By Xiao Ming

Construction and shutdown at the same time

Since Beijing Dongfang Petrochemical Company (formerly Beijing Organic Chemical Plant) introduced technology from Japan in 1965 and built China’s first calcium carbide acetylene route unit (shifted to the petroleum ethylene method in 1995), China’s polyvinyl alcohol production has been developing steadily. In 2010, the capacity reached 871 000 t/a. During the period from 2011 to 2016, Sichuan, Xinjiang, Inner Mongolia and Ningxia vigorously developed calcium carbide industrial chain, witnessing concentrated growth of polyvinyl alcohol. In 2011, Sinopec Sichuan Vinylon Plant’s 100 000 t/a line was completed and put into operation; in 2012, Guangxi Guangwei Chemical (a wholly owned subsidiary of Anhui Wanwei High-tech Materials Co., Ltd.) launched its 50 000 t/a bio-ethylene routed polyvinyl alcohol unit; in 2012, Inner Mongolia Shuangxin Environmental Protection Material Co., Ltd. completed and put into operation a new plant with an annual capacity of 110 000 t/a, which was expanded to 130 000 t/a in 2015. Inner Mongolia Mengwei Technology’s first-phase 50 000 t/a newly built line was completed and put into operation in 2011, and its second-phase 50 000 t/a and the third-phase 100 000 t/a were was completed and put into operation respectively in 2012 and 2016, leading its total capacity to 200 000 t/a. In 2014, Sinopec Great Wall Energy Chemical (Ningxia) Co., Ltd. completed and launched a new unit with an annual capacity of 100 000 t/a. There was no new capacity after 2017.
   Along with such expansion, over 300 000 t/a outdated polyvinyl alcohol capacities have been shut down permanently, including Jiangxi Jiangwei High-Tech Co., Ltd., Hunan Xiangwei Co., Ltd., Fujian Textile & Chemical Fiber Group, Yunnan Yunwei Co., Ltd., Beijing Dongfang Petrochemical Co., Ltd. Organic Chemical Plant, Guizhou Crystal Organic Chemical Group Co., Ltd. and Lanzhou New West Vinylon Co., Ltd.
   In 2019, there were altogether 11 polyvinyl alcohol producers in China with a total capacity of 1.156 million t/a.

Steady growth in exports

   China imported 39 700 tons of polyvinyl alcohol in 2019, an increase of 0.25% year-on-year. Due to the continuous increase in domestic production and the limited growth of domestic consumption, the export volume continues to rise. In 2019, the export volume of polyvinyl alcohol increased to 171 300 tons, a year-on-year growth of 16.77%.

More fierce competition

   In 2019, China's apparent consumption of polyvinyl alcohol was 652 300 tons, a year-on-year increase of 2.02%. The balance of supply and demand of polyvinyl alcohol in China in 2009-2019 is shown in Chart 1.

Chart 1 China’s polyvinyl alcohol supply-demand, 2009-2019

   In China, polyvinyl alcohol is mainly used in the fields of polymerization aids, fabric sizing agents and adhesives. The consumption structure of China's polyvinyl alcohol in 2019 was: polymerization additives 37.0%, fabric slurry 20.0%, architectural coatings 6.0%, vinylon fiber 13.0 %, paper pulp and coating 8.0%, adhesives 11.0%, and others 5.0%.
   With the economic development, the domestic demand for high-count, high-density and high-end textiles has increased, the development of high-end paper industry and petroleum extraction has accelerated, and the demand for safety glass for automobiles and construction has risen rapidly. These industries provide a broad room for the development of new polyvinyl alcohol products. It is estimated that by 2024, the total demand for polyvinyl alcohol will reach 730 000 tons. As the capacity has already been surplus, the market competition will become more intense.
   The market prices of polyvinyl alcohol in China are mainly related to the prices of vinyl acetate, acetic acid, and calcium carbide, as well as import prices. In 2020, the decline in raw material prices and downstream demands and the impact of the COVID-19 epidemic caused market prices of polyvinyl alcohol to fall, going down from RMB12 600/t in January to RMB11 200/t in June. With the gradual control of the epidemic and the recovery of manufacturers and downstream demand, the market prices started to pick up gradually then.

Future development

   In the future, the polyvinyl alcohol production will still be based on the ethylene route and the acetylene method. Foreign producers will mainly adopt the ethylene method, while the Chinese manufacturers will use the acetylene route. Affected by factors of raw materials and environmental protection, the capacity of acetylene-based polyvinyl alcohol will gradually decrease. Petroleum-based polyvinyl alcohols will enhance their competitiveness over China’s acetylene-based exports when crude oil prices are low.
   China's polyvinyl alcohol capacity has been surplus, and the growth rate of consumption has slowed, coupled with increasingly strict environmental protection regulations and further strengthened safety supervision, the industry competition will further increase, and the pace of restructuring and integration will further accelerate. Enterprises, instead of building or expanding capacities, should work harder to expand and strengthen the PVA industry chain to avoid disorderly competition on the overcapacity.
   At present, most of China's polyvinyl alcohol products are conventional ones, and the industrial chain is relatively simple. Some high-end new products are mostly in the research and development stage. Therefore, China will still import a certain number of high-end varieties and multi-purpose polyvinyl alcohol products from Japan, Singapore and Taiwan. Domestic enterprises should continue to develop and improve polyvinyl alcohol products based on their performance, actively explore new applications, continue to develop new products, improve product structure, so as to gradually substitute imports with domestic products and realize the sustainable development of the industry.