China's Olefin & Aromatics Industry Chain to Face Excess Capacity Pressure
Click:0    DateTime:Apr.24,2021


By Yang Weilan, Zhang Xiaohan, CNCIC

During the "13th Five-Year Plan" period, China has built a number of petrochemical, coal chemical, and propane dehydrogenation projects, increasing the capacities of olefins and aromatics. There are still more projects to be completed during the "14th Five-Year Plan" period. At the meantime, the pressure of overcapacity in the refining industry is being transmitted to the petrochemical industry, and the supply and demand pattern of the olefin & aromatics industry chain will also undergo major changes. It is estimated that by 2025, the capacities of ethylene, propylene, butadiene and their downstream products, as well as benzene, paraxylene and their derivatives will face overcapacity or structural surplus.

Ethylene industry chain

   (1) Ethylene
   In 2020, with another 5.13 million t/a, China’s total ethylene capacity reached 33.67 million t/a, an increase of 18.0% over 2019. Among them, ethylene cracking accounted for 72.0%, coal/methanol to olefins accounted for 22.2%, light hydrocarbon cracking accounted for 4.9%, and heavy oil cracking accounted for 0.9%. The ethylene utilization in 2020 is estimated to be 90%. The average annual growth rate of production capacity from 2016 to 2020 is 10.4%. From 2020 to 2025, China will see at least 10 million t/a new capacities per year, with an average annual growth at 5.3%.

   Meanwhile the ethylene demand in 2020 was about 32.14 million tons. The major downstream products are polyethylene, ethylene oxide, ethylene glycol and styrene, and their ethylene consumptions are 64%, 10%, 9% and 9%. China’s self-sufficiency rate of ethylene in 2020 was 94%. The domestic ethylene demand is expected to grow at an average annual rate of 8.8% from 2020 to 2025; and capacity/demand and total supply/total demand in 2025 will be 89% and 92.7% respectively.
   (2) Polyethylene
   In 2020, China’s total polyethylene capacity reached 22.56 million t/a, with 3.5 million t/a expansion, an increase of 18% over 2019. The capacity utilization was 90%. From 2020 to 2025, there will be another 10.3 million t/a new polyethylene capacities, with an average annual growth rate of 7.8%.
   In 2020, China's polyethylene demand was 38.71 million tons, with a self-sufficiency rate of 53%. It is estimated that the average annual growth rate of polyethylene demand from 2020 to 2025 will be 7.1%; the capacity/demand and total supply/total demand in 2025 will be 60% and 94% respectively.
   (3) EVA
   China did not have new EVA capacity in 2020, with a total at 970 kt/a; and the capacity utilization rate was 76%. Through 2020 to 2025, China will see 930 kt/a EVA capacity expansion, with an average annual growth rate of 14.3%.
   In 2020, China's EVA demand was 1.86 million tons, and the self-sufficiency rate was 40%. It is estimated that the average annual growth of EVA demand from 2020 to 2025 will be 8.7%; capacity/demand and total supply/total demand in 2025 will be 68% and 107% respectively.
   (4) Ethylene oxide
   In 2020, China had 650 kt/a new ethylene oxide capacities, and the total figure reached 5.44 million t/a, an increase of 13% over 2019; and the ethylene oxide capacity utilization rate was 67%. From 2020 to 2025, ethylene oxide capacity will be increased by 1 million t/a, with an average annual growth rate of 3.4%.
   China's ethylene oxide demand was 3.67 million tons in 2020, and the self-sufficiency rate was 100%. It is estimated that the average annual growth rate of ethylene oxide demand from 2020 to 2025 will be 7.3%; the production capacity/demand and total supply/total demand are both 124% in 2025.
   (5) Ethylene glycol
   China's new ethylene glycol capacity in 2020 was 4.94 million t/a, and the total reached 15.7 million t/a, an increase of 46% over 2019, with the capacity utilization at 69%. From 2020 to 2025, ethylene glycol capacity will be increased by 10.17 million t/a, an average annual growth of 10.5%.
   China's ethylene glycol demand was 21.63 million tons in 2020, with a self-sufficiency rate of 50%. It is estimated that the average annual growth rate of ethylene glycol demand from 2020 to 2025 will be 6%; the capacity/demand and total supply/total demand in 2025 will be 89% and 127% respectively.

