By Yan Feng

Capacity expands rapidly while export grows slowly

With continuous improvement of acrylonitrile production technology and increasing demand, the acrylonitrile industry in China has been developing rapidly. As of the end of 2017, capacity had reached 1 947 kt/a.

   Supply pattern has changed, and investors are diverse

   Not long ago, Sinopec and PetroChina were the only acrylonitrile producers in China. However, since Shandong Ke Luer Chemical, a subsidiary of Wanda Holding Group Co., Ltd. launched its new acrylonitrile plant, the market has seen more and more privately owned manufacturers. At present, Sinopec (including its joint ventures) has 875 kt/a capacity, or 44.94% of the national total; PetroChina has 739 kt/a, or 37.96%; and the others have 333 kt/a, or 17.10%. Shanghai Secco is currently China's largest manufacturer of acrylonitrile, with a capacity of 520 kt/a, or 26.71% of the total; and next is Jilin PC, with a capacity of 452 kt/a, or 23.22%.

   All producers employ the propylene ammoxidation process

   Initially-adopted BP technology has been replaced with technology developed by Sinopec Shanghai Petrochemical Research Institute. Jiangsu Sailboat Petrochemical Co., Ltd. adopted DuPont technology for its plant launched in 2016. For catalyst, all Chinese plants use domestic catalysts, except for Shanghai Secco’s first phase 260 kt/a line, which uses an imported catalyst.

   Acrylonitrile plants are regionally concentrated

   Acrylonitrile plants are located mainly in Northeast, East and Northwest China, where propylene resources are abundant. The capacity in East China is 1 208 kt/a, accounting for 62.04% of the national total. Northeast China’s acrylonitrile capacity is 704 kt/a, accounting for 36.16% of the total. The main manufacturers of acrylonitrile in China in 2017 are shown in Table 1.

Table 1   Top 10 calcium carbide producing provinces, Jan.-Nov. 2017

   Recently, with the expansion of domestic acrylonitrile capacity, the market share of imported acrylonitrile has gradually declined. The import volume in 2017 (from January to November, the same below) was 245.6 kt, 11.33% down from the same period of 2016. Meanwhile, the export market is growing. In 2017, the export volume increased sharply to 7 850.67 tons, an increase of 302.60% YoY.

Apparent consumption is rising, and the market prices fluctuate widely

   In China, acrylonitrile is used mainly in the production of acrylic fiber, ABS, SAN, acrylamide and nitrile butadiene rubber. In recent years, with continuous growth of the acrylic fiber and ABS resin industries, the apparent consumption of acrylonitrile has kept increasing. Apparent consumption in 2017 (from January to November) was 1 937.7 kt, an increase of 7.07% over the same period of the previous year.
   As there are no new construction projects or capacity expansion plans for acrylic fiber in following years, and the consumption structure of acrylic fiber will not change too much, the demand for acrylonitrile will remain stable. It is forecast that acrylic fiber makers’ proportion of total acrylonitrile consumption in 2021 will fall to 30%.
   ABS and SAN makers surpassed acrylic fiber makers in 2015 to become the largest consumers of acrylonitrile. In the next few years, the market will see CNOOC LG’s 150 kt/a capacity, Shanghai Huayi Polymer’s 160 kt/a line, Guangxi Keyuan Plastics’ 400 kt/a capacity and Shandong Haili Group’s 500 kt/a plant come on stream. It is estimated that the manufacture of ABS / SAN will consume 40% of the total by 2021.
   As polyacrylamide’s application scope is expanding, its consumption in oil exploration, mining, papermaking and water treatment will increase further, so the proportion of polyacrylamide makers’ demand for acrylonitrile will likely increase to 24.0% by 2021.
   In the next few years, there will still be several newly built or expanded nitrile butadiene rubber plants, including INSA GPRO (Nanjing) Synthetic Rubber Co., Ltd., a joint venture of Sibur and Sinopec, China Bluestar Tianjin and Anhui Anqing Hualan Technology Co., Ltd. If all these units are put into production as planned, it is expected that by 2021, the share of acrylonitrile consumed in making nitrile butadiene rubber will increase to 2.8%.
   Coupled with the demand from makers of adiponitrile / hexamethylenediamine, water repellents, adhesives, other organic synthetic products, pharmaceuticals and aprotic polar solvents, it is estimated that the total demand for acrylonitrile in China will reach 2.2-2.25 million tpy.
   China’s acrylonitrile market prices have fluctuated widely in recent years. In 2017, domestic prices continued to climb, with the average reaching RMB12 019.17/t, up by 33.4% over the 2016 average. The main factors driving the price are on the supply side, as stringent environmental protection policies implemented in 2017 affect some acrylonitrile plants. July 15, Qilu PC’s 80 kt/a acrylonitrile unit was suddenly shut down due to environmental issues – a prelude to the price spike of acrylonitrile. Then, Shanghai Secco’s continuous production curtailment and Jilin PC’s utilization reduction to 50% in August shortened the supply. In addition, the hurricane in the United States in late August led two manufacturers in the hard-hit area to shut down, tightening the global supply, further stimulating the market price to rise.

