By Yan Feng
At the end of December 2021, domestic MMA capacity reached 1.71 million t/a, with 13.2% or 225 000 t/a coming from Chongqing Yixiang Chemical Co., Ltd., currently China’s largest MMA producer, followed by Zibo Qixiang Tengda Chemical Co., Ltd. and PetroChina Jilin Petrochemical Company, both boasting 200 000 t/a capacity in 2021, accounting for 11.73% of the nation’s total, respectively.
Around 65.39% or 1.12 million t/a of the total capacity was contributed by East China (Shandong, Zhejiang, Jiangsu and Shanghai) in 2021, 16.13% or 275 000 t/a by Northeast China (Heilongjiang and Jilin), 13.2% or 225 000 t/a by Southwest China (Chongqing), and 5.28% or 90 000 t/a by South China (Guangdong). Figure 1 shows more details.
Figure 1 China’s MMA capacity distribution in 2021
Types of domestic MMA suppliers are diversified. In detail, private MMA producers boasted a combined capacity of 1.06 million t/a in 2021, taking up 62.17% of the total capacity; foreign firms, 370 000 t/a, 21.7%; state-owned enterprises, 275 000 t/a, 16.13%. As for production processes, MMA is currently produced by ACH process or C4 process in China. In 2021, producers adopting ACH process had a combined capacity of 1.17 million t/a, 68.33% of the total capacity (firms with C4 process, 540 000 t/a, 31.67%).
To cut production costs and ensure development of downstream industry chains, most MMA producers constructed supporting downstream integrated production units, including Heilongjiang Zhongmeng Longxin Chemical Co., Ltd. constructing PMMA and ACR units, Wanhua Chemical Group Co., Ltd. constructing PMMA units, Chongqing Yixiang Chemical Co., Ltd., etc.
Import and export
China’s MMA capacity has increased in recent years, leading to changes in import and export. From 2017 to 2021, import volume of MMA rose to the five-year high of 261 800 tons (up 21.48% YoY) in 2020, and then dropped 50.42% YoY to 129 800 tons in 2021, given factors like declining international supply, domestic demand tending to be stable, increasing domestic supply, etc.
Main sources of MMA imports were Japan, Malaysia, Saudi Arabia, South Korea, Taiwan of China and Germany in 2021, when the combined import volume from the six regions reached 99 200 tons, occupying 76.43% of the total and falling 56.59% YoY. MMA imported via general trade and another mode of trade (Inbound and Outbound Goods in Bonded Supervision Area) amounted to 111 100 tons in 2021, taking up 85.59% of the total and declining 38.14% YoY.
From 2017 to 2021, export volume of MMA fell in the first four years, and skyrocketed 264.69% from the lowest in 2020 to 178 700 tons in 2021, mainly attributable to shutdown of some foreign equipment (see Figure 2 for more details). MMA exported to India, South Korea, Turkey, Taiwan of China, the Netherlands and Mexico totaled 107 300 tons in 2021, making up 60.04% of the total and soaring 554.27% YoY. India was the largest MMA export destination, absorbing 18.07% or 32 300 tons (surging 634.09% YoY). General trade was a main mode of MMA export in 2021, when 155 600 tons of MMA were exported in this way, accounting for 87.07% of the total and shooting up 352.33% YoY.
Figure 2 MMA import and export from 2017 to 2021
Domestic apparent consumption of MMA showed an upward trend from 2017 to 2020, but was down 4.6% YoY to 1.05 million tons in 2021, still higher than 650 500 tons in 2017, when MMA self-sufficiency rate reached 90.39%, lower than 104.65% in 2021. As for AAGR (average annual growth rate), it reached around 7.69% during 2017-2021. Figure 3 shows China’s MMA supply and demand in the five years. Around 64% of MMA was consumed by PMMA producers, 16% by producers of plastic additives ACR and MBS, 15% by surface coatings producers and 5% by producers of other products.
