By Xu Shinan, Oilchem

Complicated domestic market

China’s isopropanol (IPA) capacities reached 980 kt/a in 2018, as shown in Table 1. 

   Table 1  China’s IPA capacities reached 980 kt/a in 2018

   No new IPA plants were built in China by July 2019. Five new plants are to be built, including those at Qingdao Highly Chemical New Materials and Zibo Nalcohol Chemical, with a combined capacity of 110 kt/a, expected to start up in 2020 (Details are in Table 2).  

   Table 2  New IPA plants to be built in China

Exports and domestic demand move in different directions

   China’s domestic apparent IPA demand has been falling in 2016-2018. Table 3 shows China’s apparent IPA consumption during the period. 

   Table 3  China’s apparent IPA consumption in 2016-2018   (kt)

   China’s IPA exports have been rising at a fast pace in 2016-2018, climbing from 31 578 tons to 43 755 tons before reaching 104 919 tons. Consecutive declines in acetone prices in 2018 dragged down the production costs of acetone hydrogenation-based IPA. Hence, large volumes of domestic IPA products were exported to southeast Asia, with India being the leading export destination. China exported over 40 kt of IPA to India in 2018, followed by Indonesia, Thailand, Malaysia, Philippines etc. China’s IPA exports are expected to increase by 60-70% year on year in 2019.  

   IPA is mainly used to produce solvents and intermediates, with downstream industries including pharmaceutical, pesticides, coatings, plastics, cosmetics and industrial cleaning. Solvent is the largest consumer of IPA, covering around 70% of IPA consumption. Chemical intermediates contribute to 20% of IPA consumption, derived mainly from isopropylamine, isopropyl ether and esters production. In addition, electronic industrial cleaning agents, automotive antifreeze, disinfectants, and detergents account for about 7% of total IPA consumption.

   Most small and medium-sized enterprises face consolidations as China’s tightening of environmental protection regulations since 2017 calls for deep resources integration in the downstream industries such as coatings, printing inks and pesticides etc. The domestic IPA market was hard hit. The average run rate of domestic IPA plants dropped by nine percentage points year on year in 2017 to 42.56%, while IPA supply fell to around 400 kt, down by 7.19% year on year. 

Challenges and opportunities lie ahead

   China’s IPA application has not been fully and effectively developed as compared to developed countries. Currently, electronic industrial cleaning agents is one of the fast growing application fields around the world and China’s IPA demand is expected to increase by 2-5% annually on average.  

   China’s IPA exports mainly flowed into southeast Asia in the first half of 2019. The import demand of southeast Asia is around 200 kt/a. India-based DFPCL’s 100 kt/a IPA plant will start up in late 2019 or H1 2020. Zhuhai Changcheng’s 50 kt/a IPA plant in Malaysia will come on stream later. This will impose heavy pressure on China’s IPA exports and drag down its export volume from 2021.  

   There are full of uncertainties in IPA industry development. Weakening domestic demand and increasing self-sufficiency rate in southeast Asia will be heavy headwinds, which may worsen the overcapacity pressure on the domestic IPA market. Many enterprises are trying to replace ethanol with IPA to expand IPA applications. This is likely to push up IPA demand by 100-200 kt/a.