Competition in China’s Pentaerythritol Market to Be Fierce

By Cui Xiaoming

Pentaerythritol is mainly used to produce lubricants, alkyd resins, polyurethane, surfactants, emulsifiers, medicines, pesticides and explosives. It has extensive applications in the sectors like resin, coatings, chemical, pharmaceutical and national defense. Therefore, it has a broad development and utilization prospect.

1. Production

In recent years, with the growing demand in downstream products, the pentaerythritol production in China has developed rapidly with a constant expansion of the capacity. There were more than 20 pentaerythritol producers in China in 2012, with a combined capacity of around 415 thousand t/a. China has become the world's largest pentaerythritol production base, and held an important position in the global production of pentaerythritol. Hubei Yihua Group Co., Ltd. is the biggest pentaerythritol producer in China today, with capacity of 140 thousand t/a (including 30 thousand t/a in Guizhou Bijie Jinhe Chemical Co., Ltd.), accounting for 33.73% of the national total. The company has purchased the proprietary technology for the production of monopentaerythritol and dipentaerythritol from Samyang Chemical Ind. Ltd of Korea, and the hydroxyl content of pentaerythritol produced is 98%, reaching the international advanced level. In addition to meet the domestic needs, Hubei Yihua Group Co., Ltd. also exports its pentaerythritol to Asia and Europe markets. As the only enterprise with independent intellectual property rights in domestic pentaerythritol sector, Jiangsu Ruiyang Chemical Co., Ltd. has a pentaerythritol capacity of 60 thousand t/a (a 20 thousand t/a using sodium method in Jiangsu province, and a 20 thousand t/a using sodium method and a 20 thousand t/a using calcium method in Inner Mongolia), and is one of enterprises with the most pentaerythritol varieties and processes in China. Yunnan Yuntianhua Co., Ltd. has introduced a complete pentaerythritol unit from Eurotecnica of Italy. The unit uses the low-temperature sodium method production process and has a capacity of 10 thousand t/a. Yunnan Yuntianhua is a sole pentaerythritol producer using the continuous production process in China and it can produce several product varieties with a purity of 92% - 98%. Some enterprises in China will still plan to construct or expand pentaerythritol units in the next few years. For example, Lanzhou Gaolan County plans to construct a 20 thousand t/a pentaerythritol unit, Sanmu Chemical Co., Ltd.’s 50 thousand t/a new pentaerythritol project in Hejiang Lingang Industrial Park, Luzhou of Sichuan province is expected to be completed and put into operation in 2014, and the 60 thousand t/a unit in Guizhou Kailin (Group) Co., Ltd. is expected to be put into production in 2013. In August 2011, Hubei Yihua Group Co., Ltd. began construction of its new 40 thousand t/a pentaerythritol project in Luntai county of Xinjiang region. In addition, Henan Coal Gas (Group) Co., Ltd. plans to construct a 35 thousand t/a pentaerythritol unit in Yima of Henan province, Hubei Yihua Group Co., Ltd. plans to build a 40 thousand t/a unit in Bazhou, and Inner Mongolia Linfeng Chemical Co., Ltd., a subsidiary of Jiangsu Sanmu Group Co., Ltd., also plans to construct a 200 thousand t/a unit. It is expected that China's total capacity to make pentaerythritol will exceed 700 thousand t/a by 2016. China’s major pentaerythritol producers in 2012 are listed in Table 1.

Table 1 China’s Major Pentaerythritol Producers in 2012   (kt/a)
Producer    Capacity    Production process
Hubei Yihua Chemical Industry Co., Ltd.    110    Sodium-method intermittent production process
Hengyang Sanhua Industrial Co., Ltd.    13    Sodium-method intermittent production process
Henan Puyang Methyl Alcohol Factory    10    Sodium-method intermittent production process
Henan Puyang Pengxin Chemical Co., Ltd.    20    Sodium-method intermittent production process
Yunnan Yuntianhua Co., Ltd.    10    Sodium-method intermittent production process
Jiangsu Liyang Ruiyang Chemical Co., Ltd.    20    Sodium-method intermittent production process
Inner Mongolia Chifeng Ruiyang Chemical Co., Ltd.    40    20 thousand t/a using sodium-method intermittent production process
Jiangsu Sanmu Chemical Co., Ltd.         20    Sodium-method intermittent production process
Guizhou Crystal Fine Chemical Co., Ltd.     7    Sodium-method intermittent production process
Hebei Jinzhou Yongan Chemical Co., Ltd.     5    Sodium-method intermittent production process
Hebei Jinzhou Xinhai Chemical Co., Ltd.     5    Sodium-method intermittent production process
Shandong Bofeng Chemical Co., Ltd.    5    Sodium-method intermittent production process
Shandong Jinyimeng Chemical Co., Ltd.     5    Sodium-method intermittent production process
Henan Puyang Yongan Chemical Co., Ltd.    20    Calcium-method intermittent production process
Hebei Bazhou Shengfang Unite Chemical Co., Ltd.    20    Sodium-method intermittent production process
Anhui Jinhe Industrial Co., Ltd.    30    Sodium-method intermittent production process
Guizhou Bijie Jinhe Chemical Co., Ltd. of Hubei    30    Sodium-method intermittent production process
      Yihua Group Co., Ltd.    
Hebei Baoding Guoxiu Chemical Co., Ltd.    20    Sodium-method intermittent production process
Shanxi Sanwei Group     5    Sodium-method intermittent production process
Others    20    
Total    415

