By Han Qinghua, OilChem China

With the continuous breakthrough of adiponitrile technical barriers and continuous new projects put into production, the growth rate of China's PA66 production capacity reached as high as 20% in 2022. In the future, there are still millions of tons of PA66 production capacity under planning, and the production capacity will expand rapidly.

The production capacity of PA66 is still restricted by its raw material adiponitrile

According to the monitoring and statistics of OilChem China, the production capacity of China's PA66 has maintained steady growth during the past five years. In 2022, the industry production capacity increased to 781 000 tons in total, the growth rate of production capacity reached 19.79%, new units with a total of 129 000 tons of production capacity were added during the year, and the five-year compound growth rate was 10.93%. However, affected by the supply of raw material adiponitrile, the production capacity of China's PA66 has not yet reached one million tons. From 2018 to 2022, the capacity utilization rate was around 60%, on a relatively low level. See Figure 1 for details.

Figure 1 The production capacity and output trend of China's PA66

In stages, except for 2022, the newly-added production capacity of PA66 in other years is below 100 000 t/a. With the breakthrough of adiponitrile technology, the growth rate of PA66 production capacity during the past three years has accelerated compared with 2018-2019. In 2020, Shanghai INVISTA put 40 000 tons of new production capacity on the market, with a production capacity growth rate of 13.46%. In 2022, many manufacturers expanded their PA66 production capacity, including Ningxia Ruitai Technology Co., Ltd., Zhejiang Xinli New Material Co., Ltd., Beijing Energy Engineering Technologies Co., Ltd., Hangzhou Juheshun New Materials Co., Ltd., Chongqing Huafeng Chemical Co., Ltd. and others, with a total capacity of 129 000 t/a, and an average annual growth rate of 19.79%. The domestic PA66 industry is highly concentrated. The top three manufacturers, Shenma Industrial, Shanghai Invista, and Huafon Group had a total production capacity of 580 000 t/a, accounting for 74.26% of the total.

In 2022, the production of China's PA66 was mainly distributed in East China, Central China, and Northeast China. Among them, the production capacity in East China was 431 000 t/a, accounting for 55% of the total capacity; Central China ranked second with 140 000 t/a, accounting for 18%; followed by 60 000 t/a from Northeast China, accounting for 8%; Southwest, Northwest, and North China also had production capacity put into operation. See Figure 2 for details.

Figure 2 Regional distribution of China's PA66 production capacity in 2022

The dependence on imports has been significantly reduced, and the export volume has exceeded 100 000 tons

In the past five years, China's PA66 import dependence was between 35% and 55%, showing a downward trend in overall (see Figure 3 for details). In 2022, the import volume was 198 500 tons, about 21.60% lower than that in 2021. The import dependence was 36.32%, still a little high. Due to the tight supply of raw material adiponitrile, China's dependence on foreign imports of PA66 has been high for a long time. In the past two years, due to the short supply of overseas units and expansion of domestic PA66 production capacity, China's PA66 imports was slightly decreased. While importing a large number of high-end grades, China had a slight surplus of low-end grades and the export volume increased significantly. The apparent consumption of PA66 in China has remained relatively stable at around 500 000 tons in the past five years.

Figure 3 Comparison of China's PA66 import dependence from 2018 to 2022

According to data from GACC, the import of China’s PA66 in 2022 mainly came from the United States, Singapore, South Korea, Japan, Thailand and other countries, the top five accounting for 65.89% of the total. See Figure 4 for details. In recent years, the United States has been the main source of imports of PA66 for China. In 2022, China imported 54 500 tons from the United States, accounting for 27.46% of the total imports.

Figure 4 Import sources of PA66 in China in 2022

With the steady increase of domestic production capacity, especially the rapid release in the past two years, low-end brands are slightly oversupplied. At the same time, the demand in Southeast Asia and surrounding markets has increased, and the export volume has increased significantly during the past two years. Affected by sluggish global demand, the export volume of PA66 in 2022 was about 118 000 tons, a year-on-year decrease of 7.01%. In 2022, the main export destinations of PA66 were South Korea, Taiwan and Hong Kong of China, Thailand, Japan, etc. Among them, South Korea was the the largest exporting country, reading 24 800 tons, accounting for 21.02% of the total exports. The trend of China's PA66 export volume from 2018 to 2022 is shown in Figure 5.

Figure 5 The trend of China's PA66 export volume from 2018 to 2022

The downstream is divided into three major areas, and consumption growth is slow

From 2018 to 2022, the consumption of PA66 in China had a trend of first decreasing and then increasing, with small fluctuation (see Figure 6 for details). The consumption of PA66 in 2022 was about 540 000 tons, not change much over 2021.

       Figure 6 Comparison of the trend of China's PA66 annual consumption from              2018 to 2022

In 2022, the downstream of China's PA66 could be divided into three major fields: engineering plastics, industrial yarns, and civil yarns. See Figure 7 for details.

Figure 7 Proportion of downstream consumption of PA66 in China in 2022

In 2022, the market price fluctuated and went downward

In 2022, the domestic PA66 market fluctuated and went downward in general. The spot price was lower than that of the past three years. The annual average price was RMB27 403.41 per ton, a year-on-year decrease of 31.03%. The lowest price happened in August, RMB21 300. The highest was RMB37 750 per ton in early January, with a maximum difference of 77.23% within the year. During the year, the main factors affecting the PA66 price in China were still the cost, supply and demand as before. PA66 is affected by the high monopoly of raw material adiponitrile, and the price fluctuation cycle is long.

The supply of raw materials will be eased, and millions of tons of production capacity is under planning

In 2023, with the breakthrough of the technical barrier of raw material adiponitrile and the stable production from INVISTA's adiponitrile unit in Shanghai, the supply of raw materials may be eased. In addition, there are 170 000 tons to be put into operation in 2023, so the production capacity and supply of the domestic PA66 industry may further increase. After experiencing the weak demand in 2022 and the reasonable recover of PA66 prices, domestic downstream consumption may increase simultaneously in 2023. The low-end grades of PA66 in China are still oversupplied, which may lead to a continuous decrease in imports and an increase in exports.

Looking forward to the next five years, with the continuous upgrading and transformation of adiponitrile technology, the supply problem of raw material adiponitrile will be solved. In addition, domestic enterprises compete to plan PA66 projects, and there are still millions of tons of PA66 production capacity under planning from 2023 to 2027 so the industry capacity will expand rapidly. While the supply of raw materials and PA66 increases, the market price will inevitably decline. With the improvement of the cost performance of PA66 products, the downstream demand will also increase rapidly. Because people inside and outside the industry have optimistic expectations on the maturity of adiponitrile production technology, and the domestic PA66 market is still in the early stages of development, many companies have plans to enter the PA66 industry, but some companies still have certain variables when putting projects into production.