By Gao Liping, Ji Hongyi and Hu Shiming, CNCIC

At present TPE (thermoplastic elastomer) mainly includes TPS, TPO, TPU and TPEE. TPO – divided into compounded type (including cTPO and TPV) and reactor-made type (i.e. rTPO) – is widely used in automobile, construction, medical treatment, electronic and electrical industries, given its good chemical stability, weather resistance, electrical insulating property, etc. Global consumption of TPO reached around 2.27 million tons in 2021, containing 1.35 million tons of cTPO, 470 000 tons of rTPO and 450 000 tons of TPV. Figure 1 shows consumption proportions of different regions in 2021.

Figure 1  Consumption proportions of different regions in 2021

China’s TPO supply and forecast

There were more than 15 domestic cTPO producers in 2021, when their combined capacity exceeded 600 000 t/a and output totaled around 580 000 tons. Among these producers – most of which were private modified plastics firms – Kingfa Sci. & Tech. Co., Ltd. was the largest one, accounting for over 30% of domestic supply. The only domestic rTPO producer in 2021 was Sinopec-SK (Wuhan) Petrochemical Co., Ltd., producing around 4 000 tons of rTPO in 2021 and mainly engaged in production of impact polypropylene copolymer. Table 1 shows major domestic TPO producers in 2021.

The number of domestic TPV producers approached to 20 in 2021, with Shandong Dawn Polymer Co., Ltd. (Dawn), Jiangsu Dingsu Industry Co., Ltd. and Nanjing Jinling Opta Polymer Co., Ltd. being the top 3 manufacturers, which made up 71% (equivalent to 51 000 t/a) of the nation’s total TPV capacity (i.e. 72 000 t/a) in 2021, when domestic TPV output was around 60 000 tons. With the help of Beijing University of Chemical Technology, Dawn was the first domestic firm to utilize dynamic full vulcanization technology to produce TPV, which was successfully applied to auto industry. TPV produced by most domestic enterprises could be used mainly in medium- and low-end fields. Dawn expanded TPV capacity by 11 000 t/a in 2020, increasing its TPV capacity to 33 000 t/a, 46% of the nation’s total. Table 2 shows China’s major TPV producers in 2021.

Many domestic cTPO producers (e.g. Kingfa Sci. & Tech. Co., Ltd.) are expanding their modified plastics capacity. Hence, domestic supply of cTPO is forecast to remain sufficient, but that of rTPO is likely to be insufficient continually, as there is only one producer, i.e. Sinopec-SK (Wuhan) Petrochemical Co., Ltd., which produces limited rTPO. In spite of no reports on new TPV projects, TPV capacity may grow to some extent, as TPV and cTPO/other modified plastics could be produced by the same unit. However, new TPV capacity will be limited, mainly because of high technical threshold.

China’s TPO consumption and forecast

China’s TPO consumption has increased in recent years, reaching 701 000 tons in 2021 – in detail, including 580 000 tons of cTPO, 110 000 tons of TPV and 11 000 tons of rTPO.

As for consumption structure, 83% of cTPO and rTPO was absorbed by auto industry (e.g. hard parts such as bumpers, instrument boards, etc.) in 2021, 8% by electronic and electrical appliance industry (e.g. seals, washers and casters of household appliances), 1% by waterproof roll industry and 8% by other fields like electric wires, packing materials, sporting goods, etc. (see Figure 2 for details).

Figure 2  Domestic consumption structure of cTPO and rTPO in 2021

In 2021, auto industry consumed 66% of TPV, mainly used to produce soft weatherproof seals. Hence no direct competition between TPV and cTPO/rTPO in automotive field. Construction enterprises consumed 16% mainly to produce door and window seals. Around 3% was absorbed by electric wire and cable producers, and 15% by other fields (e.g. household appliances, medical instruments, etc.). Figure 3 shows domestic TPV consumption structure in 2021.

Figure 3  Domestic TPV consumption structure in 2021

TPO consumption in auto industry has increased rapidly from 2016 to 2021, and is forecast to grow continually during 2021-2025 as lightweight of automobile is propelling TPO to replace conventional rubber and some TPE varieties, but the growth will decelerate.Further, TPO consumption will grow rapidly in medical treatment and waterproof roll industries. In 2025, domestic TPO consumption will grow to around 804 000 tons.

Suggestions

As for cTPO supply and demand, a balance was basically reached in 2021. Net import of TPV was 50 000 tons, and that of rTPO 7 000 tons, both in 2021, when self-sufficiency rates of TPV and rTPO were 55% and 36%, respectively. At present domestic TPO supply and demand are basically balanced. Although deceleration of downstream demand growth may lead to TPO market saturation, some high-end TPV products will still rely on imports. Core competitiveness of TPO producers lies in formulations and techniques. In addition, TPO market size is relatively small. Hence, it is unwise for domestic firms without advanced technologies to start out in TPO business.

In developed countries and regions (e.g. the US, Japan and Europe), some competitive polyolefin enterprises purchased TPO firms to obtain formulations and techniques, and then they strengthened related R&D, expanded TPO production and finally became the world’s main TPO producers. Therefore, in the long term, it is also feasible for domestic polyolefin firms to purchase TPO producers, in an attempt to strengthen product R&D ability, diversify products, extend industrial chains, etc.