China’s Epichlorohydrin Market

By Wang Hongrun, China National Chemical Economic and Technical Development Centre

Supply

China’s capacity to make epichlorohydrin expanded rapidly during 2011-2015. By the end of 2015, the domestic total capacity to produce epichlorohydrin had reached 1.152 million t/a, up 6.5% YoY, output of epichlorohydrin was around 572.8 kt, a YoY growth of 30.2%, while the average operating rate had declined constantly to 49.7%. China’s major epichlorohydrin producers in 2015 are listed in Table 1.

Table 1   China’s major epichlorohydrin producers, 2015

Location    Producer    Capacity
(kt/a)
Shandong province    Shandong Haili Chemical (Bohui) Co., Ltd.?    320
Tianjin    Tianjin Botian Chemical Co., Ltd.     61
Jiangsu province    Jiangsu Yangnong Chemical Group Co., Ltd.    90
Shandong province    Chlor-Alkali Plant of Sinopec Qilu Petrochemical Co., Ltd.    32
Hunan province    Epoxy Resin Plant of Sinopec Baling Petrochemical Co., Ltd.    34
Jiangsu province    Jiangsu Sandie Chemical Co., Ltd.?    25
Shandong province    Shandong Dongying Liancheng Chemical Co., Ltd.    35
Jiangsu province    Jiangsu Anpon Electrochemical Co., Ltd.?    25
Jiangsu province    Jiangsu Haixing Chemical Co., Ltd.    130
Jiangsu province    Yihai (Lianyungang) Fine Chemical Industry Co., Ltd.?    100
Shandong province    Shandong CNSG Huaxiang Salt & Chemical Co., Ltd.    35
Guangxi region    Guangxi Tiandong Jinsheng Chemical Co., Ltd.    30
Shandong province    Shandong Dongying Hebang Chemical Co., Ltd.    30
Hebei province    Hebei Jiaao Glycerol Chemical Co., Ltd.?    50
Fujian province    Fujian Haobang Chemical Co., Ltd.    25
Jiangxi province    Jiangxi Global Chemical Industrial Co., Ltd.?    30
Hebei province    Hebei Jiheng?Chemical Group Co., Ltd.    40
Zhejiang province    Ningbo Huanyang Chemical Co., Ltd.    30
Henan province    Jiaozuo Coal Group    30
Total    1 152



At the end of 2015, China had 19 epichlorohydrin producers. Shandong Haili Chemical Co., Ltd. was the largest, with a capacity of 320 kt/a. Jiangsu Haixing Chemical Co., Ltd. and Yihai (Lianyungang) Fine Chemical Industry Co., Ltd. ranked second and third, respectively, with capacities of 130 kt/a and 100 kt/a.
Technologically, the propylene high temperature chlorination process is still dominant; however, the glycerol method has been rapidly adopted in recent years, and new projects usually employ it. In the next few years, China's epichlorohydrin capacity will grow to be excessive, so there will not be many new projects.
China’s epichlorohydrin capacity was widely hoped to reach 1.25 million t/a in 2016. The capacity growth of epichlorohydrin in China is shown in Table 2.

Table 2   Growth of epichlorohydrin capacity in China

Year    2007    2014    2015    2017E
Capacity (kt/a)    470    1 082    1 152    1 380
Growth    17.0% during 2007-2012, 6.0% during 2012-2017


Table 3   Apparent consumption of epichlorohydrin in China

Year    2007    2012    2013    2014    2015    2017E    Annual growth during 2012-2017
Apparent consumption (kt)    350.0    478.9    546.6    468.8    611.8    690.0    7.6%

Table 4   China’s import & export of epichlorohydrin, 2013-2015

Year    Import?    Export
    Volume (kt)    Value (US$ million)    Volume (kt)    Value (US$ million)
2015    39.8     51.263     0.8     1.271
2014    29.5    47.309    0.8    1.533
2013    26.7    39.952    2    3.465


Demand

China’s epichlorohydrin sector is already in overcapacity. The epoxy resin sector, downstream, faces much the same situation, so the growth of its consumption of epichlorohydrin as raw material is limited. It is expected that development of the epoxy resin sector will slow down, and the growth of domestic demand for epichlorohydrin will also slow down.
In the next few years, the growth of China’s epichlorohydrin supply will slow down, and the export volume is expected to increase rapidly in order to ease the domestic oversupply.
This year, China’s apparent consumption of epichlorohydrin is expected to reach 690 kt, and the average annual growth of apparent consumption during 2012-2017 will have been around 7.6%.

Foreign trade

In 2015, China imported around 39.8 kt of epichlorohydrin, up 32.6% YoY, and the import value was around US$51 million, a YoY growth of around 8.4%. Imported epichlorohydrin came mainly from Taiwan province, South Korea and Japan, etc. The volume from Taiwan province was largest, at around 13.1 kt, or 33% of the total. South Korea ranked second, around 12.6kt, or 31.8%. Japan ranked third, providing around 11.9 kt, or 30%.
In 2015, Jiangsu province was the main destination for imported epichlorohydrin, taking 27.3 kt, or 68.7% of the total. Guangdong province ranked second, with an import volume of 7.841 kt, accounting for 19.7%. Obviously, the destinations of imported epichlorohydrin were very concentrated geographically. Nanjing customs handled the most epichlorohydrin in 2015, seeing 22.5 kt, or 56.7% of the total. Shanghai and Huangpu customs came next, accounting for 16% and 11.5%, respectively.
In 2015, China’s export volume of epichlorohydrin was less, being around 824 tons. The main export destinations were Indonesia, Japan and the United States. Jiangsu and Shandong were the dominant export provinces. Shanghai and Qingdao customs handled most of it.

Market price

In 2015, epichlorohydrin prices went all the way down. The annual average in Shandong was RMB8 850/t, 30% lower than in 2014. In 2015, the peak price in the Shandong market appeared from late January to early February, being RMB11 000/t, and the lowest price of RMB7 250/t appeared in mid October. Prices changed sharply in April and again in November, because in the second half of 2015, the operating cost of the propylene process hit the lowest level in three years. Prior to this, the glycerol method was much cheaper than the propylene method. In the second half of 2015, the costs of the two processes were close. Supported by advantages like lower cost and large capacity, the domestic market share of China’s leading enterprises using propylene method increased rapidly, their profit margins improved significantly, and their monthly output hit new highs. While restricted by the cost as well as the stability of production, most plants using the glycerol method operated at low rates or suspended production and overhauled. The market share of leading enterprises increased, and prices climbed. However, in late 2015, the operating rates of plants increased and demand continued to be slack, and in response to constant growth of supply and slack demand, prices gradually fell back. Shandong market prices for epichlorohydrin in 2015 are charted in Figure 1.