Figure 3 MMA supply and demand in China during 2017-2021
PMMA enterprises – the most important MMA consumer in China – are gradually expanding businesses to medium and high-end markets, given rapid development of advertising, medium and high-end furniture, construction, transportation, optics and IT industries. Further, producers of fuel vehicles need to save energy and reduce carbon emissions, and for NEV manufacturers, they need to improve endurance of NEVs – both accelerating lightweight of automobiles. Hence more opportunities for modified plastics, PMMA and MMA industries. However, PMMA firms will face many difficulties due to oversupply of low-end PMMA, lack of high-end PMMA and competition with substitute products like PS and PC. In spite of a main consumer of MMA in the future, consumption proportion of PMMA firms is forecast to decrease.
In the field of surface coatings, MMA is used to produce solvent-based coatings, water-based coatings and latex paints, which are all widely used in the industries of automobiles, furniture, construction, etc. Increasingly more producers of oil-based coatings switch to production of water-based coatings due to pressure from environmental protection, the nation’s policies to impose more taxes on oil-based coatings but provide greater support for water-based coatings, etc. This will increase demand for MMA.
Improvement of people's living standards and the nation’s more efforts to protect environment will both propel domestic demand for PVC products, and then stimulate development of processing and impact resistant modifiers. In addition, MMA is also applied to the areas of acrylic adhesives, unsaturated polyester cross-linking agents, etc. China’s demand for MMA is forecast to reach 1.3 million tons in 2026.
From 2018 to 2021, domestic MMA prices represented a downward trend firstly, but in 2021 grew 20.44% YoY to RMB13 158/t, mainly attributable to rising prices of raw materials, increasing import prices, surging export volume. It is forecast that the prices will remain basically stable for some time owing to growing capacity, slow growth of downstream consumption, etc.
MMA capacity will increase continually from 2022 to 2026. Many MMA producers plan to construct new or expansion projects in the five years, including Chongqing Yixiang Chemical Co., Ltd., Zhejiang Petroleum & Chemical Co., Ltd., Jiangsu Sierbang Petrochemical Co., Ltd., etc. If the projects are put into production as scheduled, domestic MMA capacity will exceed 2.9 million t/a in 2026, when the demand may be only around 1.3 million tons. Hence serious overcapacity and fiercer competition.
Supply structure of MMA will change, and capacity distribution will be more reasonable. In spite of coexistence of different types of suppliers, private firms will account for more proportion of MMA capacity, as most new or expansion projects in the next few years will be kicked off by private firms. These projects will concentrate in East China, Southwest China and South China. MMA capacity of Shandong will grow most rapidly. At present, PMMA producers are mainly distributed in Yangtze River Delta and Pearl River Delta, while producers of PVC impact resistant modifiers in Northeast China, Yangtze River Delta and Circum-Bohai Sea Region. New MMA projects will optimize downstream industry chains.
Different MMA production technologies will coexist. ACH process will still be the most important one. Of the total new MMA capacity in the next few years, projects with ACH process will account for 80%. C4 process is eco-friendly, but curbed by technical barriers (e.g. foreign and domestic companies both do not transfer the technology), catalyst synthesis and application technology (applying to domestic C4 process), higher production costs than ACH process, etc. Therefore, only a handful of MMA enterprises adopt C4 process to expand their capacity.
Import volume is expected to fall because of domestic MMA capacity expansion, which may bring product price advantage. Export volume may grow, with competitiveness of domestic MMA improving and domestic oversupply pressure becoming greater. On December 1, 2020, China lifted anti-dumping measures on MMA originating from Singapore, Thailand and Japan, facilitating the three countries to sell MMA in China. Domestic MMA enterprises will face more intense competition.
Overcapacity will be severer in the next few years. Hence, domestic MMA firms should be more cautious when making capacity expansion plans. To expand scale of production and improve competitiveness, they are wise to take measures such as M&As.
While upgrading ACH process to improve production efficiency, reduce environmental pollution and realize clearer production, domestic MMA firms should try harder to develop C4 process, and speed up industrialization of some technologies (e.g. technology to synthesize MMA with methyl acetate and formaldehyde, etc.). In addition, MMA clearer production technology with C2-C4 as raw materials should get more attention.
Cooperation with research institutions is important for MMA companies to achieve different goals like technical breakthroughs, industrialization of new technologies, improvement of product competitiveness, etc. Further, MMA firms should greatly develop high value-added downstream products, and actively expand overseas markets to relieve the pressure from fast expansion of capacity.