Domestic PVC Sector – Analysis of 2014 and Prospects

By Tian Shengjiang, China National Chemical Economic and Technical Development Centre

1. Supply

At the end of 2014, there were more than 60 polyvinyl chloride (PVC) producers in China, with a total capacity of 23.89 million t/a. New capacity put on stream in the year, including paste resin capacity, was 660 kt/a and the output was 16.3 million tons, a YoY growth of 6.6%. China’s major PVC producers are listed in Table 1.

Table 1   China’s major PVC producers, 2014

Province    Company     Capacity
(kt/a)
Anhui    Hwasu Corporation    460
Gansu    Gansu Xinchuan Chemical Co., Ltd.    200
Guangdong    Tosoh (Guangzhou) Chemical Industries, Inc.    220
Guangxi    Guangxi Tiandong Jinsheng Chemical Co., Ltd.    200
Hebei    Tangshan Sanyou Group     400
    Hebei Shenghua Chemical Industry Co., Ltd.     550
Henan    Henan Shenma Chlorine Alkali Development Co., Ltd.    450
    Henan Hengtong Huagong Group    450
    Haohua Yuhang Chemicals Co., Ltd.     500
Heilongjiang    Heilongjiang Haohua Chemical Co., Ltd.    300
Hubei    Hubei Yihua Group Co., Ltd.     250
Hunan    Hunan Zhuzhou Chemical Industry Group Co., Ltd. ? CNSIC    300
    Hengyang Kingboard Chemical Co., Ltd.    200
Jilin    Siping Haohua Chemical Co., Ltd.    250
Jiangsu    China Salt Changzhou Chemical Co., Ltd.     200
    UPC Group Taizhou Union Plastics Industry Co., Ltd.     450
Inner Mongolia    Inner Mongolia Elion Chemical Industry Co., Ltd.    500
    Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd.    600
    Inner Mongolia Wuhai Chemical Co., Ltd.    300
    Ordos Chlor-alkali Chemical Co., Ltd.    400
    Baotou Haipingmian Polymer Industry Co., Ltd.    400
    Jilantai Salt Chemical (Group) Co., Ltd.    400
    Inner Mongolia Yihua Chemical Industry Co., Ltd.    400
    Inner Mongolia Sanlian Chemical Co., Ltd.    300
    Inner Mongolia Yidong Group Dongxing Chemical Co., Ltd.     300
Ningxia    Ningxia Yinglite Chemicals Co., Ltd.     250
    Ningxia Jinyuyuan Chemical Group Co., Ltd.    250
Qinghai    Qinghai Yihua Chemical Industry Co., Ltd.     300
    Qinghai Salt Lake Haina Chemical Co., Ltd.    200
Shandong    Shandong Xinfa Chemical Co., Ltd.    600
    Sinopec Qilu Petrochemical Co., Ltd.    600
    Dezhou Shihua Chemical Co., Ltd.    300
    Qingdao Haijing Chemical (Group) Co., Ltd.    460
    Jining Gold Power Co., Ltd.     370
    Binzhou Ocean Chemical Co., Ltd.    250
Shanxi    Shanxi Yushe Chemical Co., Ltd.     300
    Shanxi Taiyuan Chemical Industry Co., Ltd.     200
    Shanxi Ruiheng Chemical Co., Ltd.    200
    Lu’an Group Resin Co., Ltd.    200
Shaanxi    Shaanxi Beiyuan Chemical Co., Ltd.     1 100
    Shaanxi Jintai Chlor-Alkali Chemical Co., Ltd.    370
Shanghai    Shanghai Chlor-Alkali Chemical Co., Ltd.    200
Sichuan    Yibin Tianyuan Group Co., Ltd.    400
    Sichuan Jinlu Group Co., Ltd.    400
Tianjin    Tianjin Dagu Chemical Co., Ltd.     800
    Tianjin LG DAGU Chemical Co., Ltd.    400
Xinjiang    Xinjiang Zhongtai Chemical Co., Ltd.?    1 520
    Xinjiang Tianye (Group) Co., Ltd.    1 300
    Xinjiang Yihua Chemical Co., Ltd.    300
    Mahatma Xinjiang Energy Co., Ltd.    300
Yunnan    Yunphos Group    300
Zhejiang    Formosa Plastics Ningbo Co., Ltd.    400
    Hanwha Chemistry (Ningbo) Co., Ltd.    300
    Others    2 040
    Total    23 890


China’s production of PVC has been on the rise in recent years. Capacity was only 9.77 million t/a when the boom began in 2005, and then the sector sprinted to 23.89 million t/a by 2014, with an average annual increase of 10.4%. Output was 6.68 million tons in 2005 and 16.30 million tons in 2014, with a 10.4% annual increase, matching capacity growth. Capacity and production of China’s PVC in recent years are listed in Figure 1.
There will be new PVC projects in China over next years, expanding the national capacity at about 4 million t/a. New PVC projects are listed in Table 2.