   (6) Styrene
   In 2020, China's new styrene capacity was 2.66 million t/a, and the total capacity reached 11.97 million t/a, an increase of 29% over 2019; and the capacity utilization rate was 83%. From 2020 to 2025, styrene capacity will be increased by 8.99 million t/a, with an average annual growth rate of 11.9%.
   In 2020, China's styrene demand was 12.89 million tons, and the self-sufficiency rate was 78%. It is estimated that the average annual growth rate of China's styrene demand from 2020 to 2025 will be 5.1%; the capacity/demand and total supply/total demand in 2025 will be 127% and 144.1%, respectively.
   (7) Overcapacity of main products
   In 2020, the ethylene oxide capacity/demand ratio was 148%, and other ethylene downstream products had different supply and demand gaps.
   In 2025, the capacity/demand ratios of ethylene oxide and styrene will be 124% and 127%, respectively, facing pressure from overcapacity. The capacity/demand ratios of polyethylene, EVA, and ethylene glycol will be 89%, 68%, and 60%, respectively. The import volume of these three products will still be large in 2025. The supply and demand of polyethylene and EVA will be tightly balanced, and ethylene glycol will see a structural surplus. The supply and demand of main products in the ethylene industry chain in 2020 and 2025 is shown in Table 1.

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Propylene industry chain

   (1) Propylene
   The year 2020 saw new propylene capacities from steam cracking, catalytic cracking, methanol-to-olefins, and propane dehydrogenation, with the expansion at 7.76 million t/a, and the total capacity reaching 47.03 million t/a, an increase of 20% over 2019. The average annual growth rate from 2016 to 2020 was 9.5%; and the utilization rate of propylene capacity in 2020 was 77%. Through 2020 to 2025, China will have 20 million t/a propylene capacity, with an average annual growth rate of 6.7%.
   China's propylene demand in 2020 was 38.59 million tons, and the self-sufficiency rate was 94%. It is estimated that the average annual growth rate of propylene demand from 2020 to 2025 will be 8.3%; the capacity/demand and total supply/total demand in 2025 will be 113% and 117% respectively.

