By Li Yan, Li Yunfeng, Wang Yingnan, Wang Yuying
Production analysis and forecast
In 2022, there were three new butadiene rubber (BR) production units in China including Zibo Qixiang Tengda Chemical Co., Ltd.’s 40 000 t/a unit which was put into operation in August, Zhejiang Transfar Synthetic Material Co., Ltd.’s 50 000 t/a unit which was come on stream in November, and Shandong Yihua Rubber and Plastic Technology Co., Ltd.’s 100 kt/a unit which was put into production in late November. The new units of Zhejiang Transfar and Shandong Yihua were nickel-based butadiene and rare-earth butadiene (HCBR/NDBR) flexible units. By the end of 2022, the number of domestic butadiene rubber manufacturers increased to 20 (24 sets of units), with a total production capacity of 1.692 million t/a. The domestic manufacturers and their units in 2022 are shown in Table 1.
From the perspective of the nature of the enterprise, it can be mainly divided into three major sectors: Sinopec, CNPC and private enterprises (including joint ventures), with production capacity of 31.3%, 21.9% and 46.8% respectively in 2022. In recent years, with the continuous expansion of butadiene rubber units of private enterprises, the capacity of private enterprises has accounted for nearly half of the domestic share.
From the perspective of production capacity distribution, after the centralized production in Shandong province from 2011 to 2013, there were two of the three new units in Shandong province in 2022, which further consolidated Shandong's important position in butadiene rubber industry, and made the production capacity of butadiene rubber in East China account for 54.5% of the domestic production. East China is not only the production center of butadiene rubber, but also the distribution center of tire consumption (Shandong is within the scope of East China). The distribution of the production capacity of domestic butadiene rubber units in 2022 is shown in Figure 1.
Figure 1 The distribution of the production capacity of domestic butadiene rubber units in 2022
Judging from the catalytic system used in the units, most are still early nickel-based technologies. Among them, there are 17 sets of nickel-based units, 6 sets of rare-earth and nickel based/rare-earth based flexible units, and 1 set of cobalt-based unit. Among them, in 2022, there were 3 newly-added units, with a total capacity of 190 000 t/a and 2 of them were nickel-based and rare-earth based butadiene flexible units, with a total capacity of 150 000 t/a. This was also in line with the "Guidance Catalogue for Industrial Structure Adjustment (2019)" formed by the National Development and Reform Commission in 2019, which encouraged to give priority to product structure adjustment and new material development, and depot new technologies of environmental protection and energy saving to make technological transformation and expansion of existing units. Therefore, enterprises have given more focus on rare-earth based butadiene rubber, low cis-butadiene rubber and other products when planning new products. According to statistics, in 2022, the proportion of production capacity solely using nickel-based catalytic systems dropped to 68.6% of the total domestic capacity. The planned units in the later stage will also be based on nickel-based/rare-earth butadiene flexible units.
Looking back at the past decade, the production capacity of domestic butadiene rubber experienced rapid expansion in 2012-2014, the overcapacity-cut period in 2016-2017, and the stable production period in 2018-2021, and usher in a new round of expansion in 2022. In March 2023, Sinopec Zhejiang Petrochemical Co., Ltd.'s 100 000 t/a nickel-based butadiene/rare-earth butadiene/low cis-butadiene flexible unit was put into trial operation. It is estimated that by the end of 2023, the domestic butadiene rubber production capacity will reach 1.792 million t/a.
