CPL Industry Must Adjust Structure
Year:2015 ISSUE:14
COLUMN:ORGANICS
Click:250    DateTime:Aug.20,2015
CPL Industry Must Adjust Structure

By Song Chao, Technology Center of Sinopec Baling Petrochemical Co., Ltd.

Rapid growth of capacity

As of the end of 2014, China had 12 caprolactam (CPL) producers with a total capacity of 2 350 kt/a (excluding the units being built by Fujian Shenyuan New Material Co., Ltd., Fujian Jinjiang Technology Co., Ltd., Risun Chemical Co., Ltd. and Henan Pingmei Shenma Group, etc.). China’s CPL producers during 2011-2014 are listed in table 1. In recent years, the number of CPL enterprises and their capacity have both grown rapidly. In 2011, China had only four CPL producers with a combined capacity of 585 kt/a, but by 2014, there were 12 producers, with 3.2 times that much capacity.
In recent years, annual growth rates of capacity and output have both exceeded 20%, the import volume has been reduced significantly, and CPL self-sufficiency has increased constantly. However, while capacity expanded rapidly, operating rates decreased significantly. The overall operating rate was less than 60% in 2012, only 65.82% in 2013, and still lower in 2014.

Table 1    China’s CPL producers, 2011-2014   (kt/a)

Producer    Capacity
in 2011     Capacity
in 2012     Capacity
in 2013     Capacity
in 2014     Remarks
Sinopec Baling Petrochemical Co., Ltd.    200    300    300    300    Using cyclohexanone ammoximation
technology
DSM Nanjing?Chemical Co., Ltd.    200    200    400    400    Using cyclohexane process technology
Sinopec Shijiazhuang Refining & Chemical Co., Ltd.    160    160    160    200    Using toluene method + cyclohexanone ammoximation technology
Zhejiang Juhua Co., Ltd.    25    50    50    150    Using cyclohexane process technology
Baling Hengyi Group Co., Ltd.    --    200    200    200    Using cyclohexanone ammoximation
technology
Shandong Hongye Group    --    100    100    200    Using cyclohexanone ammoximation
technology from ENI of Italy
Shandong Haili Chemical Industry Co., Ltd.    --    200    400    400    Using cyclohexene process technology
Hubei?Sanning?Chemical Co., Ltd.    --    --    100    100    Using cyclohexane process technology
Luxi Chemical Co., Ltd.    --    --    100    100    Using cyclohexene process technology
Fujian Tianchen Yaolong New Material Co., Ltd.    --    --    --    200    Using cyclohexane process technology
Inner Mongolia Qinghua Group    --    --    --    100    Being completed but not put into operation
Shanxi Lanhua Sci-tech Venture Co., Ltd.    --    --    --    100    Being completed but not put into operation
Total    585    1 210    1 810    2 350    

