Epoxy Chloropropane Market in China

By Qu Yeqing, Hunan Changling Petrochemical Technology Development Co., Ltd.

Epoxy chloropropane is an important raw material for epoxy resin, synthetic glycerol, chlorohydrin rubber, etc. It is used as a solvent, a plasticizer, a flame retardant or a surfactant.

Supply and demand

1. Production
China’s epoxy chloropropane capacity growth slowed down in 2008 due to the global financial crisis. Then, with average annual growth of 6.7%, it reached 750 kt/a in 2010, operating at about 70%. At the beginning of 2012, Shandong Bohui Group introduced new capacity of 130 kt/a in Dafeng District of Jiangsu, bringing the Group’s total production capacity to 450 kt/a (see Table 1). In 2013, domestic capacity reached 1 244 kt/a, and severe overcapacity led to an overall operating rate of only 50%. In 2014, the operating rate fell to 39%, the lowest level ever.
2. Consumption
In 2013, the world’s total consumption of epoxy chloropropane was about 1 650 kt. Asia, Western Europe and North America consumed about 60%, 28% and 18% of the total, respectively. Production of epoxy resin consumes 84% of the global total, and its share is still increasing. The second biggest use of epoxy chloropropane is in the production of synthetic glycerol, which is gradually taking a smaller proportion. In addition, epoxy chloropropane can be used to make chlorohydrin rubber, shrink glycerin ether, paper humidizer, flame retardant, both resin and surfactant for ion exchange systems, etc. Global demand for epoxy chloropropane is expected to exceed 2 000 kt by 2020.
Since 2000, the focal point of China’s epoxy chloropropane consumption has shifted from making synthetic glycerol to making epoxy resin, due mainly to rapid expansion of the global biodiesel industry, which spins off a great deal of glycerol as a byproduct, resulting in severe shrinkage of the market for synthetic glycerol. On the other hand, rapid development of China’s epoxy resin industry, with capacity exceeding 2 100 kt/a, has driven rapid expansion of propylene oxide manufacture. Currently, China’s epoxy chloropropane is used mainly to make epoxy resin, accounting for about 96% of total consumption. In addition, its use in making chlorohydrin rubber takes about 1% of total consumption (see Table 2).


Table 1    China’s main producers of epoxy chloropropane

Producer    Capacity (kt/a)
Tianjin Botian Chemical Industry Co., Ltd.    60
Sinopec Qilu Petrochemical Co., Ltd.     32
Jiangsu Yangnong Chemical Group Co., Ltd.    90
Shandong Haili Chemical Industry Co., Ltd.    320
Jiangsu Haixing Chemical Co., Ltd.    130
Shandong Wudi Xinyue Chemical Co., Ltd.    95
Shandong Zhonghai Fine Chemical Co., Ltd.    80
Shenxian Huaxiang Salt Chemical Co., Ltd.    40
Sinopec Baling Petrochemical Co., Ltd.    32
Jiangsu Anpon Electrochemical Co., Ltd.    20
Shandong Dongying Huatai Chemical Group    35
Dongying Liancheng Chemical Co., Ltd.    35
Dongying Hebang Chemical Co., Ltd.    30
Hebei Jiaao Glycerol Chemical Co., Ltd.    10
Ningbo Huanyang Chemical Co., Ltd.    30
Yihai Kerry Group (Lianyungang) Fine Chemical Industry Co., Ltd.    100
Guangxi Tiandong Jinsheng Chemical Co., Ltd.    30
Jiangxi Quanqiu Chemical Co., Ltd.    10


Table 2    Consumption mix of epoxy chloropropane in China  (%)

Downstream product    2000    2009    2011    2013
Epoxy resin    34.6    85.6    90.9    96.0
Synthetic glycerol    59.0    4.2    3.4    0
Chlorohydrin rubber    0    3.0    1.8    1.0
Others    6.4    7.2    3.9    3.0



Price

After the global financial crisis broke out in 2008, the price of China’s epoxy chloropropane bottomed out at only RMB6 000/t. In the global economic rebound, the price remained at the bottom in 2009. Market prices stayed at RMB12 000-16 000/t between 2010 and 2011.
A subsequent rise in demand, and consequently profit margins, led to an expansion of production capacity, whereupon the supply/demand imbalance reversed. Since the beginning of 2012, prices slid rather steadily to around RMB10 000/t by the end of 2012.
From 2013 to 2014, the domestic epoxy resin industry suffered a “winter”, with the overall operating rate below 50%. This further exacerbated the oversupply, with the market in shock, maintaining prices in a narrow range of RMB9 300-11 000/t.
In 2015, the market demand has been low and supply is still adequate, which keeps the market weak.

Import and export

For a long time, China depended heavily on imports to meet the domestic demand for epoxy chloropropane. Before 2007, the dependence was over 50%. Since 2010, the import-export structure of domestic epoxy chloropropane has changed from import-only to importing with rather active exporting (see Table 3). The import-export situation has gradually been made more comfortable.
As can be seen from Table 3, China's epoxy chloropropane export volume has dropped significantly since 2012, due to the impact of the European debt crisis, global economic slowdown and other factors.


Table 3    China's import & export of epoxy chloropropane  (kt)

Year    2007    2008    2009    2010    2011    2012    2013    2014
Import volume    150.0    160.0    170.0    42.8    27.0    33.2    31.0    29.6
Export volume    1.1    3.8    3.6    18.3    24.0    4.5    2.0    7.9


Prospects for development

In 2015, China's epoxy chloropropane capacity has continued to grow. The severe overcapacity and fierce competition continue to make low operating rates necessary. In addition, disappointing development of the utilization of epoxy chloropropane’s intermediates chloropropene and propenol and its downstream products has restricted the development of the epoxy chloropropane sector to a certain extent. Therefore, sales now face a severe test, and the outlook is not favorable. Increasing idle capacity in the short term and shrinking profits are still the overriding conditions in the sector. But in the long run, with economic recovery, revived epoxy chloropropane consumption will drive a new period of development.