In 2022, the output of domestic butadiene rubber was about 1.1468 million tons, a year-on-year increase of 21.03%, and the capacity utilization rate increased from 64.8% in 2021 to 67.8% in 2022. The main reasons for the increase of output in 2022 were as follows. First, the profit of butadiene rubber production in the first half of the year was relatively considerable, and the domestic mainstream butadiene rubber units could operate normally. In addition, Shandong Shengyu Chemical Co., Ltd. (former Huayu Rubber Co., Ltd.) and other butadiene rubber units gradually restarted and began normal production, which increased the output and capacity utilization rate of butadiene rubber. Second, there were 190 000 t/a butadiene rubber put into operation in the second half of the year, and the monthly output of butadiene rubber in the fourth quarter continued to increase, reaching 318 000 tons, making up for the loss of Sinopec Yangzi Petrochemical Co., Ltd.’s 100 000 t/a butadiene rubber unit that stopped in 2021 and other loss caused by load reduction of domestic units. The comparison of operating load of domestic butadiene rubber production enterprises in 2021-2022 is shown in Figure 2.
Figure 2 The comparison of operating load of domestic butadiene rubber production producers in 2021-2022
In 2023, Zhejiang Petrochemical's 100 000 t/a butadiene rubber unit was put into trial operation in March, Yangzi Petrochemical's 100 000 t/a butadiene rubber unit plans to restart, and the production capacity of new units has released in the second half of 2022. In addition, downstream demand also provides some support for butadiene rubber with the further optimization of the pandemic prevention policy. Therefore, the output of butadiene rubber is expected to have further growth in 2023.
Market analysis and forecast
In 2022, the apparent consumption of butadiene rubber in China was 1.1988 million tons, a year-on-year increase of 14.78%, and the market share of domestic products was 95.66%, a new high. The supply and demand of butadiene rubber in China from 2018 to 2022 is shown in Table 2.
At present, China's butadiene rubber is mainly used in tires, polymer modification, shoes, tapes and hoses. Tires are the largest application market, accounting for about 70% of the total domestic consumption, far exceeding consumption in other fields.Polymer modification is mainly used as a modifier for high-impact polystyrene (HIPS), ABS, etc., accounting for 15% of the consumption, with rapid growth in recent years. The shoes industry is a traditional consumption field of butadiene rubber, accounting for about 10% of the total consumption. In addition, transportation belts, triangle belts, rubber hoses and other industrial products also account for a certain consumption proportion.
Tires, as the main downstream field, did not have good performance in 2022, with low capacity utilization and declined output. Statistics show that in 2022, the cumulative output of all-steel tires in China was 122.0767 million, a year-on-year decrease of 7.55%, and the cumulative output of semi-steel tires was 483.6464 million, a year-on-year decrease of 1.64%, which had limit contribution to the apparent consumption of butadiene rubber. In terms of polymer modification, with the increase in production capacity and output of domestic PS and ABS, its consumption proportion was gradually increasing.
In 2022, the butadiene rubber market was oversupplied, and the market fluctuated and went downward in overall. The average price in 2022 was RMB12769.08 per ton, a year-on-year decrease of 3.22%. The comparison of price trend of butadiene rubber in China from 2021 to 2022 is shown in Figure 3. Entering 2023, affected by multiple factors such as social inventory, low price of substitutes including natural rubber and styrene-butadiene rubber, and cost fluctuations, there is a risk of a rising in butadiene rubber market in the later stage.
Figure 3 Comparison of price trends of butadiene rubber in China from 2021 to 2022
In terms of supply, the butadiene rubber industry still has new production capacity to be released in the future, and the overall supply may still have positive growth so the oversupply situation of butadiene rubber in China will continue. In terms of demand, China's tire industry is relatively saturated at present, and the oversupply situation in the tire industry is unlikely to change significantly so the consumption of butadiene rubber may increase slowly in overall.
Import and export analysis and forecast
1. Import analysis
In 2022, the import of China's butadiene rubber was about 195 800 tons, a year-on-year increase of 4.20%, which was at a relatively low level in recent years. Import was affected, on the one hand, due to poor domestic demand, on the other hand, due to the gradual recovery of overseas demand, and the price of imported butadiene rubber is much higher than that of domestic butadiene rubber. In addition, with the continuous development and growth of China's butadiene rubber industry, the output and quality of domestic butadiene rubber have increased significantly, so there is a growing trend that the imported products will be squeezed out of market or substituted.
