China Actively Upgrading Petrochemical Products

China has optimized its portfolio of petrochemical products in recent years via supply-side reform, innovation and an emphasis on “green-ness”. Since the reforms started, domestic refineries have eliminated 84 units with a combined capacity of 57.95 million t/a (below 2 million t/a for each unit). In the nitrogenous fertilizer sector, 40 synthetic ammonia firms have exited the market, removing 4.13 million t/a of synthetic ammonia capacity; meanwhile, 3.33 million t/a of urea capacity was eliminated. Twenty-five pesticides enterprises have quit the market, three of which were engaged in pesticide technical. In other areas, 19 million pcs/a of tire capacity was eliminated from the market, with nine producers stopping production voluntarily. In the chlor-alkali sector, 13 caustic soda firms have shut down from 2011 to 2015, eliminating a combined capacity of 9.05 million t/a, followed by 490 000 t/a eliminated in 2016; 14 polyvinyl chloride enterprises, involving 6.08 million t/a, withdrew from the market during 2011-2015, and an additional 320 000 t/a was eliminated in 2016.
The structure of petrochemical products needs to be optimized continually. Currently, China produces an excess of basic chemical products, like inorganic acid and alkali, fertilizers and tires. However, high-end products such as new chemical materials and electronic chemicals are in short supply here. In 2016, the petrochemical trade deficit amounted to US$136.08 billion. In detail, the synthetic resin trade deficit was US$32.68 billion, that of organic chemicals was US$10.59 billion, that of synthetic fiber monomers was US$5.41 billion, and that of specialty chemicals was US$2.41 billion. China imported over 31.83 million tons of synthetic resins in 2016, including 9.94 million tons of polythene. High-end polyolefins (e.g. hexylene copolymer, octene copolymer and metallocene polyolefin) remained a major variety of imports, given China’s self-sufficiency in that area of less than 40%.
Both CNPC and Sinopec increased their output of cleaner oil products and lowered the ratio of diesel to gasoline continually in 2016, in accordance with changing demand. To meet a rising demand for high-end petrochemical products, domestic players paid more attention to new chemical materials and fine chemicals. Sinopec Qilu Petrochemical Company, PetroChina Daqing Petrochemical Company, Sinopec Shanghai Petrochemical Co., Ltd., Sinopec Zhenhai Refining & Chemical Company, Sinopec Yanshan Company and Sinopec Yangzi Petrochemical Co., Ltd. speeded up development of metallocene polyolefin, auto materials, special materials for electric appliance, tubing for fuel gas and underfloor heating, and medical materials. Pesticides enterprises continued to improve product structure in 2016, through decreasing the proportion of insecticides while increasing those of bactericides and herbicides. In addition, new pesticides that are efficient, safe and eco-friendly made up a rapidly expanding part of the mix.
Hangzhou Electrochemical Group Co., Ltd. constructed a 200 000 t/a caustic soda unit and a 100 000 t/a polyvinyl chloride unit, after relocating to a chemical park. However, only the caustic soda unit has come on stream, as polyvinyl chloride prices recently fell sharply. Meanwhile, the company started to produce chlorinated polyvinyl chloride, hydrogen peroxide, sodium hypochlorite and electronic chemicals.
Qingdao Haijing Chemical (Group) Co., Ltd. has produced chlor-alkali for 70 years. It has recently replaced the calcium carbide process with the ethylene oxygen chlorination process, a cleaner production technology.
Shandong Lubei Chemical Co., Ltd. is a traditional enterprise making phosphate fertilizers. It has been recycling waste acid from a 210 000 t/a sulfate process titanium dioxide unit in recent years. Meanwhile, it is constructing a new 100 000 t/a titanium dioxide unit with chloride process, and has developed 12 special types of titanium dioxide for water-based paints, powder coatings, household appliances paints, plastics processing and mill base. Further, the company strived for innovation in new varieties of aluminum oxide, like the high-temperature alpha type, the super-fine flame-retardant type and the 4A zeolite type.
Jiangsu Huachang Chemical Co., Ltd. produces nitrogenous fertilizers. Beyond that, the company has constructed new units to produce polypropylene via propane dehydrogenation and then make 2-ethyl hexanol.
Domestic petrochemical players regard innovation as an engine of growth. So they have established 68 platforms, 133 demonstration firms and 14 strategic alliances for technology innovation.
Fifty business-models innovations in enterprises such as MESNAC Co., Ltd., Yibin Tianyuan Group Co., Ltd. and Luxi Group Co., Ltd. have won awards. MESNAC specialized in rubber manufacturing equipment at first, and it has become a large listed company, adding tire production to its business portfolio. MESNAC is cooperating with American Cooper Tire & Rubber Company to produce high-end tires, and its current innovation focus is raw materials for rubber.
There are many other innovation-driven enterprises such as Wanhua Chemical Group Co., Ltd., Guangdong Kingfa Science and Technology Co., Ltd., Heilongjiang XD Company and Beijing Sanju Environmental Protection & New Materials Co., Ltd. They all saw sound development for 2016.
For transnational corporations, the key of core competitiveness is innovation in business models, due to increasing uncertainty arising from globalization, technical progress and the ever-changing commercial environment. E-commerce has developed rapidly in the domestic petrochemical industry in the past two years, especially in super-huge groups like Sinopec, CNPC and ChemChina. In addition, many third-party e-commerce platforms appeared in the plastic, coating and dyestuff sectors.
Intelligent manufacturing was propelled. Eleven firms are listed among the nation’s intelligent-manufacturing pilot enterprises, including Jiujiang Petrochemical Company, Tianjin Bohai Chemical Industry Group Co., Ltd. and Xinjiang Tianye (Group) Co., Ltd. They are engaged mainly in refining, chemicals, fertilizers, chlor-alkali, tires and new chemical materials. Doublestar Tire was listed among the second group of pilot firms, striving for intelligent and eco-friendly production, while decreasing the product defect rate by 80%. Wanli Tire invested RMB1.4 billion to establish a world-class intelligent plant, which went on line in November 2016.
While chemical enterprises do unfortunately generate wastes, they can invent technologies to tackle pollution and process recyclables. For example, Linggu Chemical Co., Ltd. is a fertilizer producer. While producing granular urea, it has constructed a 110 000 t/a CO2 recycling unit, recycling sulfur to produce ammonium sulfate, recycling gasification slag to produce cement, recycling dust to produce cement additives and recycling waste heat to generate electricity.