Butyl Rubber - Analysis of Production and Market

By Xia Bin, Jilin Design Institute of CNPC Northeast Refining & Chemical Engineering Co., Ltd.

Butyl rubber (or isobutylene-isoprene rubber (IIR)) is a synthetic rubber synthesized through the cationic polymerization reaction of isobutene and isoprene in the presence of the Friedel-Craft catalyst. It has the most excellent air tightness and water tightness, and excellent resistance to weather and chemical corrosion. Butyl rubber is an irreplaceable rubber variety for producing the sealing linings of inner tubes and tubeless tires. Halogenated IIR has been modified through halogenation, and includes chlorinated IIR (CIIR) and brominated IIR (BIIR). Halogenated IIR not only keeps the characteristics of butyl rubber, but also overcomes the disadvantages of conventional butyl rubber, and is mainly used in airtight plies of radial tires and drug bottle lids.

Table 1   Consumption mix of butyl rubber in major regions (kt)

Consumption sector    The United States    Western Europe    China     Total
Tires and rubber hoses    137    170    256    563
Medical supplies    10    9    29    48
Adhesives and sealants    8    8    7    23
Automobile mechanical products    5    4    4    13
Others    12    8    7    27
Total    172    199    303    674


Table 2   China’s major butyl rubber producers in 2013

Producer    Capacity (kt/a)    Main product
Zhejiang Cenway New Synthetic Materials Co., Ltd.    122 (total capacity of two units)    IIR
Sinopec Beijing Yanshan Petrochemical Co., Ltd.    75 (total capacity of two units)    IIR,     BIIR
Liaoning Panjin Heyun Industrial Group Co., Ltd. (started up in August 2013)    60    IIR
Formosa Plastics (Ningbo) Rubber Co., Ltd.    50    
Total    307    


Table 3   China’s Butyl Rubber Units Planned for Construction or Expansion  (kt/a)

Producer    Scale of the unit    Startup time (planned)    Remarks
Liaoning Panjin Heyun Industrial Group Co., Ltd.    60    2014    Halogenated IIR
Tianjin Lugang Petroleum Rubber Co., Ltd.??    60    2014    Butyl rubber
PetroChina Lanzhou Petrochemical Co., Ltd.    60    2014    Butyl rubber
Huizhou Branch?of CNOOC    50        Halogenated IIR
Total    230        


1. Global production and consumption of butyl rubber and halogenated IIR

According to statistics, in 2013, the global capacity to make butyl rubber was around 1.631 million t/a, and was mainly distributed in North America, Western Europe, China and Japan. The capacity was relatively concentrated in the hands of major producers, including ExxonMobil, LANXESS, Nizhnekamskneftekhim Inc. and Togliattikauchuk Llc. of Russia, and Butyl Rubber Company of Japan (a joint venture between JSR of Japan and ExxonMobil). In 2013, major butyl rubber consuming regions included China, Western Europe and the United States, accounting for around 27%, 18% and 15% of the total, respectively.
In 2013, regions with rapidly growing consumption included China, India, South and Central America, Eastern and Central Europe and Thailand. Britain, Russia and Western Europe were the main net exporters of butyl rubber, and China was the largest net importer, importing around 76% of the international trade volume. In North America and Western Europe, butyl rubber is a mature product, and it is expected that by 2018, the average annual growth of butyl rubber consumption in these regions will be only 1.4%-2.4%. The applications of butyl rubber in major regions are listed in Table 1.
Around 84% of the world’s butyl rubber goes into tires and rubber hoses. The remaining 16% is consumed in making adhesives, sealants, medical supplies, automobile mechanical products and other sectors. Therefore, trends in the tire sector greatly influence the butyl rubber market. The annual growth of the butyl rubber sector worldwide during 2014-2018 is expected to average 4.2%.
Today’s production capacity cannot meet the demand that is forecast for 2018. New capacity will is expected to be concentrated mainly in Singapore, China, India and Saudi Arabia, and the anticipated new capacity will meet the future demand for butyl rubber to a certain extent.

