TPU Market in China Still Has Growth Space

By Gao Fugeng, China National Chemical Information Center

Thermoplastic polyurethane (TPU) is a class of thermoplastic elastomers consisting of linear segmented block copolymers composed of oligomer polyol soft chain segment and diisocyanate-chain extender rigid chain segment. Its properties include elasticity, transparency, and resistance to oil, grease and abrasion. Since its rapid development in China this century, the most important application sector for TPU has been the manufacturing of shoe materials and the consumption proportion had being higher than 70%. Due to the development of other application sectors afterwards, the consumption proportion in shoe materials has made a gradual reduction and is around 33% today. The consumption proportion in vehicle materials, adhesives, pipes and films is 10-20% each. Most TPU varieties can be produced in China. Due to the rapid growth of downstream sectors, however, special varieties still have to be imported and their import volume accounts for around one-third of the total consumption. TPU therefore still has a development space in China.

Table 1   Major TPU producers in China, 2013 (kt/a)

Producer    Region    Capacity
Yantai Wanhua Polyurethane Co., Ltd.     East China    34
BASF Polyurethane Specialties (China) Co., Ltd.     East China    29
Lubrizol Specialty Chemicals (Shanghai) Co., Ltd.     East China    20
Bangtai Polymer Material Co., Ltd.     North China    15
Zhejiang Huafeng Thermoplastic Polyurethane Co., Ltd.     East China     12
Dongguan Hongde Chemical Industry Co., Ltd.     South China    10
Bayer Thermoplastic Polyurethane (Shenzhen) Co., Ltd.     South China    10
Shanghai Lejoin Polymer Material Co., Ltd.     East China    10
Suzhou Austin New Material Co., Ltd.     East China     10
Bayer Material Science & Technology (Qingdao) Co., Ltd.     East China    8
Polyol Macromolecule Polymer (Fujian) Co., Ltd.    South China    5
Others    60
Total    223

Table 2   TPU projects being constructed or planned in China (kt/a)

Company    Location    Capacity    Time starting production    Remarks
Shanghai Huntsman Polyurethane Special Material Co., Ltd.     Shanghai    21    February 2014    Expansion, already completed and put on stream
Xuchuan Chemical (Suzhou) Co., Ltd.    Suzhou of Jiangsu    20    -    Environmental impact assessment
Polyol Macromolecule Polymer (Fujian) Co., Ltd.    Quanzhou of Fujian    7.5    2015    Construction started
Baoding Bangtai Polymer New Material Co., Ltd.    Baoding of Hebei    2.5    -    Put on file
Total    51        


Sustained capacity expansion

The total capacity for TPU in China was 223 kt/a in 2013. Major producers include Yantai Wanhua Polyurethane Co., Ltd. (34 kt/a), BASF Polyurethane Specialties (China) Co., Ltd. (29 kt/a), Lubrizol Specialty Chemicals (Shanghai) Co., Ltd. (20 kt/a), Bangtai Polymer Material Co., Ltd. (15 kt/a), Dongguan Hongde Chemical Industry Co., Ltd. (10 kt/a) and Bayer Thermoplastic Polyurethane (Shenzhen) Co., Ltd. (10 kt/a).
TPU products in Yantai Wanhua Polyurethane Co., Ltd. include polyester varieties, polyether varieties, polycaprolactone varieties, polycarbonate TPU varieties and aliphatic varieties. The company has the largest capacity and most diverse product portfolio among TPU producers in China Mainland.
BASF Polyurethane Specialties (China) Co., Ltd. is a wholly-owned subsidiary of BASF of Germany. It is located in Pudong New District of Shanghai. The TPU production line started trial run in 2007 and passed acceptance inspection to environmental protection facilities in early 2008. The company mainly produces TPU chips for melt-spun spandex. Its capacity has increased from 18 kt/a to 29 kt/a after expansion.
Lubrizol Specialty Chemicals (Shanghai) Co., Ltd. (formerly Noveon (Shanghai) Special Polymers Co., Ltd.) is the first foreign-funded TPU producer in China and mainly produces high-grade products such as TPU films. The company was established in February 2004. Its 5 kt/a TPU plant was completed in 2005, and then expanded to 10 kt/a in 2008, 14 kt/a in 2009 and further to 20 kt/a in 2010. Products include polyether and polyester TPU varieties.
Shanghai Huntsman Polyurethane Special Material Co., Ltd. is located in Shanghai Jinshan Second Industry Zone. Its 21 kt/a TPU project was put on stream in February 2014. Major TPU producers in China are listed in Table 1.
New TPU capacity under construction or preparation in China is about 51 kt/a, as shown in Table 2. The 21 kt/a unit in Shanghai Huntsman Polyurethane Special Material Co., Ltd. was already completed in February 2014. The 7.5 kt/a unit in Polyol Macromolecule Polymer (Fujian) Co., Ltd. has started construction and is expected to complete in 2015. The 280 kt/a polyurethane new material project in Xuchuan Chemical (Suzhou) Co., Ltd., including a 20 kt/a TPU unit, is at the stage of environmental impact assessment. The 2.5 kt/a unit in Baoding Bangtai Polymer New Material Co., Ltd. is waiting for government’s review and approval. Table 2 shows the TPU projects being constructed or planned for construction in China in 2014.

