China’s SR Industry Grows Faster

By Xiao Ming

Many new or expanded synthetic rubber (SR) units were put into production in China in 2012, a year when domestic SR capacity saw the highest growth. By June 2013, China has increased its capacity of eight major SR products to 4.61 million t/a. And the country produced 3.79 million tons of SR (including latex) in 2012, up 7.06% YOY, with the output of eight major products reaching 3.01 million tons, rising 11.05% from a year earlier. Benefiting from new units that will be put into use in the next few years, China’s SR capacity is estimated to exceed 7.5 million t/a in 2017. However, competition will be severe at that time due to overcapacity.

1. SR capacity increased rapidly

In 2010, producers of styrene butadiene rubber (SBR), polybutadiene rubber, butyl rubber (including halogenated butyl rubber), chloroprene rubber, styrene-butadiene copolymer elastomers (SBC), polyisoprene rubber, nitrile rubber and ethylene propylene rubber entered industrialized production stage upon completion of a 15 kt/a polyisoprene rubber unit (Guangdong Maoming Luhua Chemical Co., Ltd.) and a 30 kt/a brominated butyl rubber unit (Sinopec Beijing Yanshan Company).
   SR capacity soared in 2012 as many units, newly constructed or expanded, were put into operation this year including the 100 kt/a polybutadiene rubber unit and 100 kt/a solution-polymerized SBR (SSBR) unit of Shandong Huamao New Materials Co., Ltd., 30 kt/a nitrile rubber unit of LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., 200 kt/a emulsion-polymerized SBR (ESBR) unit of PetroChina Fushun Petrochemical Company, 80 kt/a polybutadiene rubber unit of PetroChina Daqing Petrochemical Company, 40 kt/a styrene-isoprene-styrene block copolymer (SIS) unit and 20 kt/a SEBS (styrene-ethylene-butadine-styrene block copolymer) unit of Sinopec Baling Petrochemical Co., Ltd., 30 kt/a rare earth polyisoprene rubber unit of Shandong Shenchi Petrochemical Co., Ltd., 30 kt/a rare earth polybutadiene rubber unit of Sinopec Beijing Yanshan Company and the second-stage 50 kt/a ESBR unit of Hangzhou Zhechen Rubber Co., Ltd.. Units that are completed in the first half of 2013 include the 50 kt/a polyisoprene rubber unit of Zibo Luhua Hongjin Chemical Co., Ltd., 100 kt/a polybutadiene rubber unit of Sinopec Maoming Petrochemical Co., Ltd., 60 kt/a butyl rubber unit of Panjin Heyun Industrial Group, 30 kt/a rare earth polyisoprene rubber unit of Sinopec Beijing Yanshan Company and 100 kt/a polybutadiene rubber unit of YPC-GPRO (Nanjing) Rubber Co., Ltd.
   As of June 2013, domestic capacity of eight SR products totaled 4.61 million t/a, of which 35.94%, or 1.66 million t/a, is contributed by SBR; 29.83%, 1.38 million t/a, polybutadiene rubber; 19.09%, 880 kt/a, SBC; 4.56%, 210 kt/a, nitrile rubber; 1.80%, 83 kt/a, chloroprene rubber; 4.34%, 200 kt/a, butyl rubber; 0.98%, 45 kt/a, ethylene propylene rubber; 3.47%, 160 kt/a, polyisoprene rubber.
   As China’s largest SR producer, Sinopec Beijing Yanshan Company boasts 345 kt/a SR capacity, accounting for 8.13% of the domestic total; second largest, Sinopec Baling Petrochemical Co., Ltd., 340 kt/a, accounting for 7.38%; third largest, Sinopec Qilu Petrochemical Co., Ltd., 300 kt/a, accounting for 6.51%.
   Domestic SR capacity grew rapidly, and with it the output, which increased 7.06% YOY to 3.79 million tons in 2012, when the yield of eight major SR products totaled 3.01 million tons, rising 11.05% from a year earlier – SBR, up 6.96%; polybutadiene rubber, up 18.88%; nitrile rubber, 13.04%; butyl rubber, down 5.95%; polyisoprene rubber, down 20.0%; ethylene propylene rubber, down 11.16%; chloroprene rubber, up 7.27%; SBC, up 14.49%. Sinopec Qilu Petrochemical Co., Ltd. produced most SR in 2012, totaling 405 900 tons, 13.48% of the domestic total, up around 0.57% YOY; Sinopec Baling Petrochemical Co., Ltd., 225 800 tons, 5.96%, 15.50%.

