-ionic surfactants and almost all specialty surfactants are imported.
   1) Non-ionic surfactants. According to different hydrophilic groups, non-ionic surfactants can be classified as two categories - polyoxyethylene-type and polyol-type. Polyoxyethylene surfactants, accounting for 70% of China’s total consumption of non-ionic surfactants, are synthesized through the reaction between ethylene oxide and chemicals containing active hydrogen atoms. Polyol-type surfactants are esters formed between polyols (such as glycol and glycerol) and higher fatty acids. China is self-sufficient for polyol surfactants, while about 200 kt of polyoxyethylene surfactants are imported each year. The development of polyoxyethylene surfactants should be accelerated, especially in areas where the supply of ethylene oxide is adequate.
   2) Surfactants containing fluorine, silicon or boron. Introducing specialty elements such as fluorine, silicon or boron into the molecular structure of a surfactant may endow the surfactant with special properties. For example, fluorinated surfactants are used to produce textile finishing agents that can make textiles resistant to water, oil and dust. In 2012, China consumed 15 kt of fluorinated textile finishing agents (containing 1000 tons of surfactants), and 80% of that was imported. Silicon-containing surfactants are considered to be very efficient and eco-friendly since they are highly biodegradable and perform well. In recent years, due to the increase of oil prices and the decrease of silicone price, silicon-containing surfactants have become more competitive in the market. Boron-containing surfactants are mainly used in water-based automotive brake fluid and hydraulic fluid.

6. Eco-friendly plastics additives

Plastics additives, including plasticizers, flame retardants, heat stabilizers, antioxidants, light stabilizers, impact modifiers, lubricants, etc., are auxiliaries added during the molding of plastic products.
   China leads the world both in producing and consuming plastics additives but still uses many toxic plastics additives. The country urgently needs new types of plastics additives to be developed, such as non-toxic plasticizers, halogen-free flame retardants and lead-free heat stabilizers.
   1) Non-toxic plasticizers
   Phthalate plasticizers (DBP, DEHP, DOP) are widely used in China, but they are forbidden in plastic wraps and containers for cooked food and raw meat. The most important non-toxic plasticizer is citric acid ester plasticizer, including tributyl citrate and trioctyl citrate. As China is the world’s largest producer of citric acid, new citric acid ester plasticizers that can replace DBP and DOP should have advantages of local raw materials. Moreover, the consumption of butanol and octanol will increase.
   Phthalate plasticizers with relatively long alkyl chains such as phthalate nonanol and decanol phthalate are believed to be relatively safe and can replace those with short alkyl chains such as DBP, DEHP and DOP. Meanwhile, the consumption of iso-nonanol and 2-propyl heptanol will be promoted.
   2) Halogen-free flame retardants
   The use of halogenated flame retardants including chlorinated and brominated flame retardants is being restricted in developed countries, since they release toxic fumes upon heating. However, these are still widely used in China.
   The most important halogen-free flame retardants are inorganic flame retardants such as nano-aluminum hydroxide and nano-magnesium, which are both safe when heated and eco-friendly. Since most inorganic materials are incompatible with organic materials, adding large amount of inorganic additives into plastic products may degrade the mechanical properties of products unless additives are ultra-fine (even nano-sized) or covered with organic materials. At present, the use of inorganic flame retardants is compulsory only in China’s cable industry, leaving enormous space for the development of inorganic flame retardants.
   Organic phosphorus flame retardants with low fumes and low toxicity could also be important alternatives for halogenated flame retardants, considering China’s abundant resources of phosphorus. Chinese producers of organic phosphorus flame retardants, such as Jiangsu Yoke Technology Co., Ltd, have developed rapidly in recent years. In 2012, the world’s leading producer of organic phosphorus flame retardants, Albemarle Corp. stopped production, leaving market space for Chinese producers to export their products.
   3) Lead-free heat stabilizers
   Heat stabilizers are mainly used to improve the thermal stability of PVC. Although China has no schedule to phase out traditional thermal stabilizers containing toxic lead, the development of lead-free heat stabilizers, including rare earth heat stabilizers, organic tin heat stabilizers and calcium-zinc composite heat stabilizers, is very much encouraged.
   China was the first country to produce a rare earth heat stabilizer on an industrial scale. As rare earth resources are abundant in China, rare earth heat stabilizers should be the first choice to replace traditional heat stabilizers. Composite heat stabilizers combine the advantages of various heat stabilizers. Non-toxic calcium-zinc composite heat stabilizer can be used in food packaging materials, but it must be used with other heat stabilizers due to its weak stabilizing effect.   (to be continued)