Wang Yuying, Research Institute of Jilin Petrochemical
Li Yanan, Jilin Petrochemical Fertilizer Plant
Capacity will go up by over 20% in the second half of 2021
Chinese producers began to embark on the R&D of epoxy resin from 1958 and put it into industrial production rapidly. So far, the industry has been well developed all over the country. The domestic capacities increased by 113 000 t/a in the first half of 2021, all of which were made from liquid epoxy resin units. The total capacities of epoxy resin hit 2.35 million tons at the end of June, of which, the capacities of liquid epoxy resin accounted for more than 64%.
Compared with epoxy resin producers in the US and Europe, producers in China started later and the number of large-sized ones was limited. The top ten epoxy resin producers accounted for 68.6% of the total domestic capacity in the first half of 2021. Table 1 shows major domestic epoxy resin producers and their capacities in the first half of 2021.
According to rough statistics of Oilchem.net, there will be six epoxy resin plants to be put into operation in the second half of 2021, with a total capacity of about 500 kt/a. Table 2 shows the new units that are expected to be put into operation in the second half of 2021.
Most of the domestic epoxy resin capacity increments were expansion projects for existing plants and some of the new capacities were exclusively matched with upstream epichlorohydrin units, while very a few of the new capacities were matched with upstream bisphenol A/epichlorohydrin or downstream units. If the new units are put into operation as scheduled, the total capacities will increase by more than 20% in the second half of 2021.
The industry will remain oversupplied for a certain period of time
Chinese epoxy resin output fluctuated from 2016 to 2020. The domestic epoxy resin output was 1.2859 million tons in 2020, taking a year-on-year increase of 6.29%.
The output increased in the first half of 2021. According to the statistics of Oilchem.net, the output hit about 710 000 tons, up by 11.79% from the same period of 2020, and the average operating rate was 65%. However, the operating rate is expected to fall in the second half of the year as a result of the epidemic and restricted road transport. Figure 1 shows the change trend of China's epoxy resin output from 2016 to the first half of 2021.
Figure 1 Change trend of epoxy resin output in China from 2016 to the first half of 2021
The global industrial transfer has been driving downstream industries, such as electronics and ships, to move to China, and this pushes up the demand for epoxy resin, making China the largest consumption area for epoxy resin since long ago. China's apparent consumption of epoxy resin kept increasing from 2016 to 2020, with an average annual growth rate of 6%. Table 3 indicates the supply and demand of epoxy resin in China from 2016 to the first half of 2021.
By downstream application, Chinese epoxy resin is mainly used in the fields of coatings, electronic and electrical, composite materials and adhesives. In 2020, the consumption of epoxy resin in the four sectors accounted for 42%, 30.5%, 20% and 7.5% of the total, respectively. Figure 2 shows the breakdown.
Figure 2 Downstream markets of epoxy resin in 2020
Among the downstream markets, composite materials and infrastructures will become the main consumers of epoxy resin that will push up the upstream output. The tailwinds such as the increasing demand for wind power, and the ongoing construction and maintenance of high-speed railway, high-speed expressway, as well as subway and airport alongside the development of urbanization, will continue to drive up the epoxy resin market.
With the start-up of new epoxy resin plants, the domestic availabilities are expected to increase. Demand is showing a recovering sign, but the growth is unlikely to outpace that of supply, so the epoxy resin industry will remain surplus in a certain period.
Shutdowns of foreign plants result in a sharp increase in exports in the first half of the year
China's epoxy resin imports increased year by year from 2016 to 2020, with an average annual growth rate of 14.51%. The domestic market was heavily beaten by the epidemic in 2020, but a wave of wind power installment drove up demand for epoxy resin, leaving the available spot goods to tighten. Thus, the import volume increased significantly. The total import volume of epoxy resin was 404 800 tons in 2020, an increase of 40.17% from the same period of 2019. Figure 3 gives the details.
Figure 3 Change trend of China's epoxy resin import from 2016 to 2020
According to customs statistics, the top three import sources in 2020 were China Taiwan, South Korea and the US. The import volumes hit 147 000 tons, 115 700 tons and 43 800 tons, accounting for 36.31%, 28.58% and 10.82% respectively.
China's export volume of epoxy resin totaled 47 200 tons in 2020, taking a year-on-year decrease of 1.97%. They were mainly sold to surrounding countries such as Thailand, Vietnam, Japan and South Korea.
China's epoxy resin import volume was 176 700 tonsin the first half of 2021, an increase of 9.9% from the same period of 2020. The export volume was 47 800 tons, an increase of 105.2% from a year ago. The main reason behind the increase was that a big number of foreign plants were shut due to extremely cold weather in the US and Europein mid-February, and many of them turned to China for purchasing. It is expected that the export volume will fall back to the normal level in the second half of the year.
With the rise of China's manufacturing industry and the rapid growth of domestic epoxy resin industry in recent years, it is expected that the apparent consumption of epoxy resin will increase to 2.21 million tons by 2026. However, the general-purpose epoxy resin market is almost saturated, so the operating rate is less than 50%. Whilst the demand for high-end epoxy resin is huge and most of it is covered by imports. Therefore, it is urgent to broaden new application fields and make greater efforts to the development of high-end products.
