DMC Market: Development of Multiple Processes and Robust Demand from Three Applications Fields
Click:0    DateTime:Apr.08,2022

Lu Jundian, Liu Xiaojie, Chen Erzhong, Yan Xiaoyu, Li Jieyi, Shenyang Research Institute of Chemical Industry

Development of multiple processes, construction of many projects

Dimethyl carbonate (DMC) is an important organic solvent and chemical intermediate. China's DMC industry has been developing for 26 years since 1995. PO transesterification was the only process to make DMC – a new type of low toxicity, safe and environmentally-friendly green organic solvent - that developed from scratch in line with the DMC market. Till 2020, other processes were adopted in the industry, giving a boost to its growth.

Year 2020 saw a sharp increase in DMC capacity especially new-route capacity. The capacity increased by 54.3% year on year to 1.136 million t/a. Year 2021 gained an increase of 44.9% in the capacity, which hit 1.646 million t/a. Table 1 shows the current situation of domestic DMC producers in 2021.

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At present, the domestic DMC capacity is concentrated in East China, accounting for 84%, especially in Shandong as it is adjacent to consumption areas. In 2020, the domestic DMC output was about 470 000 tons, an increase of about 6% from the same period of the previous year. The operating rates were only around 52%, as the output of the original plants was almost unchanged and the capacity utilization rate of new capacities was broadly affected by COVID-19. In 2021, with the recovery of downstream demand, the output reached 640 000 tons, an increase of 36.2% year on year. The annual operating rates were at about 60% and there will be upward room in the future.

There are many projects under construction or to be planned for construction following the rapid development of domestic DMC integration. Table 2 shows the domestic DMC capacity in planning or under construction during 2022-2026. It is expected that domestic DMC capacity will increase by 2.31 million t/a by 2026. In response to such whopping expansions, the cost will become the most important factor in future competition. Thus, the low-cost coal chemical route may stand out in the DMC industry.

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Lithium battery is taking higher portion in the four major derivatives

China has become one of the most important DMC producers and consumers with the expansion of domestic DMC capacity and the improvement of product quality. The downstream demand weakened to 465 000 tons amid the epidemic in 2020, which was fairly balanced with supply. Electrolyte solvent, polycarbonate and traditional fields are three major derivatives of DMC in China. With the rapid growth of electric vehicles and mobile devices, the proportion of DMC used as electrolyte solvent in lithium battery industry has increased significantly, accounting for about 29.0% in 2020. It is expected that the capacity of electric vehicles will continue to surge in the future, and hence the demand for DMC electrolyte solvent will increase. DMC is the main raw material of polycarbonate and the massive production of DMC is largely attributed to the development of non-phosgene synthesis process. With the rapid growth of polycarbonate demand, the proportion increased to 26.9% in 2020.

The apparent consumption of DMC increased significantly in 2021, registering a year-on-year increase of more than 50% in the first half of the year. The growth rate in February almost hit as high as 150%. DMC inventory stabilized from a high level in 2020, which was a reflection of the robust demand growth. Polycarbonate and electrolyte solvent are still the main derivatives of DMC. In 2021, the demand for DMC from non-phosgene-based PC sector increased to 31%, up by 2 percentage points year on year. The demand for DMC from electrolyte solvent sector increased to 28%, up by 1 percentage point year on year.

With the sustainable development of new energy vehicles, the demand for electronic-grade DMC increases steadily. In 2021, the consumption of DMC in the electrolyte industry was 180 000 tons. In addition, the demand from the non-phosgene-based polycarbonate sector was still a major contributor to the DMC market as a result of  the expansion of non-phosgene-based polycarbonate capacity. The proportion of demand from traditional derivatives such as coatings, adhesives and developing liquid fell to 25%, and the export accounted for about 16%. In 2021, electrolyte solvent, polycarbonate, traditional demand and export were four components of DMC consumption. They provided a demand structure of fundamental demand + high-end demand, in which, polycarbonate and electrolyte solvent were the two core consumers of DMC.

Under the policy of Carbon Neutrality, the demand for DMC in lithium battery electrolyte is stable in the future. It, together with polycarbonate, remains as the major derivatives of DMC. Some new capacities of DMC will be put into operation in 2022, and the prices will fall back to a normal range that will be acceptable for downstream markets. As a result, demand will resume moderately. In addition, as the government is making great efforts to develop new energy, there will be new non-phosgene-based polycarbonate plants coming on stream. Therefore, DMC products are expected to be largely consumed by polycarbonate and lithium battery sectors as well as export market. The demand for DMC will be stable-to-firm in the future. It is expected that the domestic demand for DMC will reach 1.3 million tons in 2023. Table 3 indicates the domestic DMC supply-demand status quo and prospect from 2020 to 2023.

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Prices stayed low in the first half of 2021 and witnessed big ups and downs in the second half

The domestic DMC prices stayed low in the first half of 2021, and saw sharp ups and downs in the second half of the year. The highest level occurred in October. For example, the ex-works prices in east China were at RMB14 000/ton during the month, flat with the highest level in 2020. The lowest level was seen in the end of March and the end of May, both at RMB5 200/ton. Figure 1 shows the price trend of domestic DMC in East China in 2021.

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Figure 1 East China price trend in 2021

Accord with green development trend and have big upward room of demand

The R&D of DMC and its derivatives has become one of the research hotspots of chemical industry in the world during the recent decade. In China, some processes have been developed in parallel and have gained breakthroughs, leading to wider application fields. CO2 is the most abundant carbon resource on the earth and CO2-based DMC can not only provide green products for chemical and petrochemical industries, but also solve environmental problems. Thus, the route has multiple significance in chemical industry, energy saving and environmental protection. In addition, the development of DMC and its derivatives has exploited a wide range of downstream products for methanol, which will promote the development of related industries.

In the future, with the fine-tuning of Chinese government’s subsidy policies and consumers' preference for high-range models, more battery manufacturers will seek for the cooperation with electrolyte manufacturers who have strong R&D strength, so the electrolyte industry will be more intensive and the demand for DMC will strengthen steadily. In 2021, eight domestic non-phosgene-based polycarbonate units were put into operation, adding the total capacity to 1.31 million t/a. With the continuous expansion of Hainan Huasheng’s unit, the capacity is expected to reach more than 1.5 million t/a, and hence the demand for DMC will further increase.