He Yan, Institute of Coal Chemistry Technology Research,
China Energy Investment Corporation, Ningxia Coal Company
Development of high-end polyolefin industry
The market demand for high-end polyolefin products in China has exceeded RMB100 billion, and the apparent consumption is close to 13 million tons. However, China’s high-end polyolefin industry has suffered slow development with merely 45% self-sufficiency rate, far lower than other chemical materials. This is mainly because of the high technical barriers and foreign company’s long-term technical monopoly in key technologies including polymerization technology, catalyst technology, processing modification technology and so on.
In this article, we will focus on three high-end polyolefin products which are metallocene polyethylene (mPE), ethylene-vinyl acetate copolymer (EVA) and polyolefin elastomer (POE) and make an in-depth analysis of their market availability in 2021 and predictive analysis of the market supply and demand structure in the next few years. In the end, relevant proposals and suggestions will be put forward.
The current situation and development trend of the supply and demand of major high-end polyolefin products
1. mPE
mPE is a copolymer of ethylene and α-olefin (such as 1-butene, 1-hexene, 1-octene, etc.) in the presence of metallocene catalyst. The main types of the product include metallocene linear low density polyethylene (mLLDPE), metallocene medium density polyethylene (mMDPE) and metallocene high density polyethylene (mHDPE). Among them, mLLDPE is mainly used to produce various film products such as heat shrinkable film, doypack, high-quality agricultural film, stretch wrapping film, composite packaging film, etc., while mMDPE and mHDPE are mainly used for hollow, injection molding, rotational molding and pipe products.
(1) Current situation of supply and demand
In 2021, China's mPE output reached 185 000 tons. The apparent consumption totaled 1 878.1 thousand tons, and the import dependence degree was 90.2% (See Table 1).
From the supply side (See Table 2), the output of metallocene medium density PE-RT pipes was relatively large in 2021, accounting for 55.13%. Among them, Sinopec Maoming Petrochemical Company new brand P3305, with an output of 1 100 tons; Sinopec Yangzi Petrochemical Co., Ltd. new brand P3806, with an output of 5 400 tons; Ningxia Baofeng Energy new brand M3506RTI, with an output of 1 000 tons; CNPC Lanzhou Petrochemical Co., Ltd. new brand mPE3010, with an output of 1 000 tons; Sinopec Qilu Petrochemical Company new brand 22F and 32F, with outputs of 5 400 and 65 600 tons respectively. With regards to mLLDPE, it accounted for 44.87%. Among them, CNPC Dushanzi Petrochemical Company and Shenyang Chemical Group Co., Ltd. brand 1018HA reduced their output to 21 600 tons and 3 900 tons respectively. The trial production of Ningxia Baofeng Energy M2310 marked China's coal-based mPE forward to a new stage.
From the demand side, the apparent consumption of mPE in China dropped by 14.93% in 2021 year on year (See table 1). This was influenced by dual control of domestic energy consumption and the power cuts policy in some regions, resulting in the dropping demand from mPE downstream factories.
The food film was the largest consumption sector of mPE, with an apparent consumption of 548 600 tons in 2021, accounting for 29.21% of the total consumption. The greenhouse film and stretch film were tied for second place, both with an apparent consumption of 345 200 tons, accounting for 18.38% of the total. The pipe industry ranked third place, with an apparent consumption of 199 300 tons, accounting for 10.61% of the total, of which PE-RT pipe materials became the new research emphasis in downstream enterprises. Heat shrinkable film owned the apparent consumption of 167 200 tons, accounting for 8.9% of the total, which was mainly used for collective packaging of wine, cans, mineral water and etc, being a substitute for carton packaging in a way. FFS membrane had the apparent consumption of 136 900 tons, accounting for 7.29% of the total consumption. With the continuous release of large-scale production capacity in the chemical industry, it has become a trend that FFS film will replace woven bag packaging. Other fields including bottle caps, rotational molding fuel tanks and wires and cables had the apparent consumption of 41 500 tons, accounting for 2.21% of the total (Figure 1).
