Downstream Sectors Drive Demand for Fluororubbers

By Luo Yamin and Shi Lijie, China National Chemical Information Center

Global production and consumption increases steadily

Fluororubber (FKM by ASTM and FPM by ISO) is a synthetic rubber that contains atomic fluorine in its molecular structure. All fluororubbers contain vinylidene fluoride (VDF) as a monomer. Type 1 fluororubbers are composed of VDF and hexafluoropropylene (HFP). Type 2 fluororubbers are composed of VDF, HFP, and tetrafluoroethylene (TFE). Type 3 fluororubbers are composed of VDF, TFE, and perfluoromethylvinylether (PMVE). Type 4 fluororubbers are composed of propylene, TFE, and VDF. Type 5 fluororubbers are composed of VDF, HFP, TFE, PMVE, and ethylene. In addition, there are other varieties of fluororubber with relatively small production scale such as phosphonitrilic fluororubber and fluorosilicone rubber.
Major foreign fluororubber producers include DuPont, Dyneon, Solvay Solexis, Daikin, Asahi Glass and HaloPolymer. Major fluorosilicone rubber producers include Dow Corning, Shin-Etsu and Momentive. Over 50 major varieties of fluororubber are currently produced. Fluororubbers are mainly used for the production of sealing materials with thermostability, oil-proofness and resistance to chemical attack. In recent years, the global output of fluororubber has increased 6-7% each year.

Domestic producers have large development space

China started to develop fluororubber in 1958, and the industrial-scale production of FKM-23 and FKM-26 started in 1967. After decades of efforts, China can also produce FKM-246, nitroso fluororubber, tetrafluoroethylene-propylene copolymer, perfluoroelastomer, etc. The development of all these products are primarily aimed at applications in aerospace and aeronautics, and with the gradual maturing of the technologies they are later generalized to civilian industrial sectors. China succeeded in the development of phosphonitrilic fluororubber in 1980. However, due to the high price and limited output, it is used only in aerospace and military industries.
The fast growing automobile industry has significantly promoted the development of fluororubbers. The average annual growth rates of capacity and output of fluororubbers from 2005 to 2009 in China were both over 33%.
At the end of 2012, a 4 kt/a fluororubber unit in Zhonghao Chenguang Research Institute of Chemical Industry started operation, and thus the total capacity for fluororubbers in China reached 19.5 kt/a. As shown in Table 1, there are seven fluororubber producers in China. Major products of these enterprises are low-end varieties, and most high-end fluororubber products consumed in China must be imported.

Downstream sectors flourish

In 2001, the domestic consumption of fluororubbers was only about 1.5 kt; the figure increased to around 6 kt in 2005. With the boom of China’s automobile industry, the fluororubber industry entered a period of fast development, although the development slowed down a little bit after 2009. In 2013, the demand for fluororubbers in China was about 10 kt, of which 65-75% was from the automobile industry, about 15-20% from the petroleum and chemical industry, and the remaining 15-20% from aerospace and other industries. See Figure 1 for details.
The automobile industry is the largest consumption field of fluororubbers, which are mainly used to produce sealing parts to prevent the leak of liquids or other materials. Fluororubber products used in vehicles include O-rings, rotating shaft oil seals, sealing strips, dust covers, flat gaskets, engine diaphragms and cylinder liners, valves for oil filters, filler gaps, etc. With the popularization of lead-free gasoline and electronic injection, fluororubber has gradually replaced nitrile rubber to make the inner layer of fuel hoses.
China is both a large manufacturer and consumer of automobiles. China’s automobile industry has developed rapidly in recent years, and it will keep growing for the foreseeable future. The output of automobiles in 2013 in China was 22.12 million vehicles, up 14.7% year-on-year. Meanwhile, both the proportion of passenger vehicles and that of high-end vehicles are increasing, providing an increasing demand for high-end fluororubber products.
In the petroleum and chemical industry, sealing parts made from fluororubber are widely used in drilling equipment, oil pipelines, refinery equipment and natural gas desulfurization apparatus, as well as in various types of chemical equipment, like connectors, valves, diaphragm pumps, fuel hoses, rubber rollers, flange gaskets, plugging plates, protective coatings, etc.
The aerospace industry has extremely strict requirements on safety and reliability of materials under harsh conditions. Due to its long-term reliable service life, temperature resistance, wear resistance and sealing properties under high vacuum (10-9mmHg), fluororubber products are widely used in the aerospace industry.  
As the proportion of coal with high sulfur content being used in thermal power plants has increased in recent years, the consumption of fluororubbers in waste gas desulphurization apparatuses has been promoted, as fluororubbers can tolerate the hot conditions. Fluororubbers can also be used to produce hoses for hydraulic and pneumatic apparatuses.  
In light industry, machinery manufacture and the electrical appliance industry, fluororubbers are used mainly to produce sealing doors, sleeve connectors, shaft seals, O-rings and gaskets, as well as to make sponge products through continuous extrusion. Fluororubbers can also be used in other industries including the manufacture of building materials.

