EPR: Supply/Demand Status and Analysis of Development

By Liu Hongxia, China National Chemical Equipment Corporation

Ethylene propylene rubber (EPR) is a collective name for EPM produced through the copolymerization of ethylene and propylene, and EDPM produced through the copolymerization of ethylene, propylene and unconjugated diene monomer. Owing to EPR’s excellent ozone resistance, aging resistance, chemical corrosion resistance, electrical insulation and steam resistance and to the low price and easy availability of monomers, EPR has gained extensive applications in automobile components, waterproof construction materials, heat-resistant rubber hoses and belts, automobile sealing parts, lube oil additives and polyolefin modification.
The global capacity for making EPR was 1.546 million t/a as of the end of 2013, of which 520 kt/a is in North America, 420 kt/a in West Europe and 534 kt/a in Asian Pacific region. Major producers include three American firms – Lanxess, ExxonMobil, Dow Chemical, Lion Copolymer – Japan’s Mitsui Chemicals and Korea’s Kumho Petrochemical. The world’s EPR capacity is expected to exceed 2.50 million t/a in 2018, and Asia will become an important source.
Around the world, EPR consumption in 2013 was 1.30 million tons, concentrated mainly in North America, West Europe and Asia, accounting respectively for 24.5%, 21.5% and 42.0% of the total. Consumption is expected to reach 1.65 million tons in 2018. In Asia, the average annual growth of consumption over the next few years will be 6.3%.

1. Production

China’s R&D for EPR started in the 1960s. In 1971 Lanzhou Chemical Industry Corporation used the technology developed by Beijing Research Institute of Chemical Industry and constructed a 2.0 kt/a EPR unit. The unit had to suspend production later due to equipment malfunctions. In 1997 Jilin Petrochemical Co., Ltd. adopted solution polymerization technology from Mitsui Chemicals and constructed a 20 kt/ EPR unit; then in 2009, the company used its own technology and constructed a 25 kt/a EPR unit. In 2013, a 90 kt/a EPR unit was completed and put on stream by Shandong Dongying Tianhong Chemical Co., Ltd. The total capacity for EPR in China had reached 135 kt/a by the end of 2013. As the unit in Shandong Dongying Tianhong Chemical Co., Ltd. had just started production and the operating rate of the new unit constructed by Jilin Petrochemical Co., Ltd. in 2009 was not high, the output was only 22 kt in 2013. Several new and expansion EPR units will be completed and put on stream in China in next few years. See Table 1 for details.
China’s EPR capacity will likely reach 210 kt/a in 2014 and 890 kt/a in 2018. China’s EPR supply/demand gap will be greatly eased at that time.

2. Consumption

With the rapid development of the automobile industry and other related sectors such as the construction sector, the demand for EPR in China has increased drastically in recent years. The apparent consumption was 271 kt in 2013, an increase of 19.2% over the previous year. The average annual growth of apparent consumption was 13.7% during 2008-2013. Figure 1 shows the supply and demand for EPR in China in recent years.
In China, EPR is mainly used in automobile components, waterproof materials, electric wires/cables, oil product modification and polyolefin modification. It is expected that with the constant development of automobile industry, urban infrastructure construction and rail transport construction, the total demand for EPR in China will reach 350 kt in 2018. The auto industry and polymer modification will remain the two most important consumption sectors. See Figure 2 for detail.

Table 1   New and expanded EPR units in China in the near future (kt/a)

Company    Location    Technology source    Capacity    Time for startup    Remarks
PetroChina Jilin Petrochemical Co., Ltd.     Jilin    Self-developed     40    2015    Third phase
Sinopec Yanshan Petrochemical Co., Ltd.     Beijing    Self-developed     40    2016    
Sinopec-Mitsui Elastomer Co., Ltd.     Shanghai    Metallocene catalytic technology from Mitsui Chemicals     75    2014    JV between Sinopec and Mitsui Chemicals
Shandong Yuhuang Chemical (Group) Co., Ltd.     Heze    FasTech of Italy    50    2016    
Yanan Energy & Chemical Co., Ltd.     Yanan    FasTech of Italy    50    2016    
SK Global Chemical Co., Ltd.     Ningbo    Self-developed     50        
Lanxess    Changzhou     Keltan ACE    160    2015    
Liaoning North Dynasol Co., Ltd.     Panjin of Liaoning    Eni of Italy    100    2017    50/50 JV between Shanxi North Xingan Co., Ltd. and Dynasol
Chongqing Changshou Chemical Co., Ltd.     Kuishan of Xinjiang    Introduced from abroad    80        
Shenhua Coal To Liquid & Chemical Co., Ltd.     Baotou    Introduced from abroad    50        Under planning
CNOOC Energy Development Co., Ltd.     Dayawan of Huizhou    Introduced from abroad    50    2017    First phase