Figure 1 Statistics on the downstream demand structure of China's mPE products in 2021
(2) Development trend
In 2022, China's mPE production is expected to reach 225 000 tons, and its apparent consumption will be 1 988.1 thousand tons, with an import dependence degree of 89.17% (See Table 3). Due to the technical barriers, China's mPE industry has suffered relatively slow development, but major manufacturers are keeping actively exploring and improving production technology, and gradually narrowing the gap between foreign manufacturers. At the same time, ExxonMobil, in Huizhou, Guangdong, plans to put a 1.2 million t/a MLDPE unit into operation in 2024. Its supply capacity will likely have impact on the domestic market price, and stimulate the consumption of mPE products.
With the development of China’s economy, the overcoming of production technical barriers, and the further release of production capacity, mPE will have muti-sources of market supply. At the same time, its application scope as well as demand will be further expanded due to the product advantages of excellent mechanical properties, impact resistance, low temperature embrittlement resistance and so on. Therefore, it is estimated that in 2024, the output of mPE units in China will reach 905 000 tons, the apparent consumption will increase to 3 008.7 thousand tons, and the import dependence degree will drop to 69.92%.
Judging from the future demand of mPE downstream industry (Figure 2), China's mPE demand in 2024 will still be concentrated in food film and stretch film, and it is estimated that the consumption of food and stretch film will account for a total of 49.22%. PE-RT pipe materials will rank the second place, and its consumption is expected to account for about 11.1%. With the acceleration of China's urbanization process and urban infrastructure construction, the demand for PE-RT pipelines will see a rapid growth, owning huge market potential. FFS film will still enjoy rapid growing demand and its consumption is expected to account for about 8.02%. Upstream manufacturers have demand to replace to heavy bags, therefore, FFS film will have increasing demand year by year. However, greenhouse film may have slightly decreasing consumption, mainly because the further improved quality extends product’s service life and leads to the decrease of the total consumption.
Figure 2 Forecast on downstream demand structure of China's metallocene
polyethylene products in 2024
2. EVA
(1) Current situation of supply and demand
In 2021, China's EVA production capacity totaled 1.772 million t/a. The domestic output reached 1.02 million tons. The apparent consumption was 2.085 million tons. And the import dependence degree was 52% (See Table 4).
From the supply side (See Table 5), China's EVA production capacity increased by 800 000 tons in 2021, produced by Sinopec Yangzi Petrochemical Co., Ltd. 100 000 t/a, Sinochem Quanzhou Petrochemical Co., Ltd. 100 000 t/a, Shaanxi Yanchang Coal Yulin Energy and Chemical Co., Ltd. phrase II 300 000 t/a LDPE/EVA unit and Sinopec Zhejiang Petrochemical Co., Ltd. 300 000 t/a. China had 10 EVA manufacturers and each of them had obviously different features in the source of raw materials, the nature of enterprise, and the scale of production capacity.
From the sources of raw material, most of companies adopt traditional method of petroleum to olefins, accounting for 52.4% of the production capacity, representative companies including Sinopec Yanshan Petrochemical Company, Beijing Organic Chemical Plant, Formosa Plastics Corporation (Ningbo), BASF-YPC Co., Ltd., Sinopec Yangzi Petrochemical Co., Ltd., Sinochem Quanzhou Petrochemical Co., Ltd. and Sinopec Zhejiang Petrochemical Co., Ltd. Method of methanol to olefin accounted for 27.1% of the production capacity, companies including Levima Advanced Materials and Jiangsu Sierbang Petrochemical Co., Ltd. Method of coal to olefin was newly developed as phase II LDPE/EVA unit of Shaanxi Yanchang Coal Yulin Energy and Chemical Co., Ltd. put into operation in 2021. In general, the method of petroleum to olefins still dominates EVA capacity.
From the production capacity, Shaanxi Yanchang Coal Yulin Energy and Chemical Co., Ltd. phase II EVA/LDPE unit owned 300 000 t/a production capacity, which was the largest single production line capacity in China. Jiangsu Sierbang Petrochemical Co., Ltd.’s 300 000 t/a EVA/LDPE plant had been producing EVA products only since 2018, which was the best-selling EVA unit in China.
