Epoxy Resin Makers Quietly Embrace Special Resins Worldwide

By Zhang Bei, China National Chemical Information Center

“Epoxy resins” generally refers to organic polymers whose molecules contain at least two epoxy groups. They can be roughly classified by molecular structure into five categories – glycidic ether epoxy, glycidic ester epoxy, glycidic amine epoxy, linear aliphatic epoxy and alicyclic ester epoxy. At present, the glycidic ether epoxies are most in demand, most importantly bisphenos A epoxy resin.
Epoxy resins are important thermosetting resins known for their excellent mechanical, electrical and bonding properties. They are extensively used in the bonding of various metallic materials to nonmetallic materials. They can also be used in the manufacture of corrosion-resistant coatings, electric-insulating materials and GFRP composites. Epoxy resins play a significant role as an essential raw material in fields including electronic/electric products, machine-building, chemical anticorrosion products, aviation/aerospace and ship building.

Global supply pattern changing due to a rash of M&As

Merging and investment activities of epoxy resin producers of the world are quite brisk these days. After a series of M&As, Dow, NanYa Plastics of Taiwan and Momentive are now the world’s top three epoxy resin producers.
The global epoxy resin market is changing. The production of conventional epoxy resins has matured in the United States and Western Europe. Major foreign producers began some time ago to focus on developing special varieties with high added value and special applications. In 2013 Huntsman announced plans to nearly double its capacity for special epoxy resins, and this expansion is expected to be completed at the end of 2014. Table 1 shows the epoxy resin producers outside mainland China with a capacity of over 200 kt/a in 2013.


Table 1    Major epoxy resin producers outside mainland China, 2013 (kt/a)

Producer                                 Capacity
DOW                                           596
NanYa Plastics of Taiwan                   486
Momentive                                   397
Kukdo of Korea                               245
Huntsman                                   228
ChangChun Chemical of Taiwan               235
Total                                     2 187


Small firms and low operating rates in China

Although the commercial production of epoxy resins in China started in 1958, it developed quite slowly before the 1980s, and large-scale production was not achieved until 2000. Today, China has already become the largest producer and consumer of epoxy resins in the world. In the future, the development of China’s epoxy resin industry will be slowed down by the country’s increasingly stringent environmental protection requirements.
China’s epoxy resin capacity was around 2.05 million t/a in 2013. The new capacity was mainly owned by ChangChun Chemical (Panjin) Co., Ltd. and Kukdo Chemical Co., Ltd. Overall, epoxy resins are in surplus in China. The industrial concentration is low, as there are more than 100 producers in China. The larger producers, with a capacity of at least 100 kt/a, include NanYa Epoxy Resin (Kunshan) Co., Ltd., Jiangsu Sanmu Group Co., Ltd., Baling Petrochemical Co., Ltd., Jiangsu Yangnong Kumho Chemical Group Co., Ltd. and ChangChun (Changshu) Chemical Co., Ltd.
In 2013 the production of solid epoxy resin was sharply affected by upgraded environmental protection requirements. Some epoxy resin producers in Shandong province were forced to cut back or even suspend production. The operating rate of producers in the province was therefore maintained at 20-30% for a considerable period of time.  Table 2 shows the major epoxy resin producers in China in 2013.

Last years’ consumption reinvigorated growth

The consumption of epoxy resins in China was more favorable in 2013 than the previous year. The apparent consumption was 1.17 million tons, up 15% year-on-year. Coatings and electronic/electric products were two major consumption sectors, accounting for 75% of the domestic total. The other 25% was mainly used in producing composites, adhesives and construction materials.
With the development of automobile, container and copper-clad board manufacture, building construction, water conservancy, power grid renovation, IT and new energy sectors, the consumption of epoxy resins in China is expected to increase constantly. The development of the composites sector is the most rapid, and its consumption of epoxy resins will grow considerably.

Prices fluctuate slightly, profitability is weak

Epoxy resin prices increased drastically at the beginning of 2011, with the prices of both solid and liquid varieties hitting historic highs. After the second quarter, however, the epoxy resin market was bogged down for quite some time. The price of both solid and liquid varieties dropped to the lowest point of the year. At the beginning of 2012, the prices increased a little, due to climbing raw material costs – the price of solid epoxy resin 604 increased to RMB19 500/t and the price of liquid epoxy resin 618 climbed to RMB21 300/t. After April 2012, however, the market demand for epoxy resins entered a sustained lull and high inventories led to price cuts. The price of solid epoxy resin 604 fluctuated between RMB16 000-18 000/t and the price of liquid epoxy resin 618 variety floated in a range of RMB18 000-20 000/t.

Table 2    Major epoxy resin producers in China, 2013 (kt/a)

Producer                                       Capacity
NanYa Epoxy Resin (Kunshan) Co., Ltd.              316
Jiangsu Sanmu Group Co., Ltd.                      200
Baling Petrochemical Co., Ltd.                      120
Jiangsu Yangnong Kumho Chemical Group Co., Ltd.  100
ChangChun (Changshu) Chemical Co., Ltd.          100
Total                                             836


The price of epoxy resins fluctuated during the whole year of 2013. Owing to the considerable price drop of raw materials, the production cost decreased. The marginal profit of epoxy resin producers was higher than 2012, but the overall profit rate was still low.
Pushed hard by raw material costs, the price of epoxy resins rebounded at the beginning of 2013. The price of solid epoxy resin 604 was up to RMB17 600/t and the price of liquid epoxy resin 618 was up to RMB18 900/t. After April 2013, however, the market demand for epoxy resins was weak for quite a while, and high inventories once again led to price cuts. The price of solid epoxy resin 604 floated in a range of RMB16 000-17 000/t. It dropped to the lowest point of the year in July, rebounded in August and was RMB16 400-16 600/t at the end of the year. The price of liquid epoxy resin 618 slid constantly, falling lower than RMB18 000/t, hit the lowest point of the year in July, rebounded RMB17 700-17 900/t in August and September, came down afterwards, once again dropped to the low level of July in November and made a slight increase at the end of the year.

Special resins are the future

China’s epoxy resin industry makes too much low-end product and too little high-end product. The capacity for epoxy resins in China began to expand dramatically after 2007. However, with the rapid growth of domestic capacity little effort has been made to improve quality, add varieties and enhance technology. Special resins, which are urgently needed in the domestic market, account for only 10% of China’s total output of epoxy resins. Great quantities of high-tech products with high added value such as electronic-grade varieties, flame-retardant varieties, liquid crystal varieties and multifunctional varieties still have to be imported. Thus, the development of China’s epoxy resin industry and the industries downstream is hindered.
New capacity for epoxy resin now being constructed or planned for construction in China amounts to around 500 kt/a. China’s self-sufficiency will increase. With new production units put into operation, the volume of imported epoxy resins will be reduced gradually, and the volume exported will increase. Most of the new units are for special epoxy resins.