   (2) Polypropylene
   In 2020, the polypropylene capacity expanded by 3.7 million t/a, and the total capacity reached 28.16 million t/a, an increase of 15% over 2019. The utilization rate was 91% in 2020. From 2020 to 2025, China will see another 17.69 million t/a polypropylene capacity, with an average annual growth rate of 10.2%.
   In 2020, China's polypropylene demand was 31.59 million tons, with a self-sufficiency rate of 81%. It is estimated that the average annual growth rate of polypropylene demand from 2020 to 2025 will be 6.4%; the capacity/demand and total supply/total demand in 2025 will be 106% and 120%, respectively.
   (3) Propylene oxide
   There was no new capacity for propylene oxide in 2020, with the total figure at 3.21 million t/a; and the utilization rate was 80%. From 2020 to 2025, the propylene oxide capacity will add by 4.62 million t/a, with an average annual growth rate of 19.5%.
   In 2020, China's propylene oxide demand was 3.08 million tons, with a self-sufficiency rate of 83%. It is estimated that the average annual growth rate of propylene oxide demand from 2020 to 2025 will be 7.7%; the capacity/demand and total supply/total demand in 2025 will be 176% and 187%, respectively.
   (4) Acetone
   In 2020, China’s acetone capacity rose by 370 kt/a, and the total capacity reached 1.96 million t/a, an increase of 23% over 2019. The capacity utilization rate was 75%. From 2020 to 2025, acetone capacity will be increased by 500 kt/a, with an average annual growth rate of 4.7%. 
   China's acetone demand was 2.2 million tons in 2020, and the self-sufficiency rate was 67%. It is estimated that the average annual growth rate of acetone demand from 2020 to 2025 will be 12.8%; the capacity/demand and total supply/total demand in 2025 will be 61% and 79%, respectively.
   (5) Bisphenol A
   In 2020, China's total capacity of bisphenol A was 1.79 million t/a, with a utilization of 88%. Through 2020 to 2025, bisphenol A capacity will be increased by 1.98 million t/a, with an average annual growth rate of 16.1%.
   China's demand for bisphenol A in 2020 was 2.13 million tons, with a self-sufficiency rate of 73%. It is estimated that the average annual growth rate of bisphenol A demand from 2020 to 2025 will be 11.3%; the capacity/demand and total supply/total demand in 2025 will be 104% and 119%, respectively.
   (6) Polycarbonate
   In 2020, China’s polycarbonate capacity rose by 280 kt/a, and the total capacity reached 1.94 million t/a, an increase of 17% over 2019. The capacity utilization rate was 49%. From 2020 to 2025, polycarbonate capacity will be increased by 1.79 million t/a, with an average annual growth rate of 13.9%.
   In 2020, China's polycarbonate demand was 2.34 million tons, with a self-sufficiency rate of 41%. It is estimated that the average annual growth rate of polycarbonate demand from 2020 to 2025 will be 9.3%; the capacity/demand and total supply/total demand in 2025 will be 102% and 137%, respectively.
   (7) Epoxy resin
   In 2020, China's total epoxy resin capacity reached 2.21 million t/a, with a utilization of 55%. From 2020 to 2025, the capacity of epoxy resin will be increased by 300 kt/a, with an average annual growth rate of 2.6%. 
   China's epoxy resin demand reached 1.56 million tons in 2020, and the self-sufficiency rate was 78%. It is estimated that the average annual growth rate of epoxy resin demand from 2020 to 2025 will be 4.0%; the capacity/demand and total supply/total demand in 2025 will be 132% and 149%, respectively.
   (8) Acrylic acid
   In 2020, China's acrylic acid capacity was 3.36 million t/a, with the utilization of 79%. From 2020 to 2025, acrylic acid capacity will be increased by 1.04 million t/a, with an average annual growth rate of 5.5%. 
   The demand for acrylic acid in China in 2020 was 2.66 million tons, and the self-sufficiency rate was 100%. It is estimated that the average annual growth rate of acrylic acid demand from 2020 to 2025 is 7.9%; the production capacity/demand and total supply/total demand are both 113% in 2025.
   (9) n-butanol
   In 2020, China's n-butanol capacity was 2.59 million t/a, with a capacity utilization rate of 72%. From 2020 to 2025, the production capacity of n-butanol will be increased by 530 kt/a, with an average annual growth rate of 3.8%. 
   In 2020, China's demand for n-butanol was 2.15 million tons, with a self-sufficiency rate of 87%. It is estimated that the average annual growth rate of n-butanol demand from 2020 to 2025 will be 8.0%; the capacity/demand and total supply/total demand in 2025 will be 99% and 108%, respectively.
   (10) Isooctyl alcohol
   In 2020, China's isooctyl alcohol capacity was 2.38 million t/a, with a capacity utilization rate of 87%. From 2020 to 2025, 210 kt/a capacity of isooctyl alcohol will be added, with an average annual growth rate of 1.7%. 
   China's demand for isooctyl alcohol in 2020 was 2.35 million tons, and the self-sufficiency rate was 88%. It is estimated that the average annual growth rate of isooctanol demand from 2020 to 2025 will be 6.8%; the capacity/demand and total supply/total demand in 2025 will be 79% and 87%, respectively.
   (11) Acrylonitrile
   In 2020, China had 260 kt/a more of acrylonitrile capacity, and the total figure reached 2.6 million t/a, an increase of 11% over 2019. The capacity utilization rate was 86%. From 2020 to 2025, acrylonitrile production capacity will be increased by 980 kt/a, with an average annual growth rate of 6.6%. 
   In 2020, China's acrylonitrile demand was 2.47 million tons, with a self-sufficiency rate of 90%. It is estimated that the average annual growth rate of acrylonitrile demand from 2020 to 2025 will be 4.2%; the capacity/demand and total supply/total demand in 2025 will be 118% and 125%, respectively.
   (12) Overcapacity of main products
   In 2020, among the main downstream products of propylene, the capacity/demand ratio of acrylic acid and n-butanol was above 120%, and that of others was below 110%. The utilization of all products was over 75%, except for the n-butanol, whose operating rate was 72%. 
   In 2025, the capacity/demand ratio of propylene oxide will reach 176. Due to the large import volume of high-end varieties, polypropylene will face the pressure of structural overcapacity and the decline in operating rate, and acrylonitrile will also face the pressure of falling operating rate. The supply and demand balance of main products in the propylene industry chain in 2020 and 2025 is shown in Table 2.

