Vinylon Industry in China Due for Adjustments in 2016-2020

By Gao Shenbao, Anhui Wanwei Updated High-Tech Material Industry Co., Ltd.

Since its emergence in the 1960s, China has already become a big producer of vinylon and polyvinyl alcohol (PVA). Industrial applications are diverse, with use in various sectors such as high-grade clothes/clothing ornaments, papermaking, construction and water conservation.


Table 1   Output of vinylon in China during 2011-2015

Year    Output (kt)    YoY growth (%)
2011    59.1    4.41
2012    87.1    47.38
2013    100.9    15.73
2014    110.7    9.82
2015 (E)    120.0    8.40


1. Rapid development during 2011-2015

Vinylon has been a bright spot of the chemical fiber sector in China during 2011-2015. Output has increased from 44 kt at the end of 2010 to around 120 kt at the end of 2015, growing 15.2% annually (See Table 1).
With the state’s strategy of supporting western regions’ development, the west is becoming a production base for PVA. Inner Mongolia, Ningxia and Xinjiang have vigorously developed calcium carbide and downstream industrial chains on their strength of coal resources and become a region with concentrated growth of PVA capacity. PVA capacity in China has reached 1.383 million t/a. See Table 2 for details.

Table 2    Statistics of the PVA capacity in China in 2015

Producer    Capacity
(kt/a)    Raw material route
Shanghai Petrochemical Co., Ltd.     46    Ethylene
Beijing Eastern Petrochemical Co., Ltd. Organic Chemical Plant    30    Ethylene
Sinopec Sichuan Vinylon Works    165    Natural gas
Guizhou Crystal Organic Chemical (Group) Co., Ltd.    30    Calcium carbide
Fujian Fuwei Co., Ltd.    60    Calcium carbide
Hunan Xiangwei Co., Ltd.    95    Calcium carbide
Jiangxi Jiangwei High-Tech Co., Ltd.    40    Calcium carbide
Shanxi Sanwei Group Co., Ltd.    100    Calcium carbide
Anhui Wanwei Group Co., Ltd.    100    Calcium carbide
Yunnan Yunwei Co., Ltd.    35    Calcium carbide
Lanzhou New West Vinylon Co., Ltd.    30    Calcium carbide
Shijiazhuang Chemical & Chemical Fiber Co., Ltd.    20    Calcium carbide
Taiwan ChangChun Chemical (Jiangsu) Co., Ltd.    120    VAC purchased from outside
Guangxi Guangwei Chemical Co., Ltd.    50    Biomass ethylene
Inner Mongolia Shuangxin Environment-Friendly Material Co., Ltd.    130    Calcium carbide
Ningxia Dadi Chemical Co., Ltd.    130    Calcium carbide
Inner Mongolia Mengwei Technology Co., Ltd.    100    Calcium carbide
Great Wall Energy Chemical Co., Ltd.    100    Calcium carbide
Tianjin Sunnymer Suspending Agent Co., Ltd.    2    VAC purchased from outside
Total    1 383    -



2. New normal of the sector

Since the global financial crisis in 2008, the development of the vinylon and PVA sector in China has shifted from inadequate competition with relative stability to “new normal” of overall competition. Competition in the sector is fiercer and the development of the sector has entered a period of transition and a period of deep adjustments. By the end of 2014 the capacity of PVA in China accounted for around 64% of the world total. New capacity in the world is also basically concentrated in China.
PVA capacity in China has expanded rapidly. The advantage of using low-cost resources in the western region, in particular, produces huge impacts on the entire market. Market competition with great intensity has triggered a “domino effect” in the PVA sector. Most of the nine PVA producers in the coal chemical sector that were put on stream in the 1960s and the 1970s are having a hard time in operation, and half of them have suspended production. The PVA sector in China will undergo sustained deep reshuffling, and competition will remain fierce in the next few years.
Vinylon produced in China today mainly includes high-strength high-modulus (PVA) fiber and water-soluble fiber. The overall functioning of the vinylon sector is sound, and products have had a considerable profit margin in the past 2-3 years. The resulting massive inflow of private investment has aggravated competition in the sector, toppled the previous high average profit rate, pushed enterprises to make further potential and reduce costs and therefore promoted the overall development of the vinylon and PVA sector.

3. Trends for 2016-2020

The vinylon capacity in China has increased rapidly in recent years and will reach around 120 kt/a at the end of 2015. Polarization has however appeared in market. Owing to a considerable increase in the market volume of water-soluble non-woven fabrics and water-soluble yarns, the market demand for water-soluble fiber is increasing constantly, and the operating rates of production units are high. In contrast, with impacts from the sustained slackness in the European economy, the market demand for high-strength high-modulus (PVA) fiber has shrunk a lot, and the operating rates of production units are quite low. Due to the drastic expansion of water-soluble fiber activity, both the capacity and the output of vinylon are going up instead of coming down. The drastic capacity expansion made in 2014, in particular, led to oversupply in market.
It is expected that the effective capacity of PVA in China will reach around 1.50 million t/a at the end of 2020. Domestic market consumption, however, will be only around 1.00 million tons. The capacity will have serious structural surplus and market competition will become fiercer.
The future development trend of the vinylon sector will likely be as follows. On one hand, developments will be made towards high-grade fine chemical products with high polymerization degree (high viscosity) and low alcoholysis degree. Vinylon will perform satisfactorily in high-index adhesives, high-strength high-modulus (PVA) fibers and cement fortifiers. On the other hand, developments will be made toward special products with low polymerization degree and low alcoholysis degree. Vinylon will be used mainly in water-soluble adhesives and water-soluble fibers with special requirements.
Extensions will be made to both upstream and downstream of PVA and vinylon. For example, VAC will extend to VAE emulsions or EVA resins and VAC emulsions. PVA will extend to downstream products with high technical content and high added value such as PVA films, PVB resins, PVA super absorbent polymers and PVA milk protein fibers. Efforts will be made to develop chemicals and chemical fibers with high added value and great development potential, further expand product variety, improve product quality, reduce production costs and upgrade market competitiveness.