2. Competition will be fiercer

Many projects will be finished in the next few years. In the case that these projects are put into production on schedule, domestic SR capacity is estimated to exceed 7.5 million t/a in 2017 – SBR, 2 million tons; polybutadiene rubber, 1.9 million t/a; SBC, 1.2 million t/a; butyl rubber, 700 kt/a; nitrile rubber, 400 kt/a; ethylene propylene rubber, 600 kt/a; polyisoprene rubber, at least 600 kt/a; chloroprene rubber, 300 kt/a. New units will greatly enrich China’s SR supply, but at the same time producers have to confront with a new problem “overcapacity”, which makes competition severer.

3. Growth decelerated

The apparent consumption of SR (including latex) in China was 3.55 million tons in 2007, up 7.52% YOY to 4.43 million tons in 2010, and the data grow to 5.01 million tons in 2012, gaining 8.07% from a year earlier, with the average annual growth staying around 7.14% from 2007 to 2012. With regard to the apparent consumption of the eight major products, it rose 9.36% YOY to 4.05 million tons in 2012 – SBR, up 10.12% YOY; polybutadiene rubber, up 14.63%; SBC, up 15.30%; chloroprene rubber, up 8.75%; ethylene propylene rubber, down6.18%; nitrile rubber, up7.64%; butyl rubber, down 4.68%; polyisoprene rubber, down 2.48%.
   Rubber products like tires and engineering rubber will continue to benefit from fast-growing auto industry, while coal, power, construction material and engineering industries will play a role in propelling rubber belt products. Growing capacity of both synthetic rubber and natural rubber is helpful to China’s rubber industry. As domestic tire industry gives priority to high-performance products, demand for SSBR, rare earth polybutadiene rubber and low-cis polybutadiene rubber is estimated to jump in the future. With the help of national policies to stimulate domestic demand, enterprises that are engaged in the production of rubber tube or rubber belt will maintain rapid expansion, consuming more SBR, polybutadiene rubber, chloroprene rubber and nitrile rubber. In the context of auto industry development and global economic recovery, China’s auto parts manufacturing industry is expected to embrace new progress, and demand for relevant products like nitrile rubber and ethylene propylene rubber will increase accordingly. In addition, demand for special rubber products such as nitrile rubber will be promoted by soaring output of bridge support, framework oil seal and industrial tape.
   Besides satisfying internal demand, China’s tire producers exported products to the U.S. and Europe. Although “Sino-US Tire Special Safeguard Case” and “EU Tire Labeling Regulation” curbed China’s tire export to some extent, it is estimated that tire export will push domestic SR demand to a higher level with tire industry expanding continually in emerging markets.
   After years of development, China’s shoemaking industry has laid a solid foundation. However, according to experience, relocation of enterprises in the industry is inevitable. More and more shoemaking enterprises will establish plants in Vietnam and India or central and western China where labor costs are lower. Anti-dumping policies and stricter technical criteria issued by foreign states decelerated growth of China’s shoemaking industry, which is estimated to develop in a steady pace instead of fast run. Due to SR substitutes and adjustment in footwear product structure, SR demand from the shoemaking industry will fall gradually.
Demand for rubber products such as SBC and SBR will be propelled by construction of infrastructure including road, bridge, airport, railway, etc.
   The scarcity of natural rubber resource in China also provides opportunities for the development of China’s SR industry. Natural rubber can hardly meet domestic demand, which increasingly depends on international supply. To solve the problem, SR producers should cooperate with those engaged in natural rubber to improve SR consumption in tire industry especially in the field of non-tire products. Synthetic rubber like polyisoprene rubber that can totally or partially replace natural rubber will seize more market shares.
   In spite of decelerated growth, China’s SR industry will maintain a good momentum, with domestic apparent demand for SR (including latex) expected to reach 6-6.2 million t/a by 2017 (of which 5-5.2 million t/a for eight major SR products).

