Downturn of Epoxy Resin Market in China

By Zhang Bei, China National Chemical Information Centre

Domestic capacity to make epoxy resin is scattered

China’s epoxy resin sector began mass construction and production after 2000. At present, China’s epoxy resin sector features surplus supply and scattered production capacity. China has more than 100 epoxy resin enterprises, and large epoxy resin enterprises with a capacity of over 100 kt/a mainly include six enterprises, such as NanYa Epoxy Resin (Kunshan) Co., Ltd, Jiangsu Sanmu Group Co., Ltd. and Sinopec Baling Petrochemical Co., Ltd. In 2014, with the in-depth implementation of environmental protection in China, the operating rate of solid epoxy resin units was reduced greatly.
In 2014, China’s total capacity to make epoxy resin reached around 2.185 million t/a, and the newly added capacity was mainly the second phase unit of Taiwan Changchun Chemical. In 2015, Jiangsu Sanmu Group Co., Ltd. will complete the construction of a 70 kt/a unit, and Kaiyuan Chemical Co., Ltd. of Henan Energy and Chemical Industry Group will also start up its 40 kt/a epoxy resin plant. China’s major epoxy resin producers in 2015 are listed in Table 1.

Slack downstream sectors and decrease of demand

China’s consumption of epoxy resin is mainly concentrated in sectors such as auto manufacture, containers and copper-clad board manufacture, building construction, water conservancy, power grid renovation, information technology and new energy. In 2014, influenced by the overall economic downturn, the demand for epoxy resin in downstream sectors has fallen off. China’s consumption of epoxy resin was around 1.11 million tons in 2014, down 5% YoY. Coatings and electronic/electric sectors were two major consumption sectors, accounting for 75% of the total consumption of epoxy resin. The other 25% was mainly used in producing composites, adhesives and construction materials.
It is expected that the consumption of epoxy resin will still increase year-on-year, but the growth will slow down. Development of the composites sector is the most rapid, and the consumption of epoxy resins in this sector will grow considerably.

Table 1   China’s major epoxy resin producers in 2015

Producer    Capacity (kt/a)
NanYa Epoxy Resin (Kunshan) Co., Ltd.    316
Jiangsu Sanmu Group Co., Ltd.    270
Sinopec Baling Petrochemical Co., Ltd.    120
Jiangsu Yangnong Kumho Chemical Group Co., Ltd.    100
Taiwan Changchun (Changshu) Chemical Co., Ltd.    100
Kukdo Chemical (Kunshan) Co., Ltd.    158
Total    1 064


Prices first fluctuated and then went all the way down

The domestic prices of solid epoxy resin fluctuated at RMB15 900-16 400/t in the first quarter of 2014. After June 2014, the price began to climb and reached RMB19 000/t – the highest price of the year, in September. It decreased afterwards in October and reduced to below RMB15 000/t by the end of 2014. In the first half of 2014, the prices of liquid epoxy resin floated in a range of RMB16 500-17 700/t. The prices began to rebound in July and exceeded RMB20 000/t in August, and then began to decrease in October, and reduced from RMB20 000/t to around RMB17 000/t by the end of 2014.
In 2015, both the solid epoxy resin price and liquid epoxy resin price went all the way down without rebound. The prices of solid epoxy resin dropped from RMB15 000/t in early 2015 to RMB11 700/t in October 2015, and the prices of liquid epoxy resin reduced from RMB17 000/t in early 2015 to RMB13 000/t in October 2015 (see Figure 1 and Figure 2 for details).

Structure adjustment will be the future development direction

At present, China’s epoxy resin sector makes too much low-end products and too little high-end products. Special resins, which are urgently needed in the domestic market, account for only 10% of China’s total output of epoxy resins. Great quantities of high-tech products with high added value such as flame-retardant varieties, liquid crystal varieties and multifunctional varieties still have to be imported. Thus, the development of China’s epoxy resin sector and related industries is hindered. The future development direction of epoxy resin will be the development of special epoxy resins and formulas with high added value, and active development of downstream supporting applications, such as the development and production of various curing agents for epoxy resin (polyetheramine and IPDA, etc.), the development and application of waterborne epoxy asphalt related products (for highway asphalt pavement and bridges, etc.) and the development of epoxy resin powder coatings for special purposes (weather resistant coatings, heat resistant coatings, high smoothness coatings, high light coatings, coatings with high strength and toughness, environment-friendly coatings, etc.).
In 2014, China’s import volume of epoxy resin significantly increased to 241 kt, up 18.5% YoY, and the export volume was 66 kt, down 6.6% YoY. At present, the new capacity to make epoxy resin being constructed or planned for construction in China amounts to around 400 kt/a. Most of the new units are for special epoxy resins. With the startup of new capacity, China’s import volume of epoxy resin will decrease, the export volume will increase considerably, the self-sufficiency rate of epoxy resin will climb gradually, and the supply gap of epoxy resin will be reduced further.