Table 2    China’s new PVC projects

Province    Company     Capacity (kt/a)
Yunnan    Yunnan Tianye Chemical Co., Ltd.    120
Shandong    Qingdao Haijing Chemical (Group) Co., Ltd.    400
    Shandong Hengtong Chemical Co., Ltd.    200
Inner Mongolia    Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd.    40
    Inner Mongolia Sanlian Chemical Co., Ltd.    50
    Hongdaxingye Group Zhonggu Mining Co., Ltd.    300
Shanxi    Shanxi Ruiheng Chemical Co., Ltd.     400
    Lu’an Group Resin Co., Ltd.    200
    Yangquan Coal Industry (Group) Co., Ltd., Xiyang Chlor-Alkali Chemical Co., Ltd.?    100
Hubei    Yichang Shanshui Investment Co., Ltd.    40
Gansu    Jinchuan Group Co., Ltd.    300
Ningxia    Ningxia Jinyuyuan Chemical Group Co., Ltd.    200
Qinghai    Qinghai Salt Lake Industry Group Co., Ltd.    800
Xinjiang    Mahatma Xinjiang Energy Co., Ltd.    300
Hebei    Hebei Jinniu Chemical Industry Co., Ltd.    400
Liaoning    Shenyang Chemical Co., Ltd.    200
    Total    4 090



2. Demand

Driven by the industry, agriculture and construction industries, consumption of PVC has increased gradually from 2009 to 2014. The apparent consumption of PVC was 16.03 million tons in 2014, with an annual increase of 8.1% over the past five years (shown in Table 3).

Table 3    China’s consumption of PVC, 2005-2014  (kt)

Year    Production    Import volume    Export volume    Apparent consumption    Self-sufficiency
(%)
2005    6 680    1 661    150    8 190    81.6
2006    8 240    1 452    499    9 190    89.6
2007    9 720    1 304    753    10 270    94.6
2008    8 820    1 127    646    9 300    94.8
2009    9 160    1 955    276    10 840    84.5
2010    11 300    1 511    266    12 550    90.1
2011    12 950    1 316    441    13 830    93.7
2012    13 420    1 210    454    14 170    94.7
2013    15 300    1 044    734    15 610    98.0
2014    16 300    926    1 193    16 030    101.7

Table 4    China’s import and export of PVC, 2005~2014

Year    Import    Export
    Volume (kt)    Value (US$ million)    Volume (kt)    Value (US$ million)
2005    1 661    1 416    150    125
2006    1 452    1 272    499    386
2007    1 304    1 278    753    678
2008    1 127    1 257    646    705
2009    1 955    1 598    276    257
2010    1 511    1 626    266    283
2011    1 316    1 594    441    528
2012    1 210    1 368    454    477
2013    1 044    1 226    734    757
2014    926    1 111    1 193    1 164


In recent years, soft PVC consumption – in making packaging materials, artificial leathers and plastic shoes – has gradually given way, in terms of market percentage, to hard PVC consumption. The progress of urbanization and the development of real estate drive the consumption of rigid PVC products – plastic profiles, pipes, sheets, etc.
In 2014, rigid PVC products accounted for 60% of all PVC consumption; they were mainly used for various plastic profiles, pipes, sheets, plates, blow molded products and so on. The remaining 40% was soft PVC products – mainly used for functional films (rolling film, waterproof rolls, folding doors, etc., differing in thickness), electric wire and cable, artificial leather, fabric coatings, soft tubes, gloves, toys, flooring, plastic shoes, and special coatings and sealants.
With the rapid development of China’s PVC applications in recent years, the demand for high-performance PVC special resins exceeds the supply. There is now growing interest in developing more advanced PVC-based products such as large diameter pipes, household heat resistant products (such as car antirust coatings, computer cases, clapboards and window profiles), fiber-reinforced products (flame retardant products such as pipes, metal cases, etc.) and rigid membrane packaging materials. In addition, with the progress of various composite plasticizers, composite flame retardants, heat-resistant modifiers and impact modifiers, PVC products will find a larger market. The application structure of China’s PVC is shown in Figure 2.

3. Import and export

China imported 926 kt PVC in 2014, down 11.3% YoY, and exported 1.193 million tons, up 62.5% YoY. With the rapid development of the domestic chlor-alkali industry, since 2013, China imports less PVC and exports more. Import and export of China’s PVC in recent years are listed in Table 4.

4. Market price

The PVC market continued to fluctuate with the external environments in 2014. The year’s price trends can be divided into three periods. First, a shock adjustment period (January ~ May): The operating rates of domestic manufacturers were low, and demand was depressed; calcium carbide prices plummeted and hit bottom at the end of March. Besides, ethylene prices are tied to international oil prices and stayed high. The price difference between ethylene and calcium carbide was over RMB1 000/t, which had a great impact on the ethylene market and made most ethylene-based manufacturers cut production loads. Stalemate low period (May ~ November): The imbalance between PVC supply and demand continued because demand did not revive for a long time. In this period, the price difference between ethylene and calcium carbide was RMB600-800/t, which led to high sales pressure. Deep slump (November ~ December): International crude futures prices had decreased slowly since September and fell faster in October ~ December, and current oil prices declined continually, so ethylene prices shrank sharply. Domestic ethylene-based manufacturers responded by raising their operating rates. Thus ethylene-based PVC prices dropped fast. Meanwhile, lower-cost foreign PVC arrived at ports and greatly impacted the stability of the main consumer market, which led to a decline of the domestic PVC market. PVC market prices in Eastern China in 2014 are listed in Figure 3.
By the end of the year, the PVC industry was still failing to cope with 49% overcapacity. Capacity growth is now expected to drop off sharply, and outdated capacity will be eliminated gradually. Some powerful manufacturers will expand investment in special resins and take measures to save energy and cut costs.