Development of China’s Polyurethane Industry

By Huang Maosong,  China Polyurethane Industry Association

The rapid growth of the polyurethane (PU) industry in China started in the 1980s, and rapid development was sustained in the past 20 years or so. The scale of production increased from a hundred thousand tons a year to nearly ten million tons a year. Output reached 8.70 million tons in 2013, accounting for 40% of the world total and an increase of 11.15% over the previous year. Output was expected to reach 9.60 million tons in 2014. Figure 1 shows the distribution of PU output in China in 2013.
The total consumption of PU in China was close to 10 million tons in 2013. Major consumption sectors include shoe materials, furniture, electric appliances and construction. Among PU-containing products, China’s output of refrigerated containers accounts for 95% of the world total and the output proportion is 60% for shoes and 70% for toys. Figure 2 shows the consumption of PU in China.

Raw materials

MDI is the key raw material for PU. China’s MDI capacity in 2013 was 1.99 million t/a, and output was 1.60 million tons, so the operating rate was around 80%. It is expected that demand for MDI will increase from 1.70 million tons in 2013 to 3.55 million tons (including 2.324 million tons of polymerized MDI and 1.026 million tons of pure MDI) in 2020, accounting for 40% of the world total.
An 800 kt/a MDI unit of Wanhua Chemical Group Co., Ltd. has already started production. The capacity of a 240 kt MDI unit of Shanghai Lianheng Isocyanate Co., Ltd. will be expanded to 480 kt/a and production of the expanded unit is planned to start in 2016. The capacity of a 350 kt/a MDI unit of Bayer MaterialScience (Shanghai) Co., Ltd. will be expanded to 500 kt/a. A 400 kt/a MDI unit of BASF Polyurethane Chongqing Co., Ltd. will start production in the first half of 2015. In addition, Hebei, Liaoning, Gansu, Fujian, Tianjin and Inner Mongolia all have MDI projects in preparation or being promoted.
In 2013, China’s TDI capacity was 890 kt/a, and output was 700 kt, so the operating rate was around 78%. Major units include a 250 kt/a unit of Shanghai-based unit of Bayer, a 160 kt/a Shanghai-based unit of BASF, a 150 kt/a unit of Cangzhou Dahua Group Co., Ltd., a 100 kt/a in Gansu Yinguang Juyin Chemical Industry Co., Ltd., a 80 kt/an unit of Yantai Juli Isocyanate Co., Ltd., a 50 kt/a unit of Liaoning North Jinhua Polyurethane Co., Ltd. and a 100 kt/a unit of Fujian Southeast Electrochemical Co., Ltd. The total consumption of TDI in 2013 was 701 kt. Figure 3 shows TDI consumption. It was expected that the capacity of TDI would increase to 1.26 million t/a in 2014 and surplus capacity would reach 50%.
PPG (polyether polyol glycol) is one of the key PU raw materials with the biggest consumption. In 2013, China’s PPG capacity was 3.93 million t/a,  and output was 2.44 million tons, so the operating rate was around 62%. There are more than 40 producers. Forty one percent was consumed for making rigid foam polyether and 46% for flexible foam polyether in 2013. The consumption in major flexible foam polyether sectors including flexible furniture was 411 kt. Other flexible foam polyether-consuming sectors include automobiles, motorcycles, shoes, clothes, sports appliances, cases/bags and toys. Figure 4 shows the consumption of rigid foam polyether. It is expected that the capacity of PPG will reach 8.468 million t/a in 2018, but consumption will be only 4.50 million tons. China’s PPG capacity is already in serious surplus.

Development trend

With the restructuring of the national economy, the development of the PU sector will shift from rapid growth to medium/high growth, averaging around 12% annually during 2011-2015 and around 9% during 2016-2020. PU capacity will reach 11 million t/a in 2016, 50% of the world total.  The domestic PU sector will be upgraded overall in the future.

