By Qiao Zongying, SCI
With the successful production of the first butadiene-based adiponitrile unit in China, the process of localization of adiponitrile, the raw material of polyamide 66 (PA66), has accelerated. By the end of 2022, the total capacity of PA66 in China has grown by 30% year on year. Based on the localization of adiponitrile, it is estimated that the new capacity of China’s PA66 will exceed 3 million t/a in the next five years.
PA66 industrial chain structure and current situation
Reviewing the capacity development, China began to research and develop PA66 in the 1950s. At present, China’s PA66 is in the development stage. Over the years, some enterprises have devoted themselves to technology reaearch and development, the dependence on import of PA66 products has decreased from 75% in 2012 to 49% in 2022. Up to now, there are 14 domestic producers with total capacity of 701 000 t/a, accounting for 21% of the global total capacity. The domestic compound growth rate has exceeded 15% in the past decade. Seeing from the structure of industrial chain, the material of PA66 is adipic acid and hexamethylenediamine, the material for the latter is adiponitrile. Seeing from the application in downstream, PA66 which has high intensity, rigidity, resistance for shock, oil, chemical, abrasion and heat, can be used in the industries including automobile, electronic and electrical, medical equipment and precise instrument. It has been also widely applied in engineering plastics and polyamide 66 fiber.
The capacity showed an overall increase trend from 2018 to 2022, and the concentration decreased significantly in 2022.
China’s PA66 production capacity showed an overall increase trend from 2018 to 2022.Among that, the growth rate of production capacity in 2018-2021 was relatively slow, and the market in 2019-2020 was sluggish, with only 40 000 t/a of new production capacity in two years. Adiponitrile, as the material, was in short supply and some domestic units were postponed in putting into production in 2021, so the capacity growth was ignorable. In 2022, there were more new producers coming into the industry and the capacity witnessed a substantial increase due to two reasons. Firstly, the profit of the industry was abundant because the price in 2021 rose to a very high level. Secondly, the domestication of adiponitrile production has been accelerated and PA66 is expected to have a promising future which drives the release of the new capacity earlier planned. It is estimated that the total capacity of PA66 will hit 791 000 t/a by the end of 2022, an increase of 34.07% compared to 2021 (see in Chart 1). The compound growth rate of PA66 capacity from 2018 to 2022 is expected to be more than 11%.
Chart 1 The statistic of PA66 capacity in China, 2018-2022
The capacity concentration rate of PA66 was 77% in 2018, and is expected to be 48% in 2022, it dropped by 29 percentage points during five years. This decreasing trend is continual (see Chart 2). In terms of statistics of the capacity of enterprises, only four enterprises, 27% of the total, have the capacity of 50 000 t/a. The capacity of these enterprises accounted for 60% of the total in China, decreased by 11 percentage points compared to the last year.
Chart 2 Domestic PA66 capacity concentration rate during 2018-2022
From the perspective of regional distribution of production capacity, China’s PA66 capacity is mainly in eastern China, accounting for 59% of the total and 7 percentage points down from 2021 (see Chart 3). Central China and Northeast China accounted for 28%, 6 percentage points lower than 2021. Southwest, Northwest and North China are the regions with new production capacity, accounting for 13% in total. For provincial capacity, Shanghai ranks first, with capacity of 190 000 t/a, accounting for about 27%. The second is Henan, with a capacity of 140 000 t/a, accounting for about 20%. The third is Zhejiang, with a capacity of 134 000 t/a, accounting for about 19%. The capacity of other provinces is less than 100 000 t/a, ranging from 10 000 to 80 000 t/a.
Chart 3 Comparison of regional distribution of PA66 production capacity
from 2021 to 2022
From 2018 to 2022, the actual consumption of China’s PA66 downstream is showing decreasing, increasing and decreasing trend. (see Chart 4). Due to the large increase of PA66 price in 2018, the demand from downstream decreased under this unbearable cost pressure, and the consumption of 2019 fell as the aftermath of slack market of 2018. As the demand recovered steadily and the operation load rate of spinning and engineering plastic industries rose to some extent, the demand increased in 2020. The market went in a good way in 2021 so PA66 price rose significantly. The customers of downstream were usually buying after rising, and the demand rose consequently. The market went down in 2022 while the actual consumption from downstream reduced.
Chart 4 PA66 actual consumption from downstream, 2018-2022
Seeing from the areas of consumption from downstream, East China and Central China are estimated to be the top 2 areas for PA66 downstream consumption in China, 75% of the total. East China will take the largest share, 50% of the total, Central China the second, 25%. The rest of consumption will be distributed in South and North China, 19% and 6% respectively. The reason for the largest share by East China is that this area is covered by end-consumer industries of PA66, such as parts and accessories of automobile, home appliances, mechanical engineering textile. The major capacity of PA66 is distributed in East China and Central China, 78% of the total. To reduce transportation cost by matching the supplying areas, East China and Central China are also the major consumption areas.
Chart 5 The chart of PA66 consumption structure downstream in China (in terms of areas), 2022
From the perspective of downstream industries, the PA66 downstream consumption was still consisted of engineering plastic and nylon 66 which included industrial use and civilian use (see Chart 6). China’s actual downstream consumption of PA66 in 2022 was estimated to be 533 000 tons, 11.6% down from 2021. Based on the consumption structure data of past three years, engineering plastic was the top consumer, 58% of the total in 2020, one percentage point down in 2022. The consumption of nylon fiber in 2022 increased by one percentage point compared with 2020.
Chart 6 The share chart of downstream demand for PA66
(in terms of industries), 2020-2022
Outlook: the planned new capacity from 2023 to 2027 will exceed 3 million t/a, and the competition will become increasingly fierce
Considering that PA66 has better performance in modified strength, high temperature resistance, chemical resistance for the engineering plastic downstream, it will occupy an important position in the future of automobile parts and electrical accessories. In the future, the market demand for high-performance materials will be gradually increased, manufacturing technologies will be developed and modified materials will be promoted continually by the refining of products. In the field of polyamide fiber, PA66 has advantages including wear-resistance, soft and delicate touch. Meanwhile, as the customers have more demand for high quality clothes, nylon 66 industry is expected to embrace a positive prospect in the future. The producing enterprises will further drive technological innovation, meet the diversified demands of customers and vigorously develop overseas market. Generally speaking, based on the domestication of production of adiponitrile and the planned new capacity of PA66, the major engineering plastic of downstream and polyamide fiber will have a promising future.
According to published production plan, China’s planned new capacity of adiponitrile and hexamethylenediamine will be more than 2 000 000 t/a from 2023 to 2027. Based on the consumption ratio of adiponitrile to hexamethylenediamine, and the consumption ratio of hexamethylenediamine to PA66, the planned new capacity of materials above can support PA66 capacity of more than 4 000 000 t/a. Adiponitrile and hexamethylenediamine are expected to have an abundant supply to 2027.
Based on the planned new capacity of above materials, PA66 is estimated to increase 3 260 000 t/a capacity in the future 5 years. The total capacity of PA66 of China may exceed 3 500 000 t/a in 2027. It should be noted that the production plans are only temporarily made by enterprises, facing the chances of being adjusted if necessary considering the factors including market condition, project progress, and the domestic supply and demand of adiponitrile.
The adiponitrile supply will be in abundant supply. As adiponitrile the dominance of adiponitrile was weakened in the industry and the cost pressure of PA66 was reduced, the application potential of PA66 will be definitely released, and quickly applied in the areas of engineering plastic and polyamide fibers. In the future, chances and challenges coexist for PA66. It is important to focus on the implementation of production plans and actual transformation of demand for PA66.
