By Yan Huixing, JLC
Polyoxymethylene (POM) is a synthetic resin, a high-melting, high-density, high-crystalline thermoplastic engineering plastic without side chains. According to the synthesis method, POM is divided into copolyoxymethylene and homopolyoxymethylene, and copolyoxymethylene accounts for 80% of the total.
Domestic capacity rises, so do the prices
The development of POM in China started in the 1950’s, but due to factors such as backward technology, high loss of raw materials, and unstable quality, the progress was slow. China’s POM consumption has increased rapidly in the 21st century. Through the introduction of foreign copolyformaldehyde technology, the capacity has risen rapidly, but most of the high-end POM demands still rely on imports. Table 1 shows main domestic POM manufacturers in 2020.
In the first half of 2020, the outbreak of the Covid-19 pandemic severely impacted the market. The POM market price has been falling all the way, and the mainstream price hit a three-year low. In the second half of the year, with the strong support from the supply side, the POM industry is ushering in a "price increase". In October, the mainstream POM price rose to a new high of the year. Chart 1 shows the domestic POM market price trend in 2020.
Chart 1 China’s POM market in 2020
Domestic consumption growth accelerates
With the increase in production year by year, China’s POM supply-demand fundamental has changed significantly. While the high-end products are still relying on imports, the low-end ones are in excess already. Table 2 shows the supply and demand statistics of POM from 2017 to 2020. According to preliminary estimates, China’s POM production in 2020 will be approximately 338 300 tons, an increase of 22 000 tons (6.96%) year-on-year.
The domestic POM market is mainly occupied by import products, which have been in the range of 250 000 to 300 000 tons each year recently. Guangdong, Zhejiang and Shanghai are the main import customs, where electrical & electronics and automobile manufacturing concentrates. It is estimated that the total POM imports in 2020 will be about 296 900 tons, a year-on-year decrease of 19 600 tons (6.19%); the total export volume will be about 22 400 tons, a year-on-year decrease of 3 600 tons (13.85%).
With the rapid development of downstream industries such as automobiles, construction, household appliances, and agricultural irrigation, China’s POM resin application is gradually expanding, and new fields such as automobiles are emerging, which promotes the continuous and rapid increase in consumption. It is estimated that the domestic POM consumption in 2020 will be about 606 800 tons, an increase of 6 000 tons (0.99%) year-on-year.
Automobile has the most robust growth in the demand for POM
Among all the derivatives, electrical & electronics account for about 41% of the total POM consumption, daily consumer goods 28%, automobile 23%, industrial machinery 5%, and others 3%. Chart 2 shows China’s POM downstream consumption distribution.
Chart 2 China’s POM downstream consumption distribution
In the sector of electrical & electronics, POM is mainly used in the production of timers, switches, coil support frames, and instrument gears; as for daily consumer goods, POM is applied to zippers, clock parts, hardware equipment, toys, snowboards and fitness equipment; for automobiles, it is mainly used for dry radiator tank caps, fuel tank caps, charging ports, exhaust control valves, water valve bodies, and heaters; for industrial machinery, it is used to produce electric hammers, motor protection switches, gears and bearings, impellers, and bolts; in other fields, POM are used in the production of agricultural sprayers, gas meters, water meter parts, and military supplies. In addition, in recent years, POM has also made breakthroughs in the application of building materials, mainly in various sizes of pipe joints, water valves, faucets, etc. The market potential is huge.
The automobile industry is the field with the fastest growth and the greatest potential for POM in the future. In recent years, with the accelerated development of China’s automobile industry, automotive plastic products have developed from just being ordinary decorative parts to being structural parts and functional parts. Modified POM materials for vehicles have moved towards the direction of higher strength, better impact, and ultra-high flow composite materials and plastic alloys. Accelerating the development of high-performance automotive POM products can not only expand the application fields of POM products, but also promote the development of the entire automotive industry.
POM market will see an upward fluctuation in 1H 2021
Supply: Capacity reduction and supply-side structural reforms continue to advance. At present, all domestic POM producers are running at high loads.
Demand: Due to the slowdown in the growth of developed economies, the slowdown in the growth of emerging markets, and the difficulties in corporate investment, the continued increase momentum in POM prices will not be sufficient in the future.
As China’s electrical & electronics industries are developing rapidly, and the automobile industry has gradually become China's pillar industry, the market demand for POM will further increase, with the average annual demand growth rate exceeding 25% already. However, domestic market still relies heavily on imports. Speeding up technology upgrades and realizing self-sufficiency are still important tasks at present.
In the first half of 2021, the market prices of POM will continue to fluctuate upward. With good positioning and capital risk prevention, POM companies are expected to usher in new opportunities, driven by the continuous expansion and upgrading of the scale of the market.
