China’s SBC Sector Should Shift toward Competing Internationally

By Yan Feng

Styrene thermoplastic elastomers, also called styrenic block copolymers (SBC), mainly includes SBS (styrene-butadiene-styrene block copolymers), SIS (styrene-isoprene-styrene block copolymers) and their hydrogenated products such as hydrogenated SBS (SEBS) and hydrogenated SIS (SEPS). It is extensively used in sectors such as shoemaking, plastic modification, asphalt modification, waterproof coatings, liquid sealing material, wire, cable, automotive components, medical equipment components, household electric appliances, office automation and adhesives. SBS is mainly used as a modifier for plastics and asphalt. SEBS is mainly used in sectors like adhesives, medical supplies, automobile, household electric appliances and office automation equipment. SIS and its hydrogenated product SEPS are mainly used in hot melt adhesives and asphalt modification. Different countries and regions have different focuses on the main uses of the product.

1.A system of domestic
products has been formed.

China’s SBC output is mainly SBS products. As of the end of October, China’s total capacity to make SBC had reached 880 thousand t/a, and China had surpassed the United States to become the largest SBC producer in the world. In particular, Sinopec Group’s capacity reached 450 thousand t/a, around 51.14% of the national total, CNPC’s capacity was 80 thousand t/a, around 9.09% of the total, and the SBC capacity of other enterprises (including joint venture enterprises) reached 350 thousand t/a, accounting for around 39.77% of the total. Sinopec Baling Petrochemical Co., Ltd is the largest producer of SBC in China today and has the most complete range of product grades as well as varieties. It has a capacity of 280 thousand t/a, accounting for around 31.82% of the national total. In addition to producing all conventional SBS products, the company also produces SEBS, SIS and the hydrogenated SIS product, SEPS. China’s major SBC producers are listed in Table 1.

Table 1   China’s major SBC producers in 2013

Producer                              Capacity (kt/a)    Remarks
Sinopec Baling Petrochemical Co., Ltd    280    
Uses technology by the Research Institute of Sinopec Beijing Yanshan Petrochemical Co., Ltd and Sinopec Baling Petrochemical Co., Ltd. Expanded capacity in 2009 and 2012.
Sinopec Beijing Yanshan Petrochemical Co., Ltd    90    
Uses technology from the Research Institute of Sinopec Beijing Yanshan Petrochemical Co., Ltd.
Sinopec Maoming Petrochemical Co., Ltd    80    
Imports technology from Fina of Belgium and expanded capacity in 2008.
Lee Chang Yung Rubber (Huizhou) Co., Ltd    200    
With its own technology, it constructed new unit in 2008, and expanded the capacity by 100 kt/a in 2009.
PetroChina Dushanzi Petrochemical Co., Ltd    80    
Constructed new unit in 2009, and uses technology from Italy's PolimefiEuropa (formerly EniChem).
TSRC (Nantong) Industries Co., Ltd    20    
The product is SEBS.
Tianjin LG Botian Chemical Co., Ltd    60    
A joint venture between Tianjin Botian Chemical and LG Chem. Constructed new unit in 2010, and the product is SBS.
Ningbo Keyuan Petrochemicals Co., Ltd    70    
Constructed new unit in 2011, and the product is SBS.
Total     880    


In the next few years, many enterprises will construct or expand SBC units, including an 80 thousand t/a SBS unit of PetroChina Daqing Petrochemical Co., Ltd, a 50 thousand t/a SBS unit of China National Bluestar (Group) Co., Ltd, an expanded 35 thousand t/a SEBS unit of TSRC (Nantong) Industries Co., Ltd, a 100 thousand t/a SBS project of Lee Chang Yung Chemical Industry Corporation in Huizhou of Guangdong Province, a 70 thousand t/a unit of Ningbo Keyuan Petrochemicals, a 60 thousand t/a unit in Liaoning Panjin Group, a 100 thousand t/a unit in Shandong Dongying Economic Development Zone and a 20 thousand t/a SIS hydrogenation unit of Sinopec Baling Petrochemical Co Ltd. It is expected that China’s total capacity to make SBC will reach around 1.4 million t/a by 2017.
At present, domestic SBS producers have formed a product system with unique characteristics. By virtue of its market development over years, Sinopec Baling Petrochemical Co., Ltd has formed its own special products for asphalt modification, adhesive manufacture and resin modification. For asphalt modification, the main product is YH791-H, and for making adhesives, the major product brands are YH792 and YH796. By virtue of their stable quality and good transparency, the special material F675 for shoemaking of Sinopec Maoming Petrochemical Co., Ltd and the similar product 4452 of Sinopec Beijing Yanhua Petrochemical Co., Ltd have good reputations in Guangdong and Fujian provinces. Through continuous improvement, PetroChina Dushanzi Petrochemical Co., Ltd’s special material T171 for shoemaking, and T6303 and T161B asphalt modified materials have met the de facto standards of similar domestic products in both performance and quality. Lee Chang Yung Rubber (Huizhou) Co., Ltd mainly produces shoe materials, while Tianjin LG Botian Chemical Co., Ltd mainly produces asphalt modification and adhesive materials.

