PC Shortage to Remain Big in China

By Gao Liping, China National Chemical Information Center


Worldwide capacity surplus

The capacity for making PC around the world was close to 5 million t/a in 2013, the output was less than 4 million tons and the operating rate was 78%. In short, global PC capacity is in surplus. Asia is the biggest PC production region – capacity in the region accounted for around 50% of the world total in 2013. Western Europe and North America followed behind.
The development of the PC industry in the world displays following features today. The first is more concentrated production. Major producers include Bayer, SABIC, Styron, Teijin and Mitsubishi. The second is rapid development in Asia. The demand in countries and regions such as China and India increases constantly. Many well-known PC producers of the world have constructed PC plants in Asia. Asia has become the center for the development of global PC production. The third is a trend toward environmental protection. New products such as PC alloys keep emerging.
The global PC market was quite weak in 2013. Consumption was more than 3.50 million tons, an increase of around 1.5% over the previous year. Major consuming countries and regions include China, the United States, Western Europe and Japan, and the consumption in these four regions accounts for nearly 70% of the world total. Major consumption sectors include electronics/electrics, construction sheets, communication devices, compact disks, daily-use articles and packages.
The construction market and the automobile market in North America and Western Europe are recovering in 2014. The growth of PC demand in these regions is therefore stimulated. Vigorous recovery in major PC terminal markets in North America will drive huge growth in PC demand. The automobile market constitutes 26% of the total PC demand in North America. Automobile sales in North America are on the increase. The prospect of the construction market in North America, which holds 34% of the total PC demand there, is also promising. The sale of houses in the United States is increasing constantly, and the growth of demand for electronics/electrics and household electric appliances will be promoted. The gradual recovery of the economy in Western Europe will boost the growth of demand in most sectors downstream of PC in 2014. The demand for PC in most markets is also recovering and will increase gradually in the future. It is expected that with the rehabilitation of the PC market in developed countries, the demand for PC in the world will increase steadily in next 5 years.

Immanent drastic capacity growth in China

The R&D of PC in China started in 1958, and commercial production was achieved in 1965. Shanghai Tianyuan Group Shenju Chemical Plant, Jiangsu Changlong Chemical Co., Ltd. and Chongqing Changfeng Chemical Plant were once engaged in the production of PC, and the products were mostly used by the producers themselves. Due to small scale, outdated technology, poor product quality, high production cost and low product competitiveness, however, the PC units of these enterprises have been shut down.
An upsurge of investment in PC production was triggered in China after 2005. Teijin and Bayer constructed PC plants. Teijin Chemical Industries Ltd. established the wholly-owned Teijin Polycarbonate Co., Ltd. in Jiaxing of Zhejiang and put a 50 kt/a PC unit on stream in 2005. Constant expansions were made afterward, and the company’s total PC capacity reached 147 kt/a in 2013. Bayer MaterialScience (China) Co., Ltd. completed a 100 kt/a PC plant and put it on stream in November 2006. The company’s second 100 kt/a PC unit started production in December 2008.
Two PC projects funded by Mitsubishi Chemical Industries Ltd. in China both started production in 2012. Sinopec and Mitsubishi Chemical Industries Ltd. jointly constructed a 60 kt/a PC project first. An 80 kt/a unit was constructed by Lingyou Engineering Plastics (Shanghai) Co., Ltd., a wholly-owned company established by Mitsubishi Chemical Industry Ltd. in Shanghai.
By 2013 the capacity for making PC in China was 487 kt/a, and the output was more than 200 kt. Due to factors such as market, technology and production units, the operating rate of PC in China has floated at around 50% for many years. PC producers in China are all foreign-funded or joint venture enterprises. See Table 1 for details. As of June 2014 there were mainly eight PC projects newly constructed or planned for construction in China (see Table 2). Figure 1 shows the production of PC in China during 2004-2013 and the projection for the next 5 years.


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

Producer    Capacity
Sinopec Mitsubishi Chemical Polycarbonate (Beijing) Co., Ltd.     ?60
Bayer MaterialScience (China) Co., Ltd.     200
Teijin Polycarbonate Co., Ltd.     147
Lingyou Engineering Plastics (Shanghai) Co., Ltd.     80
Total    487

Table 2  PC projects newly constructed or planned in China (kt/a)

Enterprise    New
capacity    Expected time for starting production
Ningbo Zhenyang Chemical Co., Ltd.     100    March 2014
Luxi Chemical Group Co., Ltd.     65    2016
Sinopec SABIC Tianjin Petrochemical Co., Ltd.     260    2017
Bayer MaterialScience (China) Co., Ltd.     200    2017
Yangquan Coal Industry Group Qingdao Hengyuan Chemical Co., Ltd.     100    2016-2017
Lihuayi Group Weiyuan Chemical Co., Ltd.     60    2016-2017
Globe Joint Chemical Co., Ltd.     130??     
Yantai Wanhua Polyurethane Co., Ltd.     100    

Growing demand in China

The volume of PC imported to China has been high in recent years and is increasing year-on-year. The import volume was 415 kt in 2002, went up to 1.021 million tons in 2007 and reached 1.375 million tons in 2012. With the slowdown of consumption growth, the import volume was 1.379 million tons in 2013, only 4 kt higher than in the previous year. Figure 2 shows the import and export of PC in China during 2004-2013 and the projection to 2018.
Affected by the slackness of the world economy, the demand for PC in major consuming regions such as Western Europe, North America and Japan slowed down during 2008-2013. The consumption of PC in China, however, still increased rapidly, with average annual growth of 9.9%. The consumption of PC in China was around 1.60 million tons in 2013. The average annual growth of PC capacity in China was 8.8%, and the average annual growth of PC output was 11.2% during 2008-2013. As output has grown faster than apparent consumption, the self-sufficiency rate has increased.
In China today, PC is mainly used in electronics/electrics, construction sheets, automobiles, packages and compact disks. Since the end of the 1990s, sectors demanding PC have shifted from bobbins in the textile industry to electronics/electrics, compact disks, construction sheets and automobiles, and demand growth has been drastic. Pushed by increasing demand in electronics/electrics, construction sheets, compact disks and non-disposable drinking water barrels and food containers, the PC market in China developed rapidly during 2000-2008. PC consumption diversified, and the consumption structure changed considerably during 2008-2013. The consumption proportion in making compact disks fell, whereas the consumption proportion in electronics/electrics, sunlight sheets, automobiles and packages increased. Owing to diversified development, PC started to be used in new application sectors such as medical apparatuses, eyeglasses, other optical lenses and PC films.

Conclusion

China’s dependence on imported PC was still as high as 80% in 2013. With the release of new PC capacity, the domestic supply will increase rapidly in the next five years. Along with the constant development of the economy in China, automobiles, electronics/electrics, construction sheets and non-disposable drinking water barrels will promote stable growth of demand for PC. It is expected that the shortage of PC in China will remain large in 2018, but the import dependence will be reduced somewhat.     ?