4. SR industry should develop in a orderly way

1) to construct new units reasonably and to avoid vicious competition
As many units will be put into production in the next few years, overcapacity is inevitable. Therefore, enterprises that intend to expand capacities or are constructing new units have to consider carefully so that vicious competition can be avoided. For example, because of advanced technologies, ESBR, polybutadiene rubber and SBC will be oversupplied, and therefore enterprises should reduce relevant expansion activities. As ethylene propylene rubber and butyl rubber (especially halogenated butyl rubber) are in short supply, producers are suggested to expand their capacities.
2) to develop new technologies
Enterprises should develop new technologies and new products, especially those with high added value or rare varieties such as halogenated butyl rubber, HNBR, SSBR, LCBR and special-purposed SR. Meanwhile, the quality of these products should reach international standards to satisfy the customers' requirements.
3) to promote application
Eight major kinds of SR products have been successfully made in China and their capacities saw continuous growth, but some products including brominated butyl rubber, SSBR, rare earth polybutadiene rubber and polyisoprene rubber failed to attract market attention because of insufficient development in downstream applications, which led to low unit operating rate. Therefore, producers are advised to cooperate with downstream consumers to develop product applications in addition to improving product quality and operation rates.     

Table 1    China’s Major SR Producers in 2013 (kt/a)

Company    Capacity    Main Products
Sinopec Beijing Yanshan Company    345    polybutadiene rubber, SBS, butyl rubber (brominated butyl rubber), SSBR, polyisoprene rubber
Sinopec Qilu Petrochemical Co., Ltd.    300    ESBR, polybutadiene rubber
Sinopec Shanghai Gaoqiao Company    220    SSBR, polybutadiene rubber
Sinopec Baling Petrochemical Co., Ltd.    340    SBS, SEBS, SIS, polybutadiene rubber
Sinopec Maoming Petrochemical Co., Ltd.    210    polybutadiene rubber, SBS, SSBR
PetroChina Jilin Petrochemical Company    195    ESBR, ethylene propylene rubber
PetroChina Lanzhou Petrochemical Company    225    ESBR, nitrile rubber
PetroChina Daqing Petrochemical Company    160    polybutadiene rubber
PetroChina Dushanzi Petrochemical Company    215    SSBR, polybutadiene rubber, SBS
PetroChina Fushun Petrochemical Company    200    ESBR
Shandong Yuhuang Chemical (Group) Co., Ltd.    160    nickel-based polybutadiene rubber, rare earth polybutadiene rubber
Jiangsu Nantong Shenhua Chemical Industrial Co., Ltd.    180    ESBR
Huizhou LCY Chemical Co., Ltd.    200    SBS
Fuxiang Chemical Co., Ltd.    150    polybutadiene rubber, ESBR
Shandong Huamao New Materials Co., Ltd.    200    polybutadiene rubber, SSBR
YPC-GPRO (Nanjing) Rubber Co., Ltd.    200    polybutadiene rubber, ESBR


Table 2    China’s New SR Capacity from 2013 to 2017

Product    New Capacity
butyl rubber    Sinopec Beijing Yanshan Company, 90 kt/a; Liaoning Panjin Zhenao Chemical Co., Ltd., 100 kt/a; Tianjin Lugang Petroleum Rubber Co., Ltd., 60 kt/a; PetroChina Daqing Petrochemical Company, 60 kt/a; Formosa Synthetic Rubber Industry (Hongkong) Co., Ltd., 50 kt/a; Shandong Shenchi (Dongying) Petrochemical Co., Ltd., 100 kt/a; Shandong Jingbo Petrochemical Co., Ltd., 50 kt/a; CNOOC Energy Technology & Services Limited, 50 kt/a; YPC-GPRO (Nanjing) Rubber Co., Ltd. cooperating with PetroChina Lanzhou Hongye Fine Chemical Company, 60 kt/a