High prices maintained

Before 2008, fluororubber prices stayed above RMB100 000/t, and they fluctuated with the price of HCFC-22, one of the major raw materials of fluororubbers. In 2009, the demand for fluororubbers, both at home and aboard, decreased due to the economic crisis, and the prices decreased overall. For example, the price of FKM-2602 decreased to below RMB80 000/t at the end of 2009. In 2010, the Ministry of Industry and Information Technology and the Ministry of Land and Resources issued the Criteria for Entering the Fluorite Industry and rationed allowable exploitation quantity to all fluorite mining enterprises, leading to a short supply of fluorite in the domestic market and a doubling of the prices of fluororubbers. Then some enterprises switched to using imported hydrofluoric acid to produce HCFC-22, and the prices of HCFC-22 and fluororubber decreased. In 2012, the prices of fluororubbers continued to decrease. The price of FKM-2602 fell below RMB100 000/t at the end of 2012, and it hovered at RMB80 000 to 90 000/t in 2013. See Figure 2 for details.
The prices of fluororubbers can be affected by the following factors:
(1) Supply/demand conditions. Fluororubbers are made in many varieties and their prices differ significantly. Most producers in China can only produce low-end products such as FKM-26 and FKM-246, and the supply of these products in China is sufficient. The capacity expansion in 2012 and 2013 has even hurt the industry’s profits. Moreover, most domestic products can be processed only through compression molding, while imported products can also be processed through injection molding to manufacture products with complicated structures. Consumers of most high-end varieties of fluororubbers in China rely on imports.
(2) Increasing demand. In the past several years, China’s automobile industry maintained fast development, providing a huge demand for fluororubber products. Therefore, prices of fluororubber products will remain high, as the automobile market will continue to boom for the foreseeable future.
(3) Raw materials and other costs. The surging prices of raw materials can push up the prices of fluororubber products, although the effect is not as obvious as that on other chemical materials. Moreover, the ever-increasing labor and transportation costs are also factors pushing up prices.

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

Company    Location    Capacity    Remarks
Zhonghao Chenguang Research Institute of Chemical Industry    Southwest China    7    A 4 kt/a unit started operation in December of 2012
Daikin Fluorochemicals (China) Co., Ltd.    East China    3    A 2.3 kt/a of unit started operation in the middle of 2013
Jiangsu Meilan Chemical Group Co., Ltd.    East China    2.5    
Dongyue Shenzhou New Materials Co., Ltd.    East China    2    
Inner Mongolia Alltop Fluorine Chemical New Material Development Co., Ltd.    North China    2    A 1.5 kt/a of capacity started operation in September 2013
Shanghai 3F New Material Co., Ltd.    East China    1.5    
Zhejiang Fluorine Chemical New Material Co., Ltd.    East China    1    
Others    -    0.5    
Total    -    19.5    Overall operating rate: 8.7%


(4) Technology. In general, the technical threshold of the production of fluororubbers is high, and requirements on the quality of equipment as well as strict operation during the production are needed. Enterprises with mature technology, advanced equipment and sound production management will yield products with higher performance and prices.
In the long run, the prices of fluororubbers will continue to run high, mainly for the following reasons. First, the global demand for fluororubbers will gradually rise, and the volume of fluororubbers exported from China will also increase gradually. Second, the production costs of fluororubbers, especially the costs of raw materials are rising. On the premise of robust demand, fluororubber producers can raise prices to ensure a profit. Third, more and more domestic producers have begun to focus on R&D for high-end fluororubber products, which have higher prices.