By Wang Yuying, Research Institute of PetroChina Jilin Petrochemical

Ethylene propylene rubber (EPR) includes ethylene-propylene methylene copolymer (EPM) and ethylene-propylene-non-conjugated diene rubber (EPDM), which are widely used in auto parts, waterproof materials for the construction sector, wire and cable sheath, heat-resistance rubber hose and tape, auto sealing parts, lubricant additives and polyolefin modification industry.     
   Global EPR capacity totalled 2 252 kt/a in 2018. Capacity additions reached 325 kt/a, registering a growth rate of 16.5%, which is mainly attributed to DowDupont, PetroRabigh and Italian Versalis. New capacities have hardly hit the EPR market.

Domestic market competition to intensify

   China has four EPR producers, with capacities totalling 370 kt/a, as shown in Table 1. A foreign enterprise, Arlanxeo has the largest EPR capacity, followed by PetroChina Jilin Petrochemical. A joint-venture company Shanghai Sinopec Mitsui Elastomers (SSME) ranks the third and the fourth place was taken by a foreign enterprise, South Korea’s SK.

   Table 1   China’s EPR producers in 2018

   Domestic EPR output reached around 195 kt in 2018, up by 24.6% year on year, with an average plant run rate at 53%.
   Shaanxi Yanchang Energy Petrochemical Group’s new 25 kt/a EPR plant was put into trial run in early April 2019. Shandong Tongzhou Chemical also plans to start up its new 25 kt/a EPR plant. No substantive progress has been made for other proposed or planned projects (details are shown in Table 2).

   Table 2   Planned new EPR plants

Automobile industry dominates EPR consumption

   Global EPR output amounted to around 1 500 kt in 2018. The US, West Europe, South Korea, Japan and China were major suppliers.
   EPR is mainly applied worldwide in auto, polymer modification, single-layer roof materials, cable/wire insulation and oil products additives. In recent years, with EPR prices retreating to reasonable levels, it has regained competitive strengths in consumption sectors and its consumption structure has changed. For instance, its consumption in auto manufacturing industry dropped to 28% from 43% in 2015, while that in polymer modification sector increased to 21% from 17% in 2015. EPR consumption in single-layer roof materials took a share of 17%, compared to 11% in 2015, and that in cable/wire insulation industry also saw its consumption ratio rising from 8% in 2015 to 10% in 2018. However, auto industry remains the major EPR consumer.
   Increasing domestic output has pushed up the market share of domestically made EPR to 46.9% in 2018 from 7.5% in 2013, but imports still occupy the other half.  
   In China, EPR is mainly used in auto parts, waterproof roll, cables & wires, oil products additives and polyolefin modification sector. In 2018, the auto industry accounted for 45.2% of domestic EPR consumption, polymer modification covered 12.5%, building materials took up 9.7%, sports facilities occupied 10.2%, oil products additives contributed to 7.7%, cables & wires, 7.5% and others, 7.2%. China’s EPR consumption structure in 2018 and consumption forecast in 2023 are shown in Table 3.

   Table 3   China’s EPR consumption structure in 2018 and consumption forecast  (kt)

   Around 188 kt of EPR was used in China’s automobile industry in 2018, up by 26 kt year on year. The year 2019 is deemed as an “adjustment” year for the auto industry, taking into account macro-economy and market factors. Auto production and sales may give limited support to the domestic EPR market.

Future development directions

   1. Further raise the localization rate
   China’s reliance rate on EPR imports remains at around 50%, despite year-on-year increases in domestic output. In order to further improve the localization rate, the scientific management of existing devices shall be strengthened, plants run rate shall be raised to reduce costs, raise efficiency and enhance product quality and no efforts shall be spared to new products development.

   2. Strengthen product application research
   EPR products have no unified standards, various grades and display significant difference in performances. They heavily rely on application technology support. Application research can be carried out for each grade to improve technological services.
   3. Go abroad, take part in international competitions
   PetroChina Jilin Petrochemical’s EPM products stepped into the Russian and Middle East markets in 2018. Boosted by China’s “Belt & Road” Initiative, EPR exports shall be expanded and the domestic EPR industry shall actively participate in international competitions.