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Butadiene industry chain

   (1) Butadiene
   In 2020, China's had 830 kt/a new butadiene capacity, and the total capacity reached 4.89 million t/a, an increase of 20% over 2019. The capacity utilization rate was 74%. From 2020 to 2025, 1.3 million t/a of butadiene production capacity will be added, with an average annual growth rate of 4.8%. 
   In 2020, China's butadiene demand was 4.07 million tons, with a self-sufficiency rate of 89%. It is estimated that the average annual growth rate of butadiene demand from 2020 to 2025 will be 5.0%; the capacity/demand and total supply/total demand in 2025 will be 119% and 128%, respectively.
   (2) ABS
   In 2020, China's total ABS capacity reached 4.27 million t/a, with a utilization rate of 96%. From 2020 to 2025, ABS production capacity will be increased by 3.65 million t/a, with an average annual growth rate of 13.2%. 
   In 2020, China's ABS demand was 6.06 million tons, with a self-sufficiency rate of 68%. It is estimated that the average annual growth rate of ABS demand from 2020 to 2025 will be 8%; the capacity/demand and total supply/total demand in 2025 will be 89% and 111%, respectively.
   (3) Styrene butadiene rubber
   In 2020, China's total capacity of styrene butadiene rubber was 1.74 million t/a, with a utilization rate of 62%. From 2020 to 2025, there will be no new capacity for styrene butadiene rubber. 
   China's demand for styrene butadiene rubber was 1.43 million tons in 2020, with a self-sufficiency rate of 75%. It is estimated that the average annual growth rate of styrene butadiene rubber demand from 2020 to 2025 will be 1%; the capacity/demand and total supply/total demand in 2025 will be 116% and 138%, respectively.
   (4) Butadiene rubber
   In 2020, China's butadiene rubber capacity totaled 1.48 million t/a, with a capacity utilization rate of 65%. From 2020 to 2025, there will be no new production capacity for butadiene rubber.
   In 2020, the demand for butadiene rubber was 1.19 million tons, and the self-sufficiency rate was 81%. It is estimated that the average annual growth rate of butadiene rubber demand from 2020 to 2025 will be 3.6%; the capacity/demand and total supply/total demand in 2025 will be 104% and 119%, respectively.
   (5) SBS
   In 2020, China's SBS capacity added by 150 kt/a, totaling 1.57 million t/a, an increase of 11% over 2019. The capacity utilization was 60%. From 2020 to 2025, SBS capacity will be increased by 250 kt/a, with an average annual growth rate of 3.0%. 
   In 2020, China’s SBS demand was 970 kt, and the self-sufficiency rate was 97%. It is estimated that the average annual growth rate of SBS demand from 2020 to 2025 will be 3.7%; the capacity/demand and total supply/total demand in 2025 will be 157% and 158%, respectively.
   (6) Overcapacity of main products
   In 2020, among the main downstream products of butadiene, the capacity/demand ratio of the three major rubbers and elastomers was all above 120%. The domestic operating rate was low due to overcapacity. The capacity/demand ratio of ABS was 70%, leaving a supply gap.
   As there will be no new projects for butadiene rubber and styrene butadiene rubber, the capacity/demand ratio in 2025 will decrease. SBS still has new projects, and the capacity/demand ratio will reach 157%. The domestic utilization of the three rubbers will still be low due to the overcapacity. The ABS capacity/demand ratio will be 89%, but because of the long-term existence of high-end varieties imports, it will face the pressure of structural surplus and declining operating rate. The supply and demand balance of main products in the butadiene industry chain in 2020 and 2025 is shown in Table 3.

