C9 Petroleum Resin Industry Reshuffle Coming

By Zhao Hongfu, Zhao Qingbo, Xinjiang Dushanzi Tianli Industrial Company
Fan Yuanyuan, Xinjiang Huanqiu Contracting & Engineering Co., Ltd.

Industry development trend

Demand for high-end petroleum resin (mainly hydrogenated petroleum resin) has been increasing in China. In 2014, a breakthrough in China’s first C9 hydrogenated petroleum resin core technology was made; in 2015, China’s first DCPD hydrogenated petroleum resin unit came on stream. The overall development of China’s C9 petroleum resin industry has two sides. First, capacity is concentrated in strong companies. For instance, Shandong Qilong built plants in Zibo, Fushun and Shanghai, while Zibo Luhua Hongjin and Guangdong Xinhuayue both have C9 and C5 plants in Wuhan. Second, hydrogenated resin technology is developing.
C9/C5 petroleum resin technology is quite mature, and the industry is looking for a transformative breakthrough. Hydrogenated C9, C5, C5/C9 and DCPD petroleum resins will become hot spots for investment in the future.
In 2015, there were about 70 C5/C9 petroleum resin producers in China, and the total C9 petroleum resin capacity reached 700 kt/a, with 50% utilization and 350 kt production output. Within that, C9 hydrogenated petroleum resin capacity was 12 kt/a, and its annual output was probably less than 1 kt – just after being put into production quality was still unstable and the cost was high.
Chinese C9 petroleum resin producers mainly use catalytic polymerization (also known as cold polymerization) and thermal polymerization processes, and for C9 fraction with high DCPD content, they adopt continuous pressure thermal polymerization to get high-qualified resins. Large-scale C9 petroleum resin producers usually have more than two lines with at least one cold polymerization line and one thermal polymerization line to respectively generate deep color and light color petroleum resins.
Recently, major domestic producers have been trying to move into mid/high-end resin markets. The mid-range products are copolymerized petroleum resin and cold polymerized petroleum resin. Zhejiang Henghe is now able to produce 4# cold polymerized C9 petroleum resin and its 15 kt/a copolymerized petroleum resin units came on stream in 2015. The high-end product is hydrogenated C9 petroleum resin, and a key breakthrough has been made. In June 2014, Panjin Heyun Group, using patent technology of independent intellectual property rights, launched its 2 kt/a catalytic desulfurization / hydrogenation C9 petroleum resin plant, which, however, due to poor sales and serious losses, is idled now. In 2015, Hebei Qiming Chemical Technology Co., Ltd. put into operation its own 10 kt/a grade C9 hydrogenation unit with technology of catalytic hydrogenation decolorization and odor removal reactor invented by Dalian University of Technology.

An industry reshuffle is coming

About 75% of C9 petroleum resins is applied to the manufacture of adhesives, rubbers, paintings and inks, and 25% is used in sectors like light oil varnish, resin varnish, high-end thermal adhesives and pressure sensitive adhesives. In 2015, China’s total consumption of C9 petroleum resins was 340 kt, with a shortage of 80 kt, and by 2020 consumption will reach 400 kt while the shortage, after counting in newly launched domestic plants, will exceed 100 kt.
The non-hydrogenated C9 petroleum resin industry is easy to enter, and there are many small-scale producers in China, most of which are privately owned. The competition is thus fierce, so product quality must be improved. Compared to overseas products, domestic producers of C9 petroleum resin still find it hard to control the upper limit of the softening point at 105℃, except for a few like Shandong Qilong, and most producers’ upper limit is above 110℃.
Hydrogenated C9 petroleum resin products have an inherent technology barrier, and domestic products do not have competitive edges, as their quality is still not stable and their production cost is high.
Overall, the C9 petroleum resin industry’s feedstock is tight with high cost, while the price edge of thermal polymerized resins has disappeared. Mid-range resins are developing rapidly and their market will be saturated soon. There are almost no domestic producers of high-end resins. In the future, the low-end resin market will be squeezed by mid/high-end markets, washing out small producers. The market will see several large-scale companies compete in China.