Table 2     China’s CPL producers and industrial chain

Producer    Location    CPL    Adipic acid     Chip/
spinning    Others    Remarks
Sinopec Baling Petrochemical Co., Ltd.
    Yueyang, Hunan province    √    √    √    Synthetic rubber, epoxy resin, gasoline, diesel and chemical fertilizers    Sinopec, oil refining and chemicals
DSM Nanjing Chemical Co., Ltd.    Nanjing, Jiangsu province    √        √        Jointly owned by DSM, Sinopec Nanjing and Jiangsu Guoxin Group
Sinopec Shijiazhuang Refining & Chemical Co., Ltd.    Shijiazhuang, Hebei province    √    √    √    Gasoline, diesel, aviation kerosene, LPG, polypropylene and benzaldehyde    Sinopec, oil refining and chemicals
Zhejiang Juhua Co., Ltd.    Quzhou, Zhejiang province    √            Polytetrafluoroethene, refrigerant R134a, hexafluoropropylene and ion-exchange?membrane caustic soda     Fluorine chemicals, chlor-alkali chemicals, petrochemicals and fine chemicals
Baling Hengyi Group Co., Ltd.    Hangzhou, Zhejiang province    √    √    √    PTA, PET and polyester fiber    JV between Sinopec Baling Petrochemical and ?Zhejiang Hengyi?Group, chemical fibers and chemicals
Shandong Hongye Group    Heze, Shandong province    √    √    √    Coal coking and polyurethane     Coal chemicals and petrochemicals
Shandong Haili Chemical Industry Co., Ltd.    Zibo, Shandong province and Dafeng, Jiangsu province    √    √    √    Epichlorohydrin    Petrochemicals
Luxi Chemical Co., Ltd.    Liaocheng, Shandong province    √            Chlor-alkali, sulfuric acid  and urea    Chemical fertilizers and chemicals
Hubei?Sanning?Chemical Co., Ltd.    Zhijiang, Hubei province    √            Ammonia, nitrogen fertilizer, phosphate fertilizer and compound fertilizer, sulfuric acid, phosphoric acid, nitric acid and hydrochloric acid    Coal chemicals, phosphorus chemicals, petrochemicals and fine chemicals; Shanxi Jincheng Anthracite Coal Mine has a majority interest in the company
Fujian Tianchen Yaolong New Material Co., Ltd.    Fuqing, Fujian province    √            Soda ash, ammonium chloride and nitric acid    JV between China Tianchen Engineering Corporation and Fuzhou Yaolong Chemical Group
Inner Mongolia Qinghua Group    Alashan, Inner Mongolia    √            Coal tar, crude benzol, sulfur ammonia, sulfur sulfonate and methanol    Ore dressings, coke, coal chemicals, iron and steel, and building materials
Shanxi Lanhua Sci-tech Venture Co., Ltd.    Zezhou, Shanxi province                Anthracite coal, urea, synthetic ammonia, methanol and dimethyl ether    Coal chemicals and chemical fertilizers





The industry needs
structural adjustments

Over time, the ownership of CPL enterprises has developed from the state-owned enterprises to various forms of enterprises like private firms and joint ventures. Coal chemical enterprises, chemical fertilizer enterprises and chemical fiber enterprises have entered the CPL sector. For example, Shanxi Lanhua Sci-tech Venture Co., Ltd., Hubei Sanning Chemical Co., Ltd. and Inner Mongolia Qinghua Group are coal chemical enterprises, Zhejiang Juhua Co., Ltd., Shandong Haili Chemical Industry Co., Ltd. and Luxi Chemical Co., Ltd. are chlor-alkali chemical enterprises, while Baling Hengyi Group Co., Ltd. is a chemical fiber enterprise. China’s CPL producers and industrial chain are shown in table 2.
New entrants into the CPL business are inevitably burdened by the sector’s problems of imperfect industrial chains and redundant capacity. The explosive growth of capacity has sharply constrained profitability, market competition has become fiercer, and adjustments to the industry’s structure are now imperative.

Table 3    China’s supply and demand for CPL & PA6, 2010-2014
Year    CPL capacity
(kt/a)    CPL output
(kt)    Consumption of PA6
chips (kt)    Import of PA6
chips (kt)    Import of PA6
fibers (kt)    Demand for
CPL (kt)
2010    575    493.9    1 680.4    580.4    124.2    1 804.6
2011    585    536    1 781.2    544.6    118.0    1 899.2
2012    1 210    715    1 888.1    598.2    112.1    2 000.2
2013    1 810    1 191    2 001.4    630.2    106.5    2 107.9
2014    2 350    1 540    2 290    540    150    2 440



Consumption

Most of the CPL used in China goes into producing PA6 fibers and PA6 engineering plastics. Making PA6 fibers takes around 80% of the total. Major non-fiber applications of PA6 include general civil plastics, engineering plastics (mainly for cast-molding components used in automobiles and electric appliances) and bi-oriented nylon films, and the demand for CPL in PA6 for non-fiber uses accounts for around 18.0% of the total. Other sectors consume around 2.0%.
As the automotive and textile sectors grow, the demand for PA products also increases constantly. Therefore, in recent years, China has not only imported a large amount of CPL, but also imported PA6 chips and fibers. China’s supply and demand for CPL and PA6 during 2010-2014 are detailed in table 3. In 2010, China imported 580.4 kt of PA6 chips – exceeding the domestic output of 493.9 kt. In 2013, China imported 630.2 kt of PA6 chips, equal to 50% of domestic CPL output. In 2014, China imported more than 500 kt of PA6 chips, because the structure of the domestic CPL industry is unmatched with that of PA6 chip makers, and the product quality does not meet the market’s requirements.