Wang Yuying, Kong Qingguo

Ethylene vinyl acetate copolymer resin (EVA resin) is one of the major derivatives of ethylene. Domestic market has been short of supply as a result of the rapid growth of downstream photovoltaic and cable sectors in recent years, and furthermore, the majority of high-end products have been imported. With a batch of new plants coming online in 2021, the market is likely to be caught in surplus supply of low-end products in the longer term.

Capacity Increments to Double the Market Scale

The average annual capacity in China from 2017 to 2020 was at 972 000 t/a. Figure 1 shows EVA capacity during 2016-2020.

Figure 1: Chinese EVA Capacity, 2016-2020

Table 1 shows China’s key producers of EVA resin in 2020. Chinese EVA resin producers all adopted high-pressure mass polymerization process. Thecapacity of tubular-based EVA resin was at 600 000 tons, accounting for 61.73% of the total capacity; the capacity of autoclave-based EVA was at 372 000 tons, taking up 38.27% of the total.

At present, China is the biggest consumer of EVA resin in Asia. Thanks to the rapid growth of downstream photovoltaic and cable sectors, China is also regarded as the fastest-growing consumption region in Asia. The domestic EVA capacity has been in short supply in recent years, and to meet the growing demand, producers are committed to expanding capacity. However, the outbreak of the epidemic has postponed the start-up of new capacity from scheduled 2020 to 2021.

It is estimated that five EVA units (Shaanxi Yanchang Coal Yulinn Energy and Chemical Co., Ltd.’s 300 kt/a unit, Yangzi Petrochemical’s 100 kt/a unit, Sinochem Quanzhou’s 100 kt/a unit, Gulei Refining and Chemical’s 300 kt/a unit, and Zhongke Refining and Chemical’s 100kt/a unit) will be put into operation in 2021. The total EVA capacity in China will reach 1.872 million tons by the end of 2021, doubling that in 2020. Table 2 shows the start-up plan of China's EVA plants in 2021.

Differentiated Development of Downstream Sectors

EVA resin in China is mainly used in the fields of functional shed film, packaging film, shoe material, hot melt adhesive, wire and cable, solar photovoltaic, etc. Demand for EVA is increasing in line with the development of the downstream sectors. The apparent consumption of EVA resin in China was 1.3038 million tons in 2016 and 1.9 million tons in 2020, with an average annual growth rate of 10.0% during the period. Table 3 shows the supply and demand of EVA in China from 2016 to 2020.

The consumption structure of EVA resin in China has also changed greatly. The development of EVA downstream sectors is divergent amid the adjustment of domestic industrial structure. To be specific, foamed shoe materials and films, the traditional application fields of EVA resin, are seeing a reduction in the consumption proportion as the demand for EVA has been nearly saturated. At the same time, with the development of China's photovoltaic industry, pre coating technology and halogen-free flame retardant cable, solar cells, coating, as well as wire and cable have become important application fields of EVA resin, and their demand for EVA is growing steadily. The consumption structure of China's EVA resin in 2020 is shown in Figure 2.

Figure 2: Chinese EVA Resin Consumption Structure 2020

A slowdown in the development of shoe industry is expected to curtail demand for EVA in the future. Photovoltaic power generation, as a new clean energy project strongly supported by the state, will continue to grow, which will greatly promote the development of China's EVA downstream photovoltaic industry. The demand for EVA resin will keep growing rapidly as the bellwether of EVA downstream demand growth. As a new product, pre coating has big potential, and the demand for EVA is increasing year by year. China's demand for EVA resin is expected to reach 2.2-2.3 million tons by 2022.

EVA with High VA Content Largely Depends on Import

According to statistics, the import volume increased from 2016 to 2020 except in 2018 when the volume decreased due to bleak domestic demand. The average annual growth rate of China's EVA import volume was 5.75% during the period, and the import volume in 2020 reached 1.1768 million tons, an increase of 7.35% compared with that in 2019. Figure 3 shows the import volume and the change trend from 2016 to 2020.

Figure 3: Chinese EVA Import Volume and Changing Trend

With the growth of domestic EVA production year by year, China became less dependent on importing from 2016 to 2020, and the ratio of dependence on import dropped from 72.17% in 2016 to 61.61% in 2020. However, the imported EVA still occupied more than half of the market share in China (Table 4).

China's EVA resin imports are mainly from South Korea, Saudi Arabia, Taiwan Province, Singapore, Thailand and Japan. Despite plans for a number of new EVA units in China in 2021, there are uncertainties in the start-up and capacity release of the new units, and the production of high-end products will be limited. It is expected that the high-end EVA market will develop rapidly in 2021, and the supply will keep tightening especially on expectations that the demand for photovoltaic film will grow rapidly, so a large number of imported products will be still needed to cover the demand.

The export volume of China's EVA resin was at 50 000-60 000 tons from 2016 to 2020, with Kenya, Mozambique, Mexico, Nigeria, Sudan, Indonesia, Iran, and Vietnam as key target markets. Affected by the epidemic, the export volume is expected to remain flat in 2021.

To Assess Risks Cautiously for New Units

LDPE plants will concurrently produce EVA resin in order to enhance the comprehensive competitiveness of these plants, which will be the future trend; the consumption structure of EVA resin will change to some extent, with the proportion of hot melt adhesive, coating and photovoltaic to increase remarkably; the autoclave process is more appliable for EVA with high VA content products in China, making it more popular in new EVA plants.

There are limitations in the EVA resin industry. For example, most of domestic EVA resin products are general-purpose, so they are highly homogeneous, which leads to surplus supply of low-end general-purpose products and high dependence on import for high-end products; there is a lack of industrial production technologies with independent intellectual property rights in China, so producers will have to adopt the technologies introduced from overseas for new units, leaving them with few cards on the table. 

Therefore, producers with plans for new EVA plants should make a market survey, take into account feedstock sources and demand from downstream users, and do risk assessment cautiously so as to beat against headwinds in the furious market competition. The suggestions are as follows:

(1) With the LDPE/EVA concurrent production route, producers can flexibly adjust their production according to the market situation;

(2) It’s better to construct new units with a capacity of 100kt/a and above;

(3) Autoclave process is more suitable for the domestic EVA with high VA content, so it has become the main production process of new EVA plants in China;

    (4) New units still rely on technologies introduced from overseas suppliers, mainly from ExxonMobil, Basel, ENI and DuPont. Thus, Chinese producers should speed up the development and research of industrialization packaged technologies with independent intellectual property rights.