Acetone Consumption Structure Will Change and MMA & BPA Will Become the Driving Forces
Year:2018 ISSUE:17
COLUMN:ORGANICS
Click:275    DateTime:Sep.05,2018


By Yu Zhihang


New investment focuses on integrated industrial chain

   At the end of the “11th Five-Year Plan” period (2006-2010), China's acetone capacity was 544 kt/a. During the “12th Five-Year Plan” period (2011-2015), a new round of investment was attracted to the phenol/acetone industry. In 2015, China's acetone production capacity increased significantly to 1.53 million t/a as three major plants, namely, Shanghai CCS’s 400 kt/a line, Ningbo Formosa Plastics’ 480 kt/a line and Sinopec Mitsui’s 400 kt/a unit were put into operation. Acetone production increased from 870.2 kt in 2014 to 1.068 million tons in 2015, an increase of 22.7% YoY.
   Overcapacity and fierce competition in 2015 dragged the average operating rate of the industry down to 66%, which rose once to 78% in 2016 and fell again to 72% in 2017. In 2016 and 2017, there was no new capacity seen in the market. In 2018, 350 kt/a phenol/acetone plant of CNOOC Shell was put into operation.
   At present, there are six acetone producers in East China, with a capacity of 1.515 million t/a, accounting for 61.4% of the national total; two producers in North China with a production capacity of 230 kt/a, accounting for 15.2%; one producer, namely Lihuayi in Shandong whose capacity is 130 kt/a. The capacities in Northeast China and South China are 105 kt/a and 120 kt/a, taking up 6.9% and 7.9% respectively. There is no acetone capacity in Southwest China. The main domestic acetone producers in 2017 are shown in Table 1.

   Table 1    Major acetone producers in 2017

Region

Producer

Acetone ( kt/a)

Shandong

Lihuayi

130

North China

Yanshan PC

100

Sinopec Sabic

130

Northeast China

Jilin PC

55

Bluestar Harbin

50

East China

Yangzhou Shiyou

120

Changshu Changchun

180

Gaoqiao PC

150

Shanghai CCS

150

Formosa Ningbo

180

Sinopec Mitsui

150

South China

Huizhou Zhongxin

120

Total

1 515

   During the “11th Five-Year Plan” period, domestic acetone was in short supply, and its import dependency exceeded 60%. During the “12th Five-Year Plan” period, with the launch of several large phenol/acetone plants, the import volume dropped sharply. The net import of acetone decreased from 751 kt in 2010 to 489 kt in 2013, and then remained at over 400 kt in the following five years. The figure in 2017 was 495 kt.
   During the “13th Five-Year Plan” period (2016-2020), as a new round of investment will come into phenol/acetone sector, big plants like Zhejiang PC’s integrated refinery’s 650 kt/a phenol/acetone unit and Yantai Wanhua’s 650 kt/a phenol/acetone line will be launched, and the market will see another 500 kt/a acetone capacity. In the context of overcapacity, investors are considering the development of integrated product chain.


Consumption structure will Change

   In 2017, domestic consumption of acetone was 1.58 million tons, of which the consumption from solvent and MMA consumption accounted for 31% and 22%, bisphenol A accounted for 17%, isopropyl alcohol 19%, and methyl isobutyl ketone 5%, and medicine 6%. See Chart 1 for details.

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Chart 1 China’s acetone consumption in 2017