Table 2  Foreign trade of EPR by China (kt, US$ million)

Year    Import    Export
    Volume    Value    Volume    Value
2006    88    197.848    2.3    2.704
2007    115    268.25    5.0    6.077
2008    132    357.363    8.3    15.691
2009    175    406.341    2.9    6.236
2010    218    606.212    2.5    7.335
2011    223    894.343    2.1    7.350
2012    212    852.834    3.4    12.074
2013    252    756.029    3.1    14.475


3. Foreign trade

As the numbers above suggest, China imported far more EPR in recent years than it exported, and import grew faster. The import volume in 2013 was 252 kt, an increase of 19.1% over the previous year. The export volume was only 3.1 kt that year, dropping 8.8% from the previous year. Table 2 shows China’s import and export of EPR in recent years.
China’s main sources of imported EPR in 2013 were the United States, Japan, Korea, France, Netherlands and Germany. The amount imported from the United States increased 24.5% year-on-year and accounted for 32.9% of the total; EPR from Japan was up 13.6%, accounting for 21.52%; EPR from Korea was up 30.9%, accounting for 15.9%. In 2013, EPR was mainly imported in the mode of “general trade” or “processing by imported materials,” accounting for 85.5% and 21.6%, respectively. Major importing regions included Shanghai, Zhejiang, Guangdong, Jiangsu, Tianjin and Shandong, accounting respectively for 31.1%, 10.4%, 11.5%, 16.5%, 7.7% and 9.2% of the total.

4. Development trend

Production technologies for EPR today have already developed from exclusively using the Ziegler-Natta catalytic system to the coexistence of Ziegler-Natta, metallocene and single-point catalytic systems. New polymerization processes like solution polymerization, suspension polymerization and vapor-phase polymerization have also been developed. The constant development of new products has also helped expand application sectors. Environment-friendly polymerization processes and EPR varieties will become a major development orientation for the production and the demand structure adjustment of EPR.
Newly important EPR varieties include EPR with new molecular structure (double molecular weight peaks, long-chain branch, etc.), modified EPR and special EPR aiming to improve the processing properties needed to make downstream products and to reduce the processing costs downstream. Developing characteristic, functional and special EPR varieties is a trend for the development of new products. In addition, liquid EPR and EPR varieties with low molecular weight and super low viscosity have entered the polymer modification sector as thermoplastic elastomers. The use of new second, third and fourth monomers to synthesize new EPR varieties such as ethylene/octylene copolymer, ethylene/propylene/VNB copolymer and ethylene/propylene/ENB/VNB copolymer so as to improve comprehensive properties of EPR is a new area of market growth. Traditional EPR has already been affected by thermoplastic elastomers with lower prices. For example, TPO and TPV will become major substitutes for EPR in the auto industry and polymer modification.
The world already has excess EPR capacity, and the development in various regions is unbalanced. As requirements in downstream sectors such as the auto industry are getting more stringent and sophisticated, new EPR varieties can better meet the development needs in more downstream sectors. The drive for the future development is mainly concentrated in Asia.

5. Development suggestions

On the whole, China’s EPR output still cannot meet domestic demand. So development prospects are bright here. Several new and expanded units will soon be completed and put on stream. Some foreign producers with capacity surplus will also try their best to win more market share in China. Competition in the EPR sector in China will be very fierce in the future. We therefore suggest the following:
(1) Conduct intensive surveys and research: Intensive market surveys and research should be conducted and the feasibility of projects should be fully certified in terms of raw materials, technologies, markets, development, R&D and post-sales service so as to avoid unjustifiable construction and expansion of EPR production units.
(2) Develop special new varieties: Only about 10 EPR varieties are produced in China, falling far short of the needs of downstream producers. (Nearly 100 varieties are available in developed countries.) While ensuring the production of traditional varieties, efforts should be made to develop new EPR varieties and brands so as to meet the needs and reduce the import volume. Examples include EPDM varieties with high Mooney viscosity, oil-extended, high in relative molecular mass, or have long-chain branch or double molecular weight peak structure to be used in plastics modification, high-grade sponges and electric wires/cables.
(3) Technology innovation: The assimilation and innovation of existing technologies should be strengthened. Focus should be placed on catalysts. In addition to vanadium catalysts, high-efficient titanium catalysts and metallocene catalysts should also be developed and R&D for their commercial applications should be conducted so as to upgrade the overall technical level of the sector.
(4) Improve quality and increase efficiency.