Development advantages

The first advantage is the development of coal-based PU. Raw materials for PU around the world generally come from oil. China has rich coal resources and lean oil resources. Fully employing the advantage of rich coal resources and opening up a path for the development of coal-based PU that conforms to national conditions is a topic of great concern to the coal chemical sector and the PU sector. Connell Chemical Industry Co., Ltd. is planning to use cheap coal in eastern Inner Mongolia to actively develop PU raw materials and products that incorporate PU.
The second advantage is a more rational regional distribution of the PU sector. Eight major PU industry regions have been formed in China.
The Yangtze River Delta region, with Shanghai as its center, is one of the most advanced regions for the PU industry in China. PU industrial parks in Caojing, Jinshan and Fengxian of Shanghai will gradually become first-rate PU production and export trade bases.
The Bohai Rim region, with Yantai and Tianjin as centers, will become a very important PU R&D and production base in China, on the strengths of well-known PU producers such as Wanhua Chemical Group Co., Ltd., Cangzhou Dahua Group Co., Ltd. and Tianjin Petrochemical Co., Ltd. and the scientific and technical advantages of Beijing and Tianjin.
The Pearl River Delta region, with Guangzhou as the center, including Guangzhou, Shenzhen, Zhuhai, Foshan, Jiangmen, Dongguan, Zhongshan and Huizhou, has formed a group of well-known PU producers and is an important PU production and foreign trade base.
The northeast China region, with Huludao as the center, covering Heilongjiang, Jilin, Liaoning and eastern Inner Mongolia, will soon become an important PU production and export trade base.
The northwest China region, with Lanzhou as the center, will become one of the important PU and coal-based PU production bases in China on the strengths of MDI/TDI raw materials from Gansu Yinguang Juyin Chemical Industry Co., Ltd. and coal-based PU raw materials in Ningxia, Gansu and Xinjiang.
The Taiwan Straits’ west side region, with Quanzhou of Fujian as its center, including all of Fujian, Shantou and Meizhou of Guangdong and Shangrao of Jiangxi, has already constructed production bases for PU downstream products such as shoe materials, adhesives and TPU, and is an important PU production and foreign trade base in cross-straits cooperation.
The southwest China region, with Chongqing as its center, will become a PU production and foreign trade base with rapid development on the strengths of the 400 kt/a MDI unit of BASF, the rich natural gas resources of southwest China and important European connections.
The north China region, with Taiyuan as its center, is an important PU raw materials, R&D and production base and will become one of the important PU and coal-based PU production bases on the strengths of rich coal and carbon resources in Shanxi and the west of Inner Mongolia.
The third advantage is emerging domestic demand. The textile sector and the construction sector are the biggest potential demand markets in China. The demand for PU rigid foam thermal insulating materials in China will reach over 1.00 million tons. The market potential of PU in the transportation sector is also huge. The demand for PU in the automobile sector is around 300 kt a year, with products including PU flexible foams, rigid foams, semi-rigid foams, elastomers (TPU, CPU and micro porous elastomers), adhesives, sealing agents and composites. PU track damping blocks, polyurea waterproofing coatings, adhesives, foam plastics and composites have already gained extensive applications in high-speed rail. PU track sleepers will be the development focus for high-speed rail sleepers. The application of PU coatings, adhesives and TPU films in wind energy and solar energy. Marine applications of PU elastomers, thermal insulating materials and high-performance heavy-duty anticorrosive coatings will also bring wider market space for PU.

Challenges

The PU sector in China still has capacity surplus and a serious lack of diversity in some products, there is a considerable lag in product quality and technical level compared with advanced countries, and the scale of producers is quite small. Efforts have to be made to adjust structure, transform mode and promote development so as to upgrade efficiency, shift orientation from quantity to quality, abandon low-end products in favor of high-end products, stop imitating and start innovating, and increase the scale of production.

New technologies, new materials and new applications

The process technology for the production of propylene oxide through propylene direct oxidation (HPPO technology) is the development focus for propylene oxide production. This technology is mainly controlled by Dow of the United States, and BASF and Evonik of Germany. China Jilin Shenhua Group Co., Ltd. has invested RMB2.5 billion to introduce Evonik technology and construct a 300 kt/a HPPO unit. The unit has already started production. Sinopec Hunan Changling Refining & Chemical Co., Ltd. used the technology developed by Sinopec Research Institute, Changling Refining & Chemical Co., Ltd. and Shanghai Engineering Co., Ltd. and invested RMB1.28 billion to construct a 100kt/a HPPO unit. This unit has also started production. A 100 kt/a HPPO unit is under construction at China University of Petroleum Shenghua Chemical Co., Ltd.  
A reaction control phase transfer catalyst system developed by CAS Dalian Institute of Chemical Physics is at the stage of 10 kt/a commercial demonstrative design.
PU thermal insulating material with low thermal conductivity is a long-time goal. The thermal conductivity of PU thermal insulating materials both at home and abroad is usually 0.022-0.028. Beijing Infoark Science and Technology Development Co., Ltd. has developed a series of PU aerogel products and achieved commercialization.  
Owing to its excellent performance, the applications of TPU have become more extensive. As a result of technical advances in TPU films, foams, composites, flame-retarding materials and chips, TPU is more widely used in automobiles, high-speed rail, new energies, electric wires/cables, textiles, tires and medicines. Shanghai Hiend Polyurethane Co., Ltd. has developed TPU film with high air permeability and great strength, and the product has gained extensive applications in the medical care and textile sectors.
CO2-based PU has various applications. Jiangsu Zhongke Jinlong Chemical Co., Ltd. and Huizhou Dayawan Daji Fine Chemical Co., Ltd. have developed CO2-based polyethylene or polypropylene carbonate polyol series products to be used in PU leather, coatings, adhesives, elastomers, shoe sole materials, rigid foams and water-based PU.
Compared with TDI and IPDI, DDI has outstanding advantages such as low reactivity, water insensitivity, low stream pressure and no toxicity. DDI is an excellent isocyanate for the production of water-based PU, PU elastomers, coatings, inks and adhesives and also for use in national defense. Liming Research Institute of Chemical Industry has made breakthroughs in key synthesis technology and achieved commercialization.