By Liu Ling and Wang Yuying, Research Institute of Jilin Petrochemical Company

Global capacity expansion of ethylene propylene rubber (EPR), a kind of special-purposed synthetic rubber, is closer to the end. Many EPR unis are shut down or switch to other products, decreasing EPR capacity. A main consumer in the world, China has large demand for EPR, especially in a period when the nation’s auto industry develops rapidly.

Nearly 40% increase in domestic output of EPR in 2021

The number of domestic EPR producers was still five in 2021, when no new units came on stream and total capacity reached 395 000 t/a, the same as 2019 and 2020, but higher than 370 000 t/a in 2017 and 2018 (see Table 1 and Figure 2 for details). By regions, Jiangsu accounted for around 40% of total capacity in 2021, followed by Jilin, taking up around 22% (see Figure 1 for details). By ownerships, foreign firms made up 72.5% of the total.

Figure 1 China’s EPR capacity distribution in 2021

Figure 2 Changes of China’s EPR capacity during 2017-2021

For future EPR capacity, increments are forecast to be mainly from: 1) the second 25 000 t/a production line of Shaanxi Yan'an Energy & Chemical Co., Ltd., which failed to run the first 25 000 t/a line at full load and has not made specific construction plan for the second; 2) and Shandong Dongying Tongzhou Chemical Co., Ltd.’s 50 000 t/a unit, construction of which has stopped for a long term due to financial problem. Hence, domestic EPR capacity is predicted to be stable in the coming years.

EPR output rose from 156 500 tons in 2017 to 215 000 tons in 2019, fell 8.9% YoY in 2020 due to the coronavirus resulting in low demand, but soared 38.2% YoY to 270 600 tons in 2021, mainly attributable to global tight EPR supply caused by the coronavirus, and anti-dumping duties China imposed on EPDM originating from the US, South Korea and the EU (see Figure 3 for details). In spite of regular equipment maintenance at SSME and SK Ningbo in 2022, domestic EPDM output may increase continually owing to the anti-dumping measures mentioned above.

Figure 3 Changes of domestic EPDM output during 2017-2021

Market analysis and forecast

China’s apparent consumption of EPDM was up 9.86% YoY to 407 800 tons in 2021, mainly spurred by slight increase in production and sales of automobiles, and in application in the areas of polymer modification and sealing elements (see Table 2 for details). Consumption structure had a little change in the recent five years, with auto parts accounting for around 45% of domestic EPDM consumption, rubber products 20% and polymer modification 10%, all in 2021 (see Table 3 for details). Other consumers included electric wires and cables, plastic tracks, etc.

China’s EPDM industry is forecast to develop soundly in 2022, given three factors –stable economy of China, no supply pressure (benefiting from no new capacity and anti-dumping measures likely to decrease import volume continually), and basically balanced supply and demand. Although downstream demand is growing slowly, the largest EPDM consumer auto industry has overcome difficulties at the worst phase of the coronavirus, and its demand for EPDM is expected to increase.

Import and export

Statistics of EPDM import and export involve ethylene-propylene-non-conjugated diene rubber in primary forms (40027010) and in other forms (40027090). Total import volume has been declining in the past three years, reaching 168 900 tons in 2021, down 10.79% YoY, fewer than the decrease in 2020 (see Figure 4 for details). Table 4 shows more details about the import. Seen from import origins, only import volume from the US fell rapidly in the recent five years (see Figure 5 for details). Compared with 2021, import volume from other origins like South Korea and Saudi Arabia is forecast to be little changed in 2022. General trade took up 80%-87% of total imports from 2017 to 2021. Figure 6 shows import volume by modes of trade in 2021.

Figure 4 Changes of EPDM import volume during 2017-2021

Figure 5 EPDM import volume from main origins during 2017-2021

Figure 6 Import volume of EPDM by modes of trade in 2021

China exported 31 700 tons of EPDM in 2021, hitting a five-year high and surging 133% from 2020 (see Table 5 for more details). Export volume for 2022 may increase stably because of some foreign units likely to be shut down permanently and improving quality of domestic products.

     Four development trends

1. To become more high-end, eco-friendly and customized, given overcapacity of medium- and low-end products, short supply of high-end products, more stringent policies to protect environment and various requirements from downstream consumers – This will improve EPR enterprises’ competitiveness and propel sustainable development of the industry.

2. To greatly develop metallocene catalytic technology – Downstream requirements are becoming more diversified. Hence the need of researching new technologies and products. Metallocene catalytic technology will be a research focus, given that it enjoys many advantages – such as high polymerization activity, low catalyst dosage, uniform polymer structure, excellent product performance, microstructure capable of regulating polymers in a wide range, etc. – and could manufacture products with new chain structures and for different purposes.

3. To conduct product innovation – In auto and polymer modification areas, EPDM TPO and TPV are becoming main substitutes to EPDM. Compared with traditional products, EPDM/PP TPV – a typical representative of new-generation rubber products – is superior in manufacturing techniques, product performance and environment protection. Another main substitute is POE, which enjoys good processability and price advantage. In a word, traditional products could not meet market requirements.

4. To expand application areas with modification technology – EPDM has good overall performance, but due to some shortcomings like slow curing, it could hardly satisfy requirements from high-end areas. An effective way to produce high-performance EPDM, modification technology will focus on high curing rate EPR special materials, high flame retardant EPR special materials, EPR/chlorinated polyethylene alloy, EPR/polypropylene alloy, etc.