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Aromatics industry chain

   (1) Benzene
   In 2020, China's new benzene capacity was 2.11 million t/a, and the total capacity reached 16.19 million t/a, an increase of 15% over 2019. The capacity utilization rate was 79%. From 2020 to 2025, the newly added benzene capacity will be 6.71 million t/a, with an average annual growth rate of 7.2%. 
   In 2020, China's demand for benzene was 14.87 million tons, with a self-sufficiency rate of 86%. It is estimated that the average annual growth rate of benzene demand from 2020 to 2025 will be 6.8%; the capacity/demand and total supply/total demand in 2025 will be 111% and 121%, respectively.
   (2) Phenol
   In 2020, China had 620 kt/a new phenol capacity, and the total capacity reached 3.26 million t/a, an increase of 24% over 2019. The capacity utilization was 75%. From 2020 to 2025, phenol capacity will be increased by 820 kt/a, with an average annual growth rate of 4.6%.  
   China's phenol demand in 2020 was 3.14 million tons, and the self-sufficiency rate was 78%. It is estimated that the average annual growth rate of phenol demand from 2020 to 2025 will be 11.5%; the capacity/demand and total supply/total demand in 2025 will be 75% and 88%, respectively.
   (4) Caprolactam
   In 2020, China had 320 kt/a new caprolactam capacity, and the total capacity reached 4.37 million t/a, an increase of 8% over 2019. The capacity utilization rate was 79%. From 2020 to 2025, the capacity of caprolactam will be increased by 2.2 million t/a, with an average annual growth rate of 8.5%. 
   China's caprolactam demand in 2020 was 3.71 million tons, and the self-sufficiency rate was 93%. It is estimated that the average annual growth rate of caprolactam demand from 2020 to 2025 will be 7.0%; the capacity/demand and total supply/total demand in 2025 will be 126% and 131%, respectively.
   (5) Adipic acid
   In 2020, China's total adipic acid production capacity was 2.71 million t/a, with a capacity utilization rate of 57%. From 2020 to 2025, there will be no new capacity for adipic acid. 
   The demand for adipic acid in 2020 was 1.43 million tons, and the self-sufficiency rate was 108%. It is estimated that the average annual growth rate of adipic acid demand from 2020 to 2025 will be 1.9%; the capacity/demand and total supply/total demand in 2025 will be 172% and 161%, respectively.
   (6) Paraxylene
   In 2020, China’s new paraxylene capacity was 5 million t/a, and the total capacity reached 25.53 million t/a, an increase of 24% over 2019. The capacity utilization rate was 77%. From 2020 to 2025, the capacity of paraxylene will be increased by 20.9 million t/a, with an average annual growth rate of 12.7%. 
   China’s demand of paraxylene in 2020 was 32.1 million tons, with a self-sufficiency rate of 61%. It is estimated that the average annual growth rate of paraxylene demand from 2020 to 2025 will be 6.0%; the capacity/demand and total supply/total demand in 2025 will be 108% and 137%, respectively.
   (7) Terephthalic acid
   In 2020, China's new terephthalic acid capacity reached 2.46 million t/a, with the total figure reaching 56.95 million t/a, an increase of 5% over 2019. The capacity utilization was 86%. From 2020 to 2025, the capacity of terephthalic acid will be increased by 11.5 million t/a, with an average annual growth rate of 3.7%. 
   The demand for terephthalic acid in China in 2020 was 48.97 million tons, and the self-sufficiency rate was 100%. It is estimated that the average annual growth rate of terephthalic acid demand from 2020 to 2025 will be 6.0%; the capacity/demand and total supply/total demand in 2025 will be 104% and 105%, respectively.
   (8) Overcapacity of main products
   In 2020, among the main downstream products of aromatics, the capacity/demand ratio of adipic acid was 190%, and the utilization was low. The capacity/demand ratio of paraxylene and styrene was 80% and 93%, and the self-sufficiency rate was 61 % and 78% respectively, leaving supply gaps.
   In 2025, the capacity/demand ratio of adipic acid will be 172%, and there will still be surplus. The capacity/demand ratios of paraxylene, styrene, and caprolactam will be 108%, 127%, and 126%, respectively, and coupled with the competition with imported products, they will face pressure from overcapacity and declining operating rate. The supply and demand balance of main products in the aromatics industry chain in 2020 and 2025 is shown in Table 4.   

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