By Lu Jundian, Liu Xiaojie, Jia Ting, Sun Mengyao and Liu Ge, Shenyang Research Institute of Chemical Industry

Dimethyl carbonate (DMC) – more specifically, industrial-grade DMC with purity reaching 99.9% – is widely used in traditional downstream application fields (e.g. adhesives, coatings and developing liquid) and polycarbonate (PC) industry, while producing lithium battery electrolyte – which has become a main application area of DMC and accounted for around 30% of DMC consumption in recent years – requires battery-grade DMC, i.e., DMC with purity of more than 99.999%.

Production

Growing 33.4% on average per year from 2018 to 2022, China’s DMC capacity soared 59.5% YoY, or 365 000 t/a YoY, to 978 000 t/a in 2020, when DMC projects that were put into production all adopted new technologies, including Shanxi Zhongke Huian Chemical Industry Co., Ltd.’s 50 000 t/a unit employing indirect urea technology, CNSG Anhui Hong Sifang Co., Ltd.’s 50 000 t/a unit employing methanol gas phase carbonylation technology, Chongqing Wansheng Coal & Chemical Co., Ltd.’s 60 000 t/a unit employing methanol liquid phase carbonylation technology and Zhejiang Petroleum & Chemical Co., Ltd.’s 200 000 t/a unit employing EO transesterification technology.

Domestic DMC capacity rose 30.7% YoY to 1.28 million t/a in 2021. As for China’s DMC capacity for 2022, it surged 56.3% YoY, or 720 000 t/a YoY, to 2 million t/a, which were still mainly from east China (accounting for 71.7% of the total), although distribution of DMC capacity has involved many regions in recent five years. Figure 1 shows China’s DMC capacity, new capacity and capacity growth during 2018-2022, Table 1 shows China’s main DMC producers in 2022, and Figure 2 shows China’s DMC capacity distribution in 2022.

Figure 1 China’s DMC capacity, new capacity and capacity growth during 2018-2022

Figure 2 China’s DMC capacity distribution in 2022

Domestic DMC output and rate of DMC capacity utilization have been closely related from 2018 to 2022 (See Figure 3 for details). Rate of DMC capacity utilization rebounded to around 50% in 2021, given many new DMC units starting production in the year and gradually stable production of DMC projects put into use previously. The rate grew to 53% in 2022, when DMC output reached 1.06 million tons.

Figure 3 Trends of China’s DMC output and rate of DMC capacity utilization during     2018-2022

China’s DMC supply and domestic demand for DMC are forecast to both soar during 2023-2030. Capacity CAGR (compound annual growth rate) during the eight years will be 10.77%, and output CAGR will reach 12.14%. Domestic DMC capacity is expected to reach 4.92 million t/a, and output may reach 2.25 million tons, both in 2027, resulting in an obvious trend of oversupply and low operating rates. Table 2 shows domestic DMC projects under planning or construction.

Consumption

With an upward trend from 2018 to 2022, domestic DMC consumption was up 53.9% YoY to 1.02 million tons in 2022. In recent years, DMC consumption proportion held by electrolyte industry has gradually increased, spurred by the nation’s policies to propel lithium battery industry. Further, consumption of industrial-grade DMC in PC industry has grown rapidly. Coating and adhesive industries – where DMC consumption is tied to DMC prices – will also be two main regions of DMC consumption, as expanding DMC capacity will lower DMC prices. In 2022, electrolyte producers accounted for more shares of DMC consumption, versus a proportion decrease of the second largest DMC consumer PC industry – where many PC firms suffered losses and operating rate was relatively low. See Figure 4 for more details.

Figure 4 China’s DMC consumption structure in 2022

From 2018 to 2022, many new DMC projects has been put into production, but downstream demand have been impacted by the coronavirus. Hence, DMC industry prosperity index represented a downward trend. Export has become a measure domestic DMC firms could take to alleviate negative influence from periodic oversupply, which has gradually appeared attributable to continuous expansion of DMC capacity.

Compound annual growth rate of DMC export volume was 2.2% during 2018-2022, lower than that of domestic DMC consumption. Export volume of DMC fell 5.6% YoY in 2022, when China’s DMC output surged 59.9% YoY to 1.06 million tons and consumption rose 63.2% YoY to 937 000 tons. However, the export volume for 2023 will increase more than 52.9% YoY, as imbalance between domestic DMC supply and demand will exacerbate given that China’s DMC output may reach 1.6 million tons in 2023, skyrocketing 50.7% YoY, exceeding around 35.5% of consumption growth. From 2023 to 2027, domestic DMC prices will tend to be reasonable, and DMC capacity concentration will be improved. DMC capacity will grow continually in the five years, but outdated capacity will be phased out, and periodic oversupply will be eased. Table 3 shows China’s DMC supply and demand from 2018 to 2027.

Prices

Fluctuating sharply from 2018 to 2022, domestic DMC prices went up to a five-year high of RMB13 500/t in October 2021, and due to factors like capacity expansion, output growth and the coronavirus declined to a five-year low of RMB4 400/t in April 2022 (See Figure 5 and Figure 6 for details).

Figure 5 China’s DMC price trend from 2018 to 2022

Figure 6 China’s DMC price trend in 2022

Industry outlook

While making big progress in improving technologies, domestic DMC industry has greatly increased capacity and output in recent years, and will embrace new opportunities from rapid development of new energy and new material industries. Meanwhile, DMC industry has to face many problems, such as capacity growing faster than consumption, high proportion of industrial-grade products in DMC capacity structure, lack of electronic-grade products, etc.

Domestic non-phosgene PC capacity may rise from 1.31 million t/a in 2021 to more than 1.5 million t/a. This will increase demand for DMC. China issued a series of polices to support lithium battery enterprises – which are required to invest more in technical innovation, product innovation, equipment R&D, etc. – which will be more willing to cooperate with electrolyte producers boasting strong R&D capability. Electrolyte industry concentration will be further improved. It is forecast that domestic electrolyte industry’s demand for DMC will grow during 2023-2025, and may exceed 600 000 tons in 2025.