Bright Prospects of the High-End SAP Market in China

By Hao Jingquan, Zhu Ming, Wanhua Industrial Group Co., Ltd

Compared with traditional absorbent materials, SAPs (super-absorbent polymers) feature big absorption ratio, strong water retention and excellent biodegradability. They are extensively used in sanitary napkins, paper diapers, medicine desiccants, drying agents, deoxidation anti-staling agents, waterblocking tape for electric cables, concrete admixtures, as well as drought relief, water retention, desertification prevention and water control in agriculture and forestry. They are products with extremely bright market prospect.
SAPs produced through reserve suspension polymerization have large surface area, small particle diameter and rapid water absorption.

1. SAP production of “local” enterprises in China

By 2012 the total SAP capacity of local enterprises in China was 168 kt/a, accounting for 46% of the national total. See Table 1 for detail. The average operating rate of local production units was less than 70%, being lower than those of mainstream producers (around 90%).

Table 1   Capacity of local SAP producers in China (kt/a)

Producer             Location            2012    2014
Jurong Chemical        Yancheng, Jiangsu    100.0    180.0
Shanghai Huayi        Shanghai            20.0    20.0
Shandong Haoyue        Shandong            18.0    18.0
Fujian Banglida        Fujian                15.6    15.6
Zhejiang Weilong    Zhejiang            8.4    8.4
Others                    -                6.3    1.2
Total                    -                168.3    243.2

Table 2    SAP Plants of multinationals in China (kt/a)

Company                        Location    Capacity    Remark
San-Dia Polymers            Nanjing        130            completed in 2006, expanded to 130 kt/a at the end of 2011
Nippon Shokubai Chemical    Zhangjiagang 30            completed in 2005
Formosa Plastics            Ningbo         40            expanded to 50 kt/a in 2013
Total                                     200

Except for Jurong Chemical, the average capacity of local SAP producers in China is less than 20 kt/a. Their product quality is lower than that of mainstream producers. The main defect is the unduly high content of residual monomers and impurities. Restricted by factors such as product quality and stability, local producers in China have made very few capacity expansion plans in the last three years.
Jurong Chemical’s SAP capacity is 100 kt/a today, accounting for 27% of the national total. The company has aggressive plans to expand capacity. Its sales are mainly targeted at the medium/low-end market. The major advantage of the company is that it owns upstream acrylic acid resources. It considers expanding acrylic acid capacity to achieve better industrial integration.

2. SAP production of multinationals in China

The total SAP capacity of multinationals in China is 200 kt/a today. See Table 2 for details. Also, BASF plans to construct a 60 kt/a SAP unit in Nanjing of Jiangsu in collaboration with Sinopec.

3. Consumption

In China SAP are mainly used in the personal sanitary sector, which accounts for 92% of the total consumption. Five percent is used in water retention in agriculture and 1% is used in electric cable casings. In the personal sanitary sector, the consumption proportion is 55% for baby paper diapers, 40% for women’s sanitary products and 5% for adult incontinence pads.
China has around 40.0 million babies of age 0-2. If the amount and the permeability of SAP in baby paper diapers were to reach the world average level, the market demand of SAP in baby paper diapers in China would be around 400 kt and there is a huge potential. Only 5% of SAP is used in adult incontinence pads in China, being lower than 1/4 of the world average level. The elderly population will grow 3.28% in the next decade. It is expected that when the elderly population reaches 248.0 million persons in 2020, the related sanitary material market will be around 50.0 million persons. The demand for high-end SAP will therefore increase rapidly in the next decade. The number of women with an age of 15-49 will be smaller in the next 15 years. The growth of the market for women’s sanitary products will therefore be reduced from today’s 18.9% to 4.9% and the consumption of SAP in women’s sanitary products will drop.

4. Features of the global SAP market

(1) Buyer’s market: P&G, Kimberly, Unicharm and SCA are the major suppliers of absorbent sanitary products in the world. Their total consumption of SAP is 1.85 million tons, accounting for 88% of the world total.
(2) Supply slightly higher than demand: The world’s SAP capacity was 2.042 million t/a in 2011, the demand was 1.90 million tons and the operating rate was 93%. The combined SAP capacity of the top five producers – Nippon Shokubai, BASF, Evonik, San-Dia Polymers and Sumitomo Seika Chemicals – is 81% of the world total. Capacity growth in next few years will be in the expansion of existing units, and there will be no new entrants. It is expected that SAP capacity will increase to 2.885 million t/a in 2014, and demand at that time will be 2.30 million tons. Based on an operating rate of 90%, the capacity will be in slight surplus.
(3) Stringent requirements on product quality: Major suppliers of absorbent sanitary products in the world such as P&G, Kimberly, Unicharm and SCA all require SAP supplies to meet global price and quality norms. They have imposed extremely stringent requirements on the quality of SAP. The content of residual monomers should be less than 230ppm. Due to the strict health index and management standard and the long certification period (2-3 years), small and medium SAP producers hang back in fear. As major SAP producers such as Nippon Shokubai, BASF and Evonik own the ability of acrylic acid supply, they emphasize sales volume when they sell SAP to suppliers of absorbent sanitary products and the price is therefore relatively low.
(4) Prominent difference in downstream applications: Due to different application features in women’s sanitary napkins, baby paper diapers and adult incontinence pads, there is a considerable difference in requirements on SAP. The difference in downstream applications also leads to a difference in the positioning of products. SAP producers usually have an evident positioning of their products. For example, Nippon Shokubai targets at baby paper diapers, Kimberly targets at lady sanitary napkins, BASF targets meat-related absorbent paper in super markets and Sumitomo targets absorbent tapes in heavy industry.
(5) High demands on technical and client services: There is very frequent and close feedback and interaction between SAP producers, downstream enterprises and terminal clients/consumers. On one hand, SAP downstream enterprises are making constant product innovations and proposing new concepts to occupy market. On the other, changes in consumers’ habits are also pushing market reforms and raising higher requirements on SAP producers. SAP producers have further strengthened their ability for sustained product R&D according to the ever-changing requirements of various clients and left low-end market competitors far behind.