By Gao Liping and Hu Shiming, CNCIC
Polyolefin elastomer (POE) has been widely used in areas including auto parts, photovoltaic film, electric wire, mechanical devices, household items, toys, recreational and sport goods, soles, sealing element and hot melt glue.
The demand and supply of POE in China
Due to the technological barriers, lack of polymerization technique and limited supply of ɑ-olefen material, domestic POE production has been vacant for long time and the consumption has totally depended on import. To break the situation, Beijing Research Institute of Chemical Industry of Sinopec, Zhejiang University and Wanhua Chemical have strived to make technological breakthrough. With continuous technological breakthrough made domestically, POE will soon enter into a fast lane of industrialization. Currently, there are 8 POE projects being constructed/to be constructed in China, with total capacity of 1 300 000 t/a, 700 000 t/a to be put into production before 2025. The POE projects newly constructed/to be constructed 2022 in China are showed in Table 1.
POE consumption in China
At present, POE consumption in China all depends on import. POE products are included in the H.S. Code of ‘39014090, Other ethylene-ɑ-olefen copolymer, specific gravity less than 0.94’ under which the products import volume was 640 000 t in 2021 and export volume was 5 000 t, net import volume was 635 000 t. The net import volume of POE was 590 000 t, 98% from the Korea, Thailand, Spain, Singapore, the U.S. and Saudi Arabia. China’s consumption of POE grew from around 280 000 t in 2018 to 590 000 t in 2021, 28.2% of average annual growth rate from 2018 to 2021.
China took up 59% of global consumption of POE in 2021. As top two application areas of the POE consumed, photovoltaic and automobile are major drivers for the growth of POE consumption.
Jointly pushed by the fast development of photovoltaic industry and replacement of EVA with POE, photovoltaic industry, which constituted 50% of the total POE consumption in 2021, has become the biggest market for POE. In the photovoltaic industry, POE is mainly used in the encapsulation film of solar battery. There are four types of encapsulation film for domestic photovoltaic film in 2021, including transparent EVA film, white EVA film, POE film and EVA-POE-EVA film, the latter two taking up 24% and 25% of the total respectively.
In the past several years, due to the slackened growth rate of domestic automobile production, the consumption of POE in automobile industry has accordingly slowed down to be the No 2 of total consumption, taking around 38%. In the automobile area, POE is mainly used as the flexibilizer of PP to enhance the impact resistance and tensile property of base materials. It is known that the PP plastics modified with POE which are mainly used in the automobile industry are seldom consumed in the other areas like home appliances.
The No 3 largest consumption area is electric wire and foam material, both of which take up 5% of total consumption. In addition, POE can be applied in the areas like wrapping film, medical treatment and hot melt glue. In the packaging industry, the PP and PE, as the general base materials, are subject to limited application in the low temperature in which PP and PE are easily embrittling. Therefore, POE is more used in the industrial film which requires higher tensile strength and cold resistance. Nearly more than 75% of consumed POE are used in industrial package. In the area of medical treatment, POE is used in medical plastic packing bag and plastic hose to maximize the processability, heat sealability, cold resistance and softness of medical plastic. POE is also slightly used in the hot melt glue area and is still in its early stage of application.
The POE consumption mix of China in 2021 is presented in Chart 1.
Chart 1 The POE consumption mix of China in 2021
The average annual growth rate for domestic POE consumption is estimated to be about 17% from 2021 to 2025, and the annual consumption will be 1 110 000 tons in 2025. The photovoltaic field will embrace the fastest growth of POE consumption. To realize the targets of carbon neutrality and carbon emission peak, new energies including photovoltaic were listed in the Fourteenth Five Year Plan as one of top 8 emerging industries of strategic importance.The Plan also stressed to raise the scale of wind power and photovoltaic power generation, develop the distributed energy in the middle and eastern China, establish a batch of clean energy bases generating complementary multiple energies and to level up the share of non-fossil energy consumption to 20% of the total. Therefore, photovoltaic related industries will still embrace a growth spurt. Compared to EVA, POE fill has a lower water vapor transmittance, better anti-ultraviolet and PID performance without hydrolyzing into acetic acid which will corroding battery panels after long-time use as EVA does. It is consequently expected that POE will replace EVA continually and witness a continuous growth of consumption for photovoltaic film in the future.
The second fastest growth area of POE consumption is automobile. In the following five years, with higher domestic automobile production, more modified plastic used for each car produced and higher share of modified PP used, the consumption of POE in automobile area will be continually rising and the average annual growth rate will roughly hit 8% in in future five years.
The POE consumption mix of China in 2025 is presented in Chart 2.
Chart 2 The POE consumption mix of China in 2025
The Producers with technological advantages are suggested entering the industry
At present, domestic POE completely depends on import, meaning the supply has severely fallen short of the demand and a promising market in the future. In the next five years, the demand for POE, driven by photovoltaic and automobile industries, will be kept growing at a speed as high as 17% (CAGR).
Because POE is demanding in technologies and investment, large scale petrochemical enterprises are usually the major undertakers of researching and producing. Currently, several domestic relevant institutes have succeeded in finishing pilot scale tests and many enterprise are constructing or have planned to construct industrialized projects which are all equipped with their own technologies or technologies of their cooperation parties. Major breakthrough will come into being soon for domestic POE production in large scale, but there is great gap between Chinese and foreign products in terms of grade serialization and performance. It is difficult to replace imported POE completely with domestic one in the short term, so the import volume will remain large till 2025 when 60% of domestic POE demand will be covered by importing.
In conclusion, those domestic enterprises with producing technologies are encouraged to go into the industry, lay out earlier and grab the market to gain the initiative and maximize the benefits.