2. Slowdown of consumption growth

In recent years, China’s demand for pentaerythritol has increased constantly. China's apparent consumption of pentaerythritol was 109.8 thousand tons in 2006 and reached 139.3 thousand tons in 2009, up around 22.41% year-on-year from 2006 to 2009. The apparent consumption reached 160.4 thousand tons in 2012, up around 3.55% year-on-year. The average annual growth of the apparent consumption was around 8.58% during 2006-2012. With the constant growth of the capacity and the output, China’s import volume of pentaerythritol has gradually reduced in recent years. The import volume was 2.4 thousand tons in 2006 and decreased to 2.2 thousand tons in 2012, down 4.35% year-on-year. In contrast, China’s export volume of pentaerythritol has increased in recent years. The export volume was 32.7 thousand tons in 2006 and reached 61.8 thousand tons in 2012, up around 13.59% year-on-year. China’s supply and demand of pentaerythritol during 2006-2012 are shown in Table 2.

Table 2 China’s Supply and Demand of Pentaerythritol during 2006-2012 (kt)
Year    Output    Import volume    Export volume    Apparent consumption
2006    140    2.5    32.7    109.8
2007    150    2.3    46.0    106.3
2008    175    2.1    63.3    113.8
2009    190    2.1    52.8    139.3
2010    200    2.5    58.1    144.4
2011    205    2.3    52.4    154.9
2012    220    2.2    61.8    160.4

China's consumption mix of pentaerythritol in 2011 was around 64.5% for alkyd resins, around 7.5% for lubricants, around 9.5% for polyurethane, around 6.4% for rosin ester and around 12.1% for others. It is expected that by 2016, China’s total demand for pentaerythritol would reach around 200 thousand tons. The proportion of demand in alkyd resin sector will fall while that in lubricant, rosin esters and polyurethane sectors will increase as the latter sectors have higher requirements on the quality of pentaerythritol than alkyd resins. China’s capacity to make pentaerythritol will exceed 700 thousand t/a by 2016 the overcapacity will lead to fiercer competition.

3. Pentaerythritol portfolio needs urgent adjustment

In spite of the rapid development of China’s pentaerythritol production in recent years, the technical level of China's pentaerythritol sector lags substantially behind that of the advanced countries in the following aspects:
(1) China’s capacity to produce pentaerythritol has already reached 415 thousand t/a, however, the output is lower and the operating rate of pentaerythritol units still needs to be improved.
(2) The pentaerythritol portfolio is single, the development of its downstream products lags behind. Most domestic producers can only produce pentaerythritol industrial grade with a purity of 88%-92%. Only a few large producers can produce a small amount of pentaerythritol with a purity of over 98% and dipentaerythritol, and the domestic output of these products cannot meet the actual demand in China. Therefore, in China, most exported pentaerythritol are relatively cheap, whereas the high-grade dipentaerythritol and tripentaerythritol still need to be imported.
(3) In spite of using the self-developed technology to build 10 thousand t/a pentaerythritol unit, China still lags considerably behind the foreign countries in synthetic technologies. The domestic technology features intermittent operation, large equipment investment and environmental pollution, affecting the sustainable development of pentaerythritol sector in the future. Therefore, China should take a cautious attitude towards construction of new units or the capacity expansion of existing units, strengthen the research and development of new processes, improve product quality, and reduce environmental pollution to achieve the sustainable development. Learning from the successful experience of foreign counterparts, in addition to the production of pentaerythritol, the units should be able to produce trimethylolpropane and neopentyl glycol at the same time to improve the anti-risk ability of enterprises and the competitiveness of units. China should strengthen the industry management, actively respond to the challenges from international trade barriers, improve product quality, reduce production cost, and actively expand the exports while expanding the domestic demand at the same time to ease the domestic overcapacity situation and ensure the steady development of related sectors.