By Sun Baohua and Zhao Hong, China Synthetic Rubber Industry Association

At the end of 2020, there were 61 producers of main synthetic rubber products in Chinese mainland. Their combined capacity was up 1.23% annually during 2016-2020 to 6.08 million t/a, and total output up 5.95% annually to 4.41 million tons, both in 2020, when domestic apparent consumption of main synthetic rubber products reached 5.56 million tons, up 4.36% annually from 2016 to 2020, according to data from the China Synthetic Rubber Industry Association. Over the past five years, China’s main synthetic rubber products showed three main characteristics – severe overcapacity in spite of an obvious decrease in new capacity, increasing output and changing consumption structure.

Development in the 13th Five-Year Plan period (2016-2020)

Compared with the end of 12th Five-Year Plan period (2011-2015), domestic output of main synthetic rubber products was up 1.37 million tons at the end of the 13th Five-Year Plan period, rate of capacity utilization up 21 percentage points, export volume up 86 000 tons, apparent consumption up 1.4 million tons, and degree of self-sufficiency up six percentage points. In addition, import volume remained stable, and degree of dependence on import was down six percentage points.

Some problems still existed, like low average rate of capacity utilization, structural excess capacity, insufficient supply of some high-end products, slow progress in technological industrialization and weak awareness of globalization. Further, although China is among the top in aspects of capacity, output, apparent consumption and import volume of synthetic rubber, its export volume ranks 12th, and the nation is in urgent need to improve related technologies and upgrade products. Hence, in the international synthetic rubber market, China is a big producer and a big consumer, but not a strong competitor.

Strategies, tasks and forecasts in the 14th Five-Year Plan period (2021-2025)

While optimizing industrial structure over the next five years, domestic synthetic rubber enterprises will improve core competitiveness, avoid constructing low-level homogeneous projects, seek for support from policies issued to boost domestic demand and break main bottlenecks relying on product quality. Through different strategies like the abovementioned, the rate of capacity utilization of main synthetic rubber products is forecast to meet the world’s average, the product self-sufficiency rate to exceed 80%, the proportion of products exported to surpass 6%, while the degree of dependence on import to fall below 21%, all by 2025. Other targets set for 2025 mainly involve industrial structure adjustment, technical innovation, product quality improvement, transition from large scale to strong competitiveness, etc.

There are seven detailed tasks domestic synthetic rubber companies are required to fulfill from 2021 to 2025: 1) making breakthroughs in core technologies; 2) striving for green, low-carbon development continually; 3) avoiding blindly expanding capacity; 4) upgrading products; 5) strengthening R&D on new applications of products; 6) expanding overseas markets; 7) improving intelligent manufacturing level.

Domestic capacity of synthetic rubber is forecast to surge from 2021 to 2025, given soaring supply of raw materials. Hence changes in current supply-demand structure. More specifically, main synthetic rubber product capacity may reach 7.9 million t/a in 2025, up 1.82 million t/a from the end of 2020 and up 6% annually, according to forecast of the China Synthetic Rubber Industry Association. SBCs are predicted to account for around 50% of capacity addition, and the remaining will mainly come from sectors of NBR, IIR, EPR, etc. Overcapacity will be severer.

In addition, average rate of capacity utilization will be dragged down to below that during 2016-2020, as capacity will grow much faster than downstream consumption. Rates of capacity utilization of NBR, SBCs and BR will be higher than the industry’s average. But SBC firms will also face severe overcapacity, if they continue to construct homogeneous projects and expand capacity irrationally. Domestic output of main synthetic rubber products is forecast to be up 3.2% annually over the next five years to around 5.2 million tons in 2025, and apparent consumption up 2.7% annually to 6.2 million tons.