Stable imports

TPU has no separate HS code in China Customs. It is included in polyurethanes in primary form (HS Code: 39095000). Besides TPU, the HS code also includes some PU basic materials that can have further processing.
The import market of polyurethanes in primary form is basically stable in China. From 2009 to 2013, the average import price of polyurethanes in primary form in China was maintained at RMB23 000-25 000/t.
The import volume of polyurethanes in primary form was 138 kt in 2013, an increase of 10.4% over the previous year. The major import source was Taiwan and the amount imported accounted for 38% of the total. Germany, the United States and Korea followed behind and the amount imported accounted respectively for 12%, 11% and 11% of the total. The export volume was 107 kt in 2013, an increase of 33.1% over the previous year. Major export destinations included Pakistan, Hong Kong, Vietnam and India and the amount exported accounted respectively for 21%, 11%, 10% and 10% of the total. Figure 1 shows the import sources and export destinations for polyurethanes in primary form in China in 2013.
Major import regions for polyurethanes in primary form in China in 2013 were Shanghai and Jiangsu and the amount imported accounted respectively for 55% and 18% of the total. Major export regions were Zhejiang and Shanghai and the amount exported accounted respectively for 38% and 34% of the total. Figure 2 shows the import regions and export regions for polyurethanes in primary form in China in 2013.

Sound downstream development

The consumption of TPU in China was 223 kt in 2013, an increase of 11% over the previous year, mainly used to produce shoe materials, vehicle materials, adhesives, pipes, films and melt-spun Spandex. The consumption structure of TPU will make no great changes up to 2018. Figure 3 shows the consumption structure of TPU in China in 2013 and the projection to 2018.
Shoe materials are the most important consumption sector for TPU and the consumption accounts for around 33% of the total. The consumption of TPU in shoe materials has promoted a rapid development of the TPU sector and the average annual growth is over 8%. As the shoemaking sector will gradually shift to Southeast Asia in future, the consumption growth of TPU in shoe materials will be slowed down. The consumption of TPU in vehicle materials has also presented a trend of rapid growth in recent years. Saturation of the automobile industry will however become a constraint. The consumption proportion of TPU in vehicle materials is around 10% today. The market of TPU adhesives in China is at the stage of rapid development and there will still be a certain space in future. TPU films have extensive applications in developed countries, although their application in China is now constrained by the cost.

Stable price

Unlike the sustained price rise in 2012, due to the relatively stable MDI price and the balanced supply/demand of TPU, the TPU price in China made no drastic fluctuations in 2013 and was maintained at RMB26 000-27 000/t. The average price was RMB26 200/t in 2013, an increase of 7.3% over the previous year. See Figure 4 for detail

Promising development prospect

The TPU sector in China is still at the stage of rapid development. The capacity for upstream raw materials is making rapid expansion. It is expected that the capacity for MDI in China will at least increase by 550 kt/a from 2014 to 2018. An abundant raw material supply to the TPU production can therefore be ensured. The development of adhesives and TPU films and the stable demand in shoe materials and vehicle materials will also bring opportunities to the development of the TPU sector. It is expected that the capacity for TPU in China will exceed 270 kt/a by 2018. The domestic demand will however reach over 300 kt at that time. The TPU sector will therefore still have a bright prospect.