Thread Content
When it comes to the melamine industry, one cannot overlook these three multinational companies: DSM of the Netherlands, OEG Industries of Austria, and BASF of Germany. Thanks to their advanced melamine production technologies and large-scale melamine manufacturing facilities, these companies produce more than 35% of the world’s annual melamine consumption, and they dominate the market for melamine products used in high-end applications. To successfully enter the international market, especially the high-end market, it is first necessary to consider partnering with these companies or engaging in OEM sales. Chinese companies are most acutely aware of this: by 2003, China already had a large production volume of melamine, but since international end-users only accepted products from a few major companies, Chinese firms were unable to break into the international market for a long time. However, after 2005, this situation began to change. Chinese companies have built up strength over time to achieve breakthroughs. China’s first melamine production facility was put into operation in 1958; at that time, the scale of industrial production was very small. Using dicyandiamide as raw material and employing a high-pressure process, the annual production volume was only 100 tons. It was also at that time that China’s melamine industry began to develop. After 50 years of development, China’s melamine industry has made significant progress. By 2007, China’s effective production capacity for melamine had reached 720,000 tons, with consumption amounting to over 350,000 tons and exports exceeding 150,000 tons. As a result, China has become the world’s largest producer, consumer, and exporter of melamine. The domestic melamine industry is also gradually showing 4 major advantages. Overall volume on the rise In recent years, China’s capacity, production, demand, and exports of melamine have all seen annual growth rates of over 10%. By 2006, China’s melamine production capacity was 609,000 tons, while production volume was 416,000 tons and apparent consumption was 300,000 tons – figures that accounted for 36.4%, 32% and 23.1% of the world’s total respectively. As the overall volume increases, the scale of domestic melamine manufacturers is also growing continuously. In 2006, there were 27 melamine manufacturers in China with a production capacity of over 10,000 tons per year; their combined capacity was 530,000 tons, accounting for 87% of the country’s total production capacity ； The total production amount is 292,000 tons, accounting for 70% of the country’s total output. In 2007, with the commissioning of four 30,000-ton/year production units operated by CNPC Urumqi Petrochemical Company, Sichuan Jinhua, Chongqing Jianfeng, and Zhongyuan Dahuahua, the number of domestic manufacturers of melamine with a production capacity of over 30,000 tons per year increased to 13. The process leads the way. Currently, the most advanced melamine production technologies in the world, those with low energy consumption and high competitiveness, are mainly in the hands of companies such as DSM in the Netherlands, BASF in Germany, Shin-Nissan in Japan, and Montedison in Italy. Additionally, the third-generation vapor quenching process developed by Tsinghua University in China has also received recognition and attention from the industry due to its advanced technical features. Compared with foreign technologies, Tsinghua University’s third-generation vapor quenching technology features a shorter process route, a more compact structure, lower project investment, and reduced maintenance costs. It offers significant advantages in terms of energy and space savings as well as cost reduction, which is why it is also referred to as an \"energy- and cost-saving\" process. It provides strong technical support for the sustainable and healthy development of China’s melamine industry. It is understood that through decades of effort, our country has developed its own semi-dry process technology, while also adopting advanced foreign process technologies and equipment. At present, China has become the country with the most comprehensive melamine technology in the world, and some of its melamine production technologies have been exported abroad. Completion of capacity upgrading Since 2006, in line with the requirements of energy conservation and emission reduction policies, a considerable number of melamine manufacturers with small production scales, outdated manufacturing technologies, high energy consumption, and severe pollution issues have shut down their facilities. It is understood that alone during 2006–2007, more than 20 melamine-producing enterprises in China ceased operations, resulting in a reduction in production capacity of over 100,000 tons. While phasing out outdated production capacity, China has also built a number of new large-scale melamine plants that feature advanced technology, low energy consumption, high overall material utilization rates, and are environmentally friendly; the combined production capacity of these new plants exceeds 200,000 tons. At the same time, the elimination of outdated production capacity improved the overall technical level and product competitiveness of China’s melamine industry, leading to a significant increase in the share of Chinese products in the international market. Preparing to compete overseas According to data released by the preparatory group of the China Melamine Industry Cooperation Committee, by the end of 2007, China had 96 melamine production enterprises and those under construction, with a total of 117 production units. The combined production capacity was 856,500 tons, accounting for 73.5%, 73%, and 41% of the global total respectively. According to statistics from the International Melamine Industry Federation, since 2005, aside from a few new and planned projects in countries such as the UAE and Qatar, over 80% of the world’s new, renovated, and expanded melamine production projects have been located in China. As China’s capacity, production volume, and exports of melamine continue to increase, along with improvements in product quality and reputation, Chinese products are gaining an increasingly larger share in international markets, and China now holds a certain degree of power in terms of pricing. Decline of foreign companies Since the past two years, the melamine industry abroad has begun to show signs of decline. On the one hand, in developed countries such as Europe, the United States, and Japan, sectors like the engineered wood market have shifted from a period of rapid growth to one of steady development ； As for the melamine foam market, which holds great expectations, it remains a \"luxury product\" even after over 20 years of development, as BASF keeps its production techniques strictly confidential; it has yet to reach ordinary