   1. BPA
   Before 2005, there was very few bisphenol A production unit in China and the total production capacity was only 58 kt/a. The capacity started to grow in 2007, and totaled 1.41 million t/a by the end of 2017, with the production reaching 1.02 million tons, consuming 270 kt of acetone.
   Most of the domestic bisphenol A production units are equipped with epoxy resin or polycarbonate lines as derivatives. At present, bisphenol A products for the market selling is about 600 kt, accounting for 42.5% of the capacity of bisphenol A.
   In the current situation, domestic bisphenol A will continue to be in short, and the utilization in 2018 will remain high. Its demand for phenol and acetone will increase.
   At present, Zhejiang Petrochemical and Wanhua Chemical have both expanded their bisphenol A capacity by 240 kt/a and will consume 130 kt of acetone. Both units are phenol/acetone, bisphenol A, and polycarbonate integrated.
   2. MMA
   As of the end of 2017, domestic MMA capacity was 945 kt/a, of which the capacity using acetone cyanohydrin process (ACH route) reached 655 kt/a with the production at 520 kt, consuming 350 kt of acetone.
   Affected by the policy of prohibition of importing recycled plastics, the supply of MMA became seriously short and the market prices soared in 2017. The average annual profit was around RMB8 000/t, which attracted investors. At present, acetone cyanohydrin route and isobutylene route are two major production processes of MMA, and the former will dominate the industry in the future.
   There are now acrylonitrile construction plans in Shandong, Northeast, Henan, Jiangsu, Ningxia and Guangdong. Acrylonitrile’s byproduct hydrocyanic acid is the ideal raw material of MMA. ACH routed MMA capacity will increase greatly from 2020 to 2021. It is estimated that the newly added capacity will be 485 kt/a and the consumption of acetone will be 329 kt.
   3. IPA
   As of the end of 2017, the domestic isopropyl alcohol/isopropylamine capacity is about 900 kt/a, and the capacity under operation is 580 kt/a, of which the acetone processed capacity is 350 kt/a, consuming 300 kt of acetone. In 2017, the import and export of isopropyl alcohol was respectively 10 kt and 20 kt. Due to overcapacity, there are no expansion plans, and its demand for acetone is stable.
   4. MIBK
   As of the end of 2017, there were 6 MIBK producers in China with a total capacity of 125 kt/a. In recent years, domestic demand for MIBK has grown rapidly, and the import dependency is high. In 2017, the import volume was 50 kt. At present, the domestic MIBK plants’ consumption of acetone is about 90 kt.
   It is expected that the structure of China's acetone consumption will also undergo an essential change in the next few years, and the situation of excessive consumption of solvents will be completely changed. In recent years, with the use of high-efficiency solvent recovery systems or the reduction of acetone as a solvent, the growth of acetone demand in the solvent field will slow down; the demand for acetone from bisphenol A will accelerate significantly; the demand for acetone by ACH/MMA will be significantly improved; the consumption of acetone by isopropanol/isopropylamine will remain the same.


Future development

   Since acetone is a co-product of the phenol plant, it is inevitably affected by phenol production. The downstream products of phenol are phenolic resin and bisphenol A, which account for 37% and 40% of the phenol consumption respectively. In recent years, environmental protection inspections have been intensified, forcing some small phenolic resin enterprises to stop production, which has affected the demand for phenol. However, in 2017, Fujian Shenyuan launched its 200 kt/a cyclohexanone capacity with phenol-cyclohexanone process, which relieved the problem of excess phenol supply. The company is now preparing to launch the second phase of the project. Jiangsu Weiming Petrochemical Co., Ltd. plans to launch its 300 kt/a phenol processed cyclohexanone unit in 2018, which will help to increase the operating rate of phenol/acetone plant and directly increase the supply of acetone.
   In recent years, the profit of acrylonitrile-MMA product chain has been particularly good, especially in 2017, thus attracting investors. ACH/MMA's consumption of acetone will expand rapidly, becoming the major engines of pushing up the demand for acetone.
   It is expected that the regional imbalance of acetone will be improved around 2020. The commissioning of Shandong Wanhua’s phenol/acetone plant eased the shortage in Shandong and reduced the logistics cost; Zhejiang PC’s Phase I’s acetone products are basically for captive use; products form CNOOC Shell's 350 kt/a unit are sold to the market, increasing the supply of acetone by 130 kt. The above three plants have provided 380 kt of acetone for the market. If the ACH/MMA units can be put into production on schedule, they can basically consume all these additional acetone capacities.