From the demand side, the apparent consumption of EVA in China showed a gradual increase trend from 2019 to 2021. High-tech industries such as photovoltaics and cables have become the main driving force for the growth of EVA demand. At the same time, the rapid recovery of domestic terminal demand and the international orders further boosted the growth of EVA demand. Photovoltaic film was the largest consumption field in the EVA industry, foaming material ranked second place, and cable material went to third place. The consumer-oriented industries such as shoe materials and hot melt adhesives showed a positive development trend, accounting for 7% of total consumption (Figure 3), which benefited from international orders and the growing demand of domestic market.
Figure 3 Statistics on the downstream demand structure of China's
EVA products in 2021
(2) Development trend
In 2022, China's EVA production capacity will reach 2.372 million t/a, of which 600 000 t/a will be newly added, including 300 000 t/a of Fujian Gulei Petrochemical Co., Ltd., 200 000 t/a of Xinjiang Dushanzi Tianli High & New Tech Co., Ltd. and 100 000 t/a of ZhongKe (Guangdong) Refinery & Petrochemical Co., Ltd. It is expected that in the next few years, the production capacity of EVA will continue to rise, and the product supply and apparent consumption will show an upward trend as well, while the import volume and import dependence degree will see a downward trend (Figure 4).
Figure 4 Forecast on the supply and demand structure of China's EVA product in
2019-2022
In the next few years, China's photovoltaics, foaming, and cables will still be the top three application fields in the downstream demand of EVA, and the demand for photovoltaic materials will be fastest growing field. Under the long-term policy of "carbon peaking and carbon neutrality", it is a the long-term and definite trend that the scale of thermal power will gradually decrease, and the renewable energy such as photovoltaics will be the replacement. Large-scale wind power, photovoltaic projects and the promotion of rooftop distributed photovoltaics in county, city and district will provide strong impetus for the growth of the photovoltaic industry. The rapid growth of the photovoltaic industry will be a strong driving force for the growth of EVA demand.
3. POE
(1) Current situation of supply and demand
By 2021, the production of POE in China was still in a blank state, and no company had completely broken through the technical barriers and achieved the industrial production of POE. The domestic market highly depended on imports.
From the demand side, China's POE consumption exceeded 400 000 tons in 2021, mainly used in automobiles, polymer modification, etc., of which the consumption in the automobile accounted for more than 60%.
(2) Development trend
By 2022, many domestic enterprises have carried out the preliminary development of POE. Among them, Wanhua Chemical Group Co., Ltd. is a leading enterprise in domestic POE technology research. It has completed the POE pilot test and plans to put 200 000 t/a into production before 2025. Sinopec Tianjin Nangang project 1.2 million t/a ethylene and downstream high-end new material project was launched in May 2021. The industrial chain was extended to build 12 sets of high-end new materials device such as ultra-high molecular weight, alpha-olefin, ALL-PE, ABS, POE, HDPE, etc., among which the POE will have 100 000 t/a production capacity. Sinopec Maoming Petrochemical Company's 1 000 t/a POE pilot project was approved in September 2021. Wison's 100 000 t/a POE unit will be put into operation in 2023. Shandong Chambroad Petrochemicals Co., Ltd. POE unit is initially planned to be 50 000 t/a, and will be put into operation in 2025. In addition, Jiangsu Sierbang Petrochemical Co., Ltd., China National Chemical Engineering Co., Ltd. and Satellite Chemical all have plans in POE.
In the next few years, with China's urgent need for lightweight and high-end development of downstream application industries such as automobiles, it is expected that the demand for POE applications will continue to rise. At the same time, driven by a series of China supporting policies in strategic emerging industries including new chemical materials, the industrial structure will be further optimized and upgraded. In addition, domestic enterprises will continue efforts to make breakthroughs in the industrialized production of POE, and the market import substitution share of POE materials will continue to increase.