In 2022, affected by the uncertainty of the international situation, China's major import trading partners underwent big changes in the import proportion. Among them, the supply of butadiene rubber from Russia to China was generally increased, surpassing South Korea and Japan, becoming China's largest import trading partner. The change was particularly obvious in China's import butadiene rubber trading partners in the fourth quarter of 2022. This was also one of the reasons why the import of China's butadiene rubber had a slight increase beyond expectations. The statistics of China's main import sources of butadiene rubber in 2022 are shown in Table 3.
2. Export analysis
In 2022, in the face of the complicated development environment and economic situation such as the pandemic, while accelerating the resumption of work and production, domestic butadiene rubber companies took the domestic economic cycle as the main body, actively explored overseas markets, promoted domestic products to participate in world competition, created new opportunities in the midst of a crisis and opened a new chapter in the changing situation. According to customs statistics, the export volume of China's butadiene rubber was about 143 800 tons in 2022, a year-on-year increase of 58.02%, and the export volume hit a record high. The main reasons for the increase in export volume included, on the one hand, the demand in Southeast Asia was relatively good, and the price in this region was higher than that in the Chinese market, on the other hand, affected by changes in the supply of butadiene rubber in some major European export trade regions, buyer in some countries and regions chose to seek alternative resources from China.
In 2022, the top three export trading partners were still Vietnam, Thailand and India, accounting for about 69% in total. The main reason was that the cost-effective advantages of China's butadiene rubber in Southeast Asia and India have become more prominent with the increase in the output and quality of domestic butadiene rubber, and the modification of policies such as superimposed export tax rebates. Therefore, the export enthusiasm increased significantly both in domestic production enterprise or trade, and the export volume showed an increasing trend. The statistics of China's main export destinations of butadiene rubber in 2022 are shown in Table 4.
It is estimated that in 2023, the domestic supply side will be relatively sufficient, the market competition pressure will be high, and the export volume may continue to be relatively high; in terms of imports, due to the impact of low-priced goods from Russia and other countries, the pressure and impact of imported products on the domestic market still need constant attention.
Development trends and suggestions
1. Development trend
First, with the continuous deepening of supply-side structural reforms, enterprises should enhance their ability to resist risks, strengthen upstream and downstream cooperation, and highlight the advantages of building upstream and downstream integrated unit in order to avoid market risks.
Second, based on the existing domestic production units, process technology, market conditions and application conditions, the technical improvement direction of domestic butadiene rubber units will be based on nickel-based/rare earth flexible production. In this way, the investment risk of new rare-earth unit can be avoided, and the product grade can be flexibly adjusted according to market demand, so as to maximize the return on investment of the enterprise.
Third, in order to improve the competitiveness of domestic butadiene rubber, it is necessary to increase investment in science and technology, accelerate product structure adjustment, transform to produce products with high added value, and adopt advanced technology for energy-saving and consumption-reducing transformation. It will be an inevitable choice for enterprises to realize low-cost, high-end and differentiated development.
2. Development suggestions
The first is to optimize and improve processes and equipment to reduce costs and increase efficiency. While intensifying efforts to implement lean management, production enterprises should focus on optimizing and improving production processes, pay attention to the transformation and upgrading of advanced and efficient production equipment, and take multiple measures to reduce costs and increase efficiency in many ways.
The second is to speed up the development of new products and enhance product competitiveness. Butadiene rubber production enterprises should be market demand orientation, continuously increase the development and production of new brand products, and improve product competitiveness, so as to avoid falling into homogeneous competition in the low-end market.
The third is to comply with the development trend of green, environmental protection and energy saving. Butadiene rubber enterprises should increase investment in environmental protection and upgrade, so as to meet environmental protection requirements and ensure the stable operation of the unit.
The fourth is to open up the international market and shift excess production capacity. Butadiene rubber production enterprises should face the world, further increase export efforts, expand sales through multiple channels, shift excess production capacity, and improve unit utilization and efficiency.