households. Therefore, international demand for melamine has grown very slowly in recent years, accounting for less than half of China’s growth rate. On the other hand, most foreign companies use natural gas as a raw material to produce urea, which is used in the manufacture of melamine. Since 2003, the continuous and significant rise in oil and gas prices has led to increased costs for urea. Some companies have even had to shut down their urea production facilities or reduce the output of their urea plants due to insufficient supply of raw materials, which in turn has resulted in a shortage of raw materials for these melamine manufacturers and a sharp increase in their costs. Industry experts have observed the decline of foreign melamine giants from two perspectives. Increased shutdowns and restructurings: Over the past two years, the melamine production capacity in Europe**, which has long led the global melamine market, has not increased at all; on the contrary, it has declined year by year due to the shutdown of certain production facilities owned by companies such as DSM and Oegstgeest. In 2005, Europe’s melamine production capacity was 705,000 tons; by the end of 2007 it had dropped to around 600,000 tons ； In 2005, Europe’s melamine production was 670,400 tons, and it dropped to 520,000 tons in 2007 ； In 2005, the average operating rate of melamine plants in Europe was as high as 95.6%, whereas it was only 87% in 2007. In the major producers and consumers of melamine, such as the United States and Japan, the melamine industry has also been on a downward trend over the past two years. Not only have no new projects been launched, but some existing facilities have also reduced production or stopped operating due to issues with raw material supply. Between 2005 and 2007 alone, the soaring prices of oil and gas forced DSM of the Netherlands to shut down a melamine plant in the United States with an annual production capacity of 52,000 tons; Ogrinz of Austria ceased operations at a melamine facility in Europe with a capacity of 60,000 tons per year; SMR of Indonesia reduced the capacity of its melamine plant to 60%; Mitsubishi Chemical Corporation of Japan closed its plant in Kashima with an annual production capacity of 35,000 tons; Samsung Fine Chemicals of South Korea shut down its plant in Ulsan with the same capacity of 35,000 tons per year; and Mississippi Chemical Company of the United States closed its melamine-urea plant in Louisiana with an annual production capacity of 52,000 tons… The shutdown of these plants resulted in a reduction of melamine production capacity by over 200,000 tons, with output dropping by around 180,000 tons. Setbacks in the Chinese market: In recent years, China’s capacity, production, demand, and exports of melamine have all seen annual growth rates of over 10%, which has drawn the envy of international melamine giants. In particular, China’s huge market for melamine and the relatively low cost of urea as a raw material have attracted the attention of these melamine giants. Starting in 2004, some internationally renowned companies began to engage frequently with Chinese enterprises and local authorities, with the aim of gaining a foothold in the Chinese market and further expanding their melamine production capacity as well as their international influence. Unfortunately, foreign melamine manufacturers entered the Chinese market a bit too late--by the time they did so, they encountered Chinese companies that were already starting to grow stronger. As a result, foreign companies’ plans to compete in the Chinese market are repeatedly hindered. The most obvious example is found in the industry leader, DSM. As early as 2005, DSM signed a cooperation framework agreement with CNOOC Hainan Dongfang Chemical Industry Co., Ltd., aiming to jointly invest 1.4 billion yuan to build a melamine production facility with an annual capacity of 120,000 tons, using urea produced by CNOOC Fudao Chemical Plant as raw material. However, when substantive negotiations began, the cooperation fell through as CNOOC rejected DSM’s desire to have control over the sales rights for all melamine products. In the following years, companies such as DSM and Oegstgeest entered into partnerships with various enterprises in Sichuan, Shandong, Fujian, Xinjiang, and other regions. However, since its main goal was to find melamine processing plants in China in order to gain control over the sales rights of melamine from those companies with minimal investment, it failed repeatedly. Chinese and foreign companies are evenly matched. In 2006, after the completion and operation of Shanxi Fengxi Fertilizer (Group) Co., Ltd.’s urea production facilities in Pinglu with a capacity of 15,000 tons per year and in Jishan with a capacity of 12,000 tons per year, their advantages such as low investment, rapid returns, low energy consumption, and high quality rates once again caught the attention of DSM Corporation. In 2007, DSM and Fengxi finally reached an agreement to jointly invest over 100 million RMB in building expansion projects for melamine production: one with a capacity of 12,000 tons per year in Pinglu and another with a capacity of 15,000 tons per year in Jishan. By March of this year, once the project is completed, it will mark the success of the first joint-venture melamine project in the country. By then, Fengxi Company will be primarily responsible for the production of melamine, while DSM will take care of all sales of the product at a volume of 60,000 tons per year. Dyson has reaped significant benefits from this, as its dream of investing in and building factories in China over the years has finally come true. From then on, DSM was finally able to enter China, the most promising market for melamine. With DSM’s success, foreign companies have once again started to eye the Chinese market. But at the same time, Chinese companies also began to target foreign markets – China not only managed to export several sets of melamine production facilities and related patent technologies, but leading enterprises such as Zhongyuan Dahuahua have also established their own sales outlets and companies in Europe, the United States, Japan, Central Asia and other countries, allowing them to sell their products directly to these regions. Whether it is Chinese melamine manufacturers or foreign ones, they are all different from what they were 50 years ago, 30 years ago, 10 years ago, or even 1 year ago. Dyson’s successful entry into the Chinese market not only marks another segment of the Chinese chemical products market entering an era of Sino-foreign joint ventures, but it also signifies that domestic and foreign melamine manufacturers will engage in a new round of competition on a new platform – one characterized by new energy sources, technologies, scales, and market conditions. 2008-02-14 China Chemical Information Network