Development trend

   China’s acrylonitrile production technology R&D will have the following characteristics in the coming years: 1) propylene ammoxidation will still be the major production route, and catalyst R&D will still be the key to improving the process; 2) the main technology developers will develop complete sets of acrylonitrile production process with their own catalyst technology as the core; 3) with rising awareness of environmental protection, the pollution caused by acrylonitrile production will attract more and more attention, so the development of low-pollution or non-polluting technology will become an inevitable trend; 4) the production route with propane as the raw material is getting promoted, which will further improve the selectivity and yield of the catalyst for minimizing production costs.
   China’s acrylonitrile capacity construction or expansion plans for the next few years include a new 260 kt/a line of a joint venture of INEOS and Tianjin Bohai Chemical (50%-50%) in Tianjin; Shandong Ke Luer Chemical’s 130 kt/a new capacity (second phase); Guangxi Keyuan New Materials’ 200 kt/a and Shandong Haili Group’s 130 kt/a. It is estimated that by 2021, China’s acrylonitrile capacity will reach 2.67 million t/a. The oversupply will lead to fierce competition.

   Acrylic fiber and ABS manufacture are still the two main consumers of acrylonitrile in China, but the growth of demand from acrylic fiber makers will slow down, and ABS will become the largest derivative of acrylonitrile in the future. The demand from makers of acrylamide and nitrile butadiene rubber will increase.
   Despite a bright future, the acrylonitrile market still faces challenges. The downturn in the global economy and the prospect of additional capacity are unfavorable to the market; large integrated producers are gaining pricing power, forcing old and inefficient plants to shut down; the cash cost challenge is predictable, including energy price trends, energy efficiency, transportation costs, etc. In this context, the integration of production, such as acrylonitrile—ABS and acrylonitrile—polyacrylamide will become a reasonable choice.
   With the entry of privately owned enterprises (Shenghong Group and Shandong Wanda) and foreign companies (BP and INEOS), investors and market players have become diverse. State-owned enterprises, private enterprises, foreign enterprises and imported product will share the market.
   The imports do not have advantages, and the acrylonitrile import volume is declining. With the construction and launch of new domestic plants, buyers will be less enthusiastic to purchase imported goods. The import volume continues to decline in the coming years. However, most consumers of the imported goods are Sino-foreign joint ventures or foreign-owned enterprises, so the imports will not be totally replaced by domestic product in the short term.
   The export volume will gradually increase. Before 2016, China’s acrylonitrile market was dependent on imports, with zero export volume. Now, with the improvement of self-sufficiency and the support of the government, the export market has opened up. China's acrylonitrile export volume was 1 950 tons in 2016, and 7 850.67 tons in 2017. In addition, according to an announcement by the Ministry of Commerce, acrylonitrile will no longer be listed in the "Inventory of Toxic Chemicals with Close Restrictions in China", beginning this year. In the future, the import and export of acrylonitrile will be more flexible, which is favorable for acrylonitrile’s export market.
   In 2018, a “green tariff” will be levied in China, and the force of environmental protection is self-evident. Acrylonitrile will face tremendous regulatory pressure and risk, and business operating costs will increase accordingly. Therefore, future market prices are likely to continue fluctuating widely in the short term.