Domestic Butyl Rubber Supply Short, Halogenated Butyl Rubber New Focus of Development

By Xiao Min

Demand for radial tires increases steadily

Development of the automobile industry and the rising requirements for the safety and comfort of autos have promoted the technological progress of radial tires and development of tubeless tires. In 2017, China’s butyl rubber capacity reached 395 kt, as detailed in Table 1 for major manufacturers.
As China’s butyl rubber production cannot meet the demand, the import volume increased from 125.6 kt in 2005 to 249.2 kt in 2010 and 273.9 kt in 2016, with a YoY growth of 10.09%, according to customs statistics. China also exports butyl rubber, but the export volume fell from 10 kt in 2005 to 9.7 kt in 2010 and then rose again to 14.1 kt in 2016.
Rapid growth of demand for high performance radial tires and medical rubber bottle closures has driven a year-on-year increase in the import of halogenated butyl rubber. In 2005, the import volume was 82.4 kt, or 65.61% of all rubber imports. In 2010, it climbed to 170.2 kt, accounting for 68.30% of the total. In 2016, it reached 211.6 kt, or 77.25% of the total, with a YoY growth of 17.43%.
Butyl rubber is imported mainly from the United States, Russia, Belgium and Singapore. In 2016, the imports from these four countries totaled 194.9 kt, or 71.16% of the total, but it was down 2.65% from 200.2 kt in 2015. Please refer to Table 2 for China’s major import sources of butyl rubber during 2012-2016.

Table 1    China’s major manufacturers of butyl rubber, 2017

Manufacturer    Capacity
(kt/a)    Product types
Sinopec Yanshan PC    135    Ordinary butyl rubber and brominated butyl rubber
Zhejiang Cenway Synthetic New Materials     100    Ordinary butyl rubber, chlorinated butyl rubber and brominated butyl rubber
Panjin Heyun Group    60    Ordinary butyl rubber, chlorinated butyl rubber and brominated butyl rubber
Formosa (Ningbo)    50    Ordinary butyl rubber
Shandong Chambroad Petrochemical    50    Ordinary butyl rubber
Total    395?    


Prices influenced by raw materials and demand

With the continuous development of China's tire industry, the apparent consumption of butyl rubber continues to increase, reaching 414.8 kt in 2016, an increase of 13.15% YoY. The average annual growth rate of apparent consumption during 2011-2016 was 6.61%. Meanwhile, self-sufficiency went up from 25.23% in 2005 to 37.37% in 2016.
At present, the domestic consumption structure of butyl rubber is as follows: 84.5% tires, 10.5% medicine bottle closures and others 5.0%. The main classes of general butyl rubber imports are 268, 301, and BK1675N, and the main brands of halogenated butyl rubber imports are Lanxess' 2030 and X2; ExxonMobil's 2211, 2222, 2235, 2244, 2255, 1065, and 1068; and Russia's CBK150, CBK139, BBK232, and BBK239.
The rapid development of China's automobile industry drives the progress of radial tires, tires' aspect ratio and tubeless tires. At the same time, the development of expressways has accelerated the development of high-performance tires containing butyl rubber. At present, the aspect ratios of butyl tubes (including farm implement tires) and radial tires in China are still relatively low, and there is a good space for development in the future, which in turn will increase the demand for butyl rubber.
In order to ensure medication safety, national medical authorities stipulate that natural rubber be replaced by butyl rubber in medical bottle rubber closures (all forms of drugs included, such as powder-injection, infusion and oral solution). With the rapid development of the pharmaceutical industry, the demand for medical bottle closures, and hence the demand for butyl rubber is bound to increase.
In addition, the demand for butyl rubber from makers of tapes, hoses, adhesives, waterproofing membranes, etc. is growing. Demand for butyl rubber in China will likely reach 500-550 kt by 2021, of which demand for halogenated butyl rubber will be 430-450  kt.
The market price of butyl rubber in China is affected mainly by the raw material – isobutylene – and the demand for butyl rubber. From 2013 to 2017, the market price of ordinary butyl rubber fluctuated a lot with a declining trend overall. From January to March 2017, the price kept rising, from RMB17 300/t in January to RMB19 700/t in March, due mainly to increasing raw material prices and shutdowns of many domestic plants. Then in April, prices started to fall, declining to RMB14 200/t in October on the back of a drop in the whole rubber market and an increase in operating rates.

Table 2    China’s major import sources for butyl rubber, 2012-2016 (kt)

Source    2012    2013    2014    2015    2016
USA    77.3    65.2    69.7    67.4    69.6
Russia    40.5    39.4    44.6    50.2    48.9
Singapore    0.4    8.8    41.8    47.0    44.9
Belgium    42.0    37.9    40.4    35.6    31.5
Japan    23.1    31.4    24.2    18.3    27.3
Canada    33.8    54.6    30.3    12.8    31.3
UK    8.3    5.9    6.6    7.4    17.0
France    3.4    6.9    7.7    5.9    1.1
Taiwan    0.3    0.3    0.5    0.3    0.1
Korea    0.5    0.2    0.4    0.4    0.5
Malaysia    0.0    0.5    2.3    1.4    1.2
Others    1.0    0.7    0.4    2.1    0.5
Total    230.6    251.8    268.9    248.8    273.9


Development trends

The world’s major production technology providers will improve slurry methods further. The direction of technology development is increasing polymerization temperature while decreasing energy consumption. The direction of equipment and process development is better polymerization reactors and control of the technology and process. The objectives of research are to reduce production costs and pollution. High performance, environmental protection and low carbon emission are the development orientation for butyl rubber. The solution method, new catalysts such as metallocene, and technologies like grafting and ionization chemical modification will also be applied to butyl rubber production.
Capacity will continue to increase, and competition will become more intense. The next few years will see several of butyl rubber plants come on stream. Formosa (Ningbo) plans to build a 50 kt/a halogenated butyl rubber unit in Ningbo; Shandong Shenchi PC plans to construct a 60 kt/a plant; Dongchen Holding Group will build a 50 kt/a unit; and CNOOC Huizhou will also construct a 50 kt/a line. If these units are all completed and put into operation as scheduled, China’s capacity will reach 600 kt/a by 2021.
While retaining the good performance of butyl rubber, halogenated butyl rubber also has a rapid co-curing property like natural rubber and styrene-butadiene rubber, and is thus irreplaceable in the production of radial tires. With the rapid development of the tire industry and radial tires in particular, demand for halogenated butyl rubber will keep increasing. Ordinary butyl rubber is gradually being replaced by halogenated butyl rubber, which will become the focus of development.
With the continuous increase of capacity and gradual improvement of technology, the operating rates of butyl rubber plants in China will keep increasing and output will improve greatly. However, as domestic products are still not able to meet all the production requirements, butyl rubber will still be imported for a long time. But the volume will gradually decrease. On the other hand, export will increase, but not by a large margin.