2. Rapid growth of consumption

With the development of sectors like shoemaking and road construction, China’s consumption of SBC has increased rapidly in recent years. China's apparent consumption of SBC was 414 thousand tons in 2005 and reached 664.2 thousand tons in 2010, up around 13.81% year-on-year. The apparent consumption reached around 679.6 thousand tons in 2012, up around 15.30% year-on-year. The average annual growth of the apparent consumption was around 7.64% during 2007-2012. Correspondingly, the self-sufficiency rate of SBC was 32.12% in 2005, and climbed to 90.33% and 95.35%, respectively in 2010 and 2012. In recent years, with the constant growth of SBC capacity and output, China’s import volume of SBC has decreased year-on-year. In 2012, China imported 48.6 thousand tons of SBC, down 32.41% year-on-year, and China’s export volume of SBC was 17 thousand tons. China’s supply and demand of SBC in recent years are shown in Table 2.
SBC is mainly used in shoemaking, asphalt modification, polymer modification and adhesives in China. China's consumption mix of SBC in 2012 was around 34.0% for shoemaking, around 30.5% for asphalt modifiers, around 12.0% for adhesives, around 15.0% for polymer modification and around 8.5% for others.
It is expected that China’s consumption of SBC will increase at an average annual rate of around 6.5% in the next few years and reach around 800 thousand tons by 2017. Shoemaking will still be the main sector consuming SBC; however, China’s traditional export manufacturing industries are now in an unfavorable market situation and their export volumes will decline, so the growth of SBC consumption in shoemaking will slow down, and the proportion of SBC demand in the shoemaking sector will decline to around 30.0% by 2017. In the aspect of asphalt modification, China will strengthen infrastructure construction and the domestic demand for high quality waterproof coiled materials in the construction sector will consequently increase greatly. Therefore, the proportion of SBC demand in asphalt modification will climb to around 35.0% by 2017.
In addition, with the improvement of science and technology, the application of SBC in polymer modification will develop rapidly. In the aspect of adhesives, in spite of many competitive products, the market share of SBC in the pressure-sensitive adhesive and hot melt adhesive sectors will further expand because it is non-toxic and odorless, and it is used in a simple process for producing adhesives. Moreover, demand for SBC in the domestic coatings and ink sectors will also increase considerably.

Table 2   China’s Supply and Demand of SBC in Recent Years

Year Output(kt) Import(kt) Export(kt) Apparent consumption (kt)    Self-sufficiency
                                                                 rate (%)
2008  315.0         125.0         6.9         433.1                    72.73
2009  465.0         127.7         9.1         583.6                    79.68
2010  600.0          99.5        35.3         664.2                    90.33
2011  566.0          71.9        48.5         589.4                    96.03
2012  648.0          48.6        17.0         679.6                    95.35


3. Adjust the product portfolio and strengthen market advantage

In the next few years, China will continue to increase investment in sectors like road construction, housing construction, automobile manufacture and household electric appliances, so the domestic demand for SBC in pavement modification materials and polymer modification materials will grow constantly. China’s increase of the export rebate for footwear products can enhance the export competitiveness of China’s footwear products to a certain extent, alleviate some pressure on the shoemaking sector and stabilize the domestic market demand for oil-extended SBC. SBC still has good development prospects in China. However, with shoemaking activities shifting globally to neighboring countries with lower labor costs like Vietnam and India, as well as the influence of alternative materials like EVA (ethylene vinyl acetate), the growth of SBC demand in China’s shoemaking sector will gradually decline, and the development of the whole SBC sector will slow down. With the startup of many new or expanded SBC units in the next few years, China’s capacity to produce SBC will be in surplus, making market competition fierce. Therefore, China’s SBC sector should seize the market opportunity on the basis of existing overall scale advantage and domestic demand, to make full use of the somewhat monopolistic advantage of the domestic market, and specify product development strategies, segment the market, adjust product portfolios, improve product quality standards and control systems and realize the matching of product portfolios and market structure according to the significant increase of dry-rubber consumption ratio and stable consumption of oil-extended rubber. China should strengthen R&D, accelerate the development of new catalysts and processes, optimize the production process, reduce material consumption, conserve energy, and improve competitiveness in the international market. China’s SBC sector should speed up the transformation of equipment and build multi-use units that can be switched between producing SBS, SIS, SEBS, solution-polymerized styrene-butadiene rubber, various vinyl polybutadiene rubbers and K resin, to adjust the product variety according to the needs of market and improve the effective utilization rate of the units. China should strengthen application research, and develop new SBC products for polymer modification and adhesive manufacture as soon as possible to widen the application fields of SBC. The SBC series upgrading products such as SEBS, SEPS, epoxidized SBS (ESBS) as well as SBS functional graft modification should be actively developed to meet the domestic demand and obtain greater economic benefits. The application and service organizations of the products should be established as soon as possible to improve the level of technical service and promote the dissemination and application of products. China should make efforts to improve the quality of the products, actively expand exports and compete in the international market in order to survive and develop in the face of fierce international competition.