PPE and MPPE Sector Urgently Needs Breakthrough in Consumption Pattern

By Yang Junzhong, China National Chemical Information Center

Modified polyphenylene ether (MPPE, also known as modified polyphenylene oxide, MPPO) is widely used in the sectors such as automobiles, electronic and electrical, household electric appliances, office electric appliances, precision machinery, liquid delivery equipment and textile equipment. New application fields that have been developed in recent years are building materials (such as being used in injection molded roof plates), thin-walled products, etc. Although PPE is still being listed among the five major engineering plastics, its production does not match with the demand in China.

Table 1   China’s foreign trade of PPE resin (tons)

Year    Import volume    Export volume
2010    15 800    ?-
2011    19 050    7 000
2012    15 770    6 300
2013    14 640    6 500
2014(E)    15 500    7 000
2018(E)    20 000    7 300


Stable production in China

China started research on the synthesis of 2,6-dimethylphenol and the preparation of PPE engineering plastic in local regions like Shanghai and Tianjin during 1960s-1970s. As the only domestic PPE enterprise, China National Bluestar (Group) Co., Ltd. put its 10 kt/a PPE unit using intermittent production process into operation in Ruicheng of Shanxi province in April 2006. Through constant technical transformation, the quality of PPE resin has been improved significantly, and the operating rate of the unit has been stabilized at around 80%. Around 2009, Bluestar signed a long-term contract with a company of Korea to export PPE resin, and the annual export volume was around 7 kt. It is expected that during 2014-2018, no new PPE resin capacity will be constructed, and the output will remain at around 8.7 kt.
As of the end of 2013, China’s total capacity to make MPPE was nearly 150 kt/a, and the output was around 75 kt. Major MPPE producers in China include GE Plastics (Shanghai) Co., Ltd., Guangzhou Kingfa Sci. & Tech Co., Ltd., Japan Super Engineering Plastic (Shenzhen) Co., Ltd., Asahi Kasei Plastics (Shanghai) Co., Ltd. and Huizhou Wote Advanced Materials Co., Ltd., etc.

Table 2  China’s supply and demand for PPE resin (kt, %)

Year    Output    Import
volume    Export
volume    Apparent
consumption     Supply
gap     Self-
sufficiency rate
2010    8.0    15.8    6.5    17.3    9.3    46.2
2011    8.0    19.1    7.0    20.1    12.1    39.8
2012    8.0    15.8    6.3    17.5    9.5    45.7
2013    8.5    14.6    6.5    16.6    8.1    51.2
2014(E)    8.7    15.5    7.0    17.2    8.5    50.6
2018(E)    8.7    20.0    7.3    21.4    12.7    40.7


Table 3   China’s projection to consumption mix of MPPE (kt, %)

Year    Electronic and
electrical    Automobile
industry    Office
equipment    Others    Total
2008    49    11    12    8    80
2009    51    10    10    6    77
2010    51    12    10    7    80
2011    52    12    11    6    81
2012    52    12    10    6    80
2013    55    16    9    7    87
2014(E)    56    17    10    6    89
2018(E)    60    23    13    10    106
Average annual growth during 2013-2018    1.8    7.5    7.6    7.4    4.0


Supply gap

China’s imports of PPE resin mainly come from SABIC and Asahi Kasei. Because PPE and its modified products have no separate HS code in China Customs, they are included in "other polyethers, in primary forms" (HS Code: 39072090) and account for around 4.8% of the total import volume under the category. It was roughly estimated that China’s import volumes of PPE resin in 2011, 2012 and 2013 was 19.1 kt, 15.8 kt and 14.6 kt, respectively. It was expected that, in 2014, China’s import volume of PPE resin would be no more than 16 kt.

Demand

During 2010-2012, China’s consumption of PPE resin fluctuated at 16 -21 kt. In 2013, China’s output of PPE was 8.5 kt, the net import volume reached 8.1 kt, and the apparent consumption was 16.6 kt, down 5.1% year-on-year.
It is expected that by 2018, China’s output of PPE will be not more than 10 kt, the apparent consumption will be around 21.4 kt, and the self-sufficiency rate will reach around 40.7%. China’s supply and demand of PPE resin in recent years are listed in Table 2.
PPE resin cannot be used alone as engineering plastic to be directly processed into the plastic products. It must be blended with products like PS (polystyrene) or HIPS (high impact polystyrene) and PA (polyamide) to form composite material MPPE. At present, the most common MPPE in China is the composite materials like PPE/HIPS, PPE/PA and PPE/PET (polyethylene terephthalate). The price of PPE resin has been higher than that of engineering plastics such as nylon, PBT (polybutylene terephthalate) and PET for a long time, and MPPE is gradually being replaced by other engineering plastics in its traditional application fields, so the apparent consumption has been hovering at around 80 kt.
In 2013, China's consumption mix of MPPE was around 63% for electronic and electrical, 18% for the automobile industry, around 10% for office equipment and around 8% for others like the building sector.
The direct application field of PPE resin is the production of MPPE. Due to the particularity of poly (2,6-dimethyl-1,4-phenylene oxide) consumption, the analysis and prediction of its consumption trend need to be based on MPPE. China’s projection to consumption mix of MPPE is listed in Table 3.

Table 4  China’s projected MPPE prices (RMB/t)

Variety    PX9406    SE1X
2011    34 500    36 000
2012    34 500    36 000
2013    34 500    35 000
2014(E)    35 000    35 000
2015(E)    35 000    36 000
2016(E)    34 500    36 000
2017(E)    34 500    36 000
2018(E)    34 500    36 000


Price will be stable

At present, domestic players pay attention to the price trend of typical MPPE special materials to analyze the dynamic market changes of this kind of engineering plastics.
In the domestic market, PX9406 is a common MPPE mainstream product that has a flame retardance rating of V0 and is used in electronic and electrical appliances. SE1X is a common injection molding MPPE special material with a flame retardance rating of V1. The price change of these two kinds of products in East China’s Yuyao market has been a sound basis to characterize the price trend of PPE in recent years.
Since 2008, the prices of the two PPE special materials have been generally stable. However, the impact of financial crisis in 2008 on the engineering plastic market also affected MPPE products. During July 2009-August 2010, PX9406 and SE1X were sold at low prices. The recent macroeconomic adjustment has also slowly affected the price of SE1X. Since June 2013, the price of SE1X has once again dropped to the level that is closer to the price of PX9406, and remained stable.
In the next 3 years, China’s MPPE prices will remain stable, and without taking into account inflation factors, the market price will fluctuate at RMB34 000-36 000/t. China’s projected MPPE prices are shown in table 4.

Conclusion

Although PPE is still being listed among the five major engineering plastics, its production does not match with the consumption in China.
The production and consumption of PPE are confined to the traditional application fields, and the expanded application of this engineering plastic lacks the promotion of macro policy. China’s price and demand for PPE will not fluctuate much in the future, and its main downstream product, MPPE will probably see a breakthrough in emerging fields like the building sector.