nitrile rubber    Shenhua Chemical Industrial Co., Ltd., 30 kt/a; Bluestar Tianjin Petrochemical Company, 40 kt/a; INSA-GPRO (Nanjing) Synthetic Rubber Co., Ltd., 60 kt/a; Sibur cooperating with Sinopec, 50 kt/a; Dongying Port Economic Develop Area, 50 kt/a

ethylene propylene rubber    PetroChina Jilin Petrochemical Company, 40 kt/a (phase II); Sinopec Beijing Yanshan Company, 80 kt/a; Mitsui Chemicals cooperating with Sinopec, 75 kt/a; Shandong Yuhuang Chemical (Group) Co., Ltd., 50 kt/a; Shaanxi Yanchang Petroleum (Group) Co., Ltd., 60 kt/a; Korea SK Group, 50 kt/a; Liaoning Panjin Zhenao Chemical Co., Ltd., 100 kt/a; Chongqing Changshou Chemical Co., Ltd., 80 kt/a; Shandong Dongying Tianhong Chemical Co., Ltd., 90 kt/a; Lanxess, 160 kt/a

polyisoprene rubber    PetroChina Jilin Petrochemical Company, 50 kt/a; Qingdao Yikesi New Material Co., Ltd., 40 kt/a; Panjin Heyun Industrial Group Co., Ltd., 50 kt/a; Qingdao Dipai New Material Co., Ltd., 30 kt/a; Shandong Yuhuang Chemical (Group) Co., Ltd., 30 kt/a; Shandong Shenchi (Dongying) Petrochemical Co., Ltd., 30 kt/a; Ningbo Jinhai Deqi Chemical Co., Ltd., 30 kt/a; Fujian Refining & Chemical Co., Ltd., 30 kt/a; Sinopec cooperating with Sibur, 50 kt/a; PetroChina Lanzhou Petrochemical Company, 50 kt/a; Shandong Hongyang Chemical Technology Co., Ltd., 30 kt/a

polybutadiene rubber    PetroChina Sichuan Petrochemical Company, 150 kt/a; Zibo Qixiang Tengda Chemical Co., Ltd., 50 kt/a; YPC-GPRO (Nanjing) Rubber Co., Ltd., 100 kt/a; Zhenhai Refining & Chemical Co., Ltd., 60 kt/a; Zhejiang Transfar Co., Ltd., 100 kt/a; Liaoning Shengyou Rubber Technology Co., Ltd., 30 kt/a; Formosa (Ningbo) Petrochemical Corporation, 50 kt/a; Shanghai Huayi Acrylic Acid Co., Ltd., 70 kt/a

SBR    Shanxi Beifang Xingan Chemical Industry Co., Ltd. cooperating with Dynasol, 100 kt/a; Shandong Zhucheng Guoxin Rubber Co., Ltd., 100 kt/a; Zhejiang Weitai Rubber Co., Ltd., 100 kt/a; Sinopec Baling Petrochemical Co., Ltd., 30 kt/a

SBC    PetroChina Daqing Petrochemical Company, 80 kt/a; Bluestar, 50 kt/a; Taiwan LCY Chemical Co., Ltd., 100 kt/a; TSRC (Nantong) Industries Co., Ltd., 35 kt/a; Dongying Port Economic Develop Area, 100 kt/a; Sinopec Baling Petrochemical Co., Ltd., 20 kt/a

chloroprene rubber    Bluestar, 80 kt/a; Chongqing Changshou Chemical Co., Ltd., 40 kt/a; Changning county of Sichuan province, 50 kt/a; Dongying Port Economic Develop Area, 50 kt/a; Inner Mongolia Lantai Industrial Co., Ltd., 20 kt/a


Table 3      Supply and Demand of China’s SR (including latex)  (kt)

Year    Output    Import    Export    Apparent Consumption     Self-sufficiency Rate/%
2007    2 220.0    1 413.5    81.4    3 552.1    62.50
2008    2 383.0    1 201.9    95.6    3 489.3    68.29
2009    2 755.0    1 467.9    104.1    4 118.8    66.89
2010    3 100.0    1 565.3    236.8    4 428.5    70.00
2011    3 536.4    1 445.3    291.8    4 689.9    75.40
2012    3 786.2    1 451.0    222.4    5 014.8    75.50

Source: the National Bureau of Statistics of China