2. China’s production and consumption of butyl rubber and halogenated IIR  

2.1 Status and forecast of production
In 2013, China’s capacity to make butyl rubber reached around 307 kt/a. There were three new units – a 72 kt/a brominated IIR unit constructed by Zhejiang Cenway New Synthetic Materials Co., Ltd. using its own technology, a 50 kt/a butyl rubber unit of Formosa Plastics (Ningbo) Rubber Co., Ltd. and a 60 kt/a butyl rubber unit of Liaoning Panjin Heyun Industrial Group Co., Ltd. China’s butyl rubber producers in 2013 are shown in Table 2.
Domestic butyl rubber capacity grew considerably in the last two years, but the new units are still in the debugging stage. China’s output of 110 kt of butyl rubber in 2013 could not meet domestic demand, so China needed to import a large amount.
Based on the good expectations for the future development of China-made butyl rubber, many domestic enterprises plan to construct or expand butyl rubber units. Units now being planned for construction or expansion during the next few years are listed in Table 3.
If all the planned capacity is put into production on schedule, by 2015, China’s total capacity will reach around 540 kt/a, which is likely an excess, and this risk should attract great attention from players.
2.2 Analysis and projection of supply and demand
In recent years, due to the vigorous development of the automotive and tire sectors, especially radial tires, the domestic demand for butyl rubber has grown continually. China’s supply and demand for butyl rubber during 2011-2013 are shown in table 4. China’s consumers of butyl rubber and halogenated IIR products depend heavily on imports – butyl rubber self-sufficiency has not risen above 33% in the last three years. So the domestic production of butyl rubber has good market development prospects.
In 2013, around 84% of China's butyl rubber consumption was for making tires and around 9% was for making medical supplies.
In recent years, China’s automobile industry has developed rapidly, and has gradually developed toward large scale, high output and specialization. Tires have also shifted to radial, flat road contact and tubeless varieties, in line with the international trends. At the same time, the rapid development of expressways has promoted the development of high performance tires made of butyl rubber and halogenated IIR. The consumption of butyl rubber in the tire sector was around 285 kt in 2013. It is expected that the average annual consumption growth of butyl rubber in the tire sector will be around 6.5% during 2014-2018.
As in the rest of the world, the domestic medical supplies sector is China’s second biggest market for both butyl rubber and halogenated IIR. With the rapid development of health care in China, the demand for medical supplies will increase, promoting the growth of demand for butyl rubber and halogenated IIR. Around 32 kt of butyl rubber was consumed here in making medical supplies in 2013. It is expected that the average annual growth of butyl rubber consumption in making medical supplies will be around 5.8% during 2014-2018.
In addition, with the stable development of the sectors, the demand for butyl rubber as well as halogenated IIR in rubber belts, rubber hoses, adhesives and waterproofing coil materials will also increase. In 2013, around 23 kt was consumed in these sectors. It is expected that the average annual growth of butyl rubber consumption in these sectors will be around 5% during 2014-2018.
China’s combined demand for butyl rubber and halogenated IIR will reach 461 kt by 2018, and auto makers will still be the main consumers.


Table 4   China’s Supply and Demand for Butyl Rubber during 2011-2013 (kt)

Year    Output    Import volume    Export volume    Apparent consumption
2011    84    235    18.3    300.7
2012    95    231    22.5    303.5
2013    110    255    25    340.0


3. Suggestion

(1) Several butyl rubber and halogenated IIR units will be completed in China and put into operation in the next few years, so China’s capacity to produce butyl rubber is likely to be in surplus soon. In order to improve the competitiveness of butyl rubber products, enterprises should continually improve the quality of existing butyl rubber products and reduce the consumption of energy and materials in production.
(2) At present, as China’s butyl rubber products are undifferentiated, enterprises should actively seek out key users, strengthen cooperation with users in production, sales and research, and produce product varieties that suit actual market demand in order to improve the market competitiveness of enterprises.
(3) Internationally, butyl rubber production is relatively concentrated, and some of China’s neighboring countries have no butyl rubber units. Therefore, domestic enterprises should develop the needed product varieties and actively expand export, especially to Southeast Asia and regions like South Korea.
(4) Competition in China’s butyl rubber sector has already been aggravated in the past two years by capacity expansion. Therefore, enterprises that plan to start making butyl rubber or halogenated IIR sector should closely track the development and changes of the market and the technology, not blindly follow the investment trend of the past, and make decisions on the basis of exhaustive research and rational argument.