Development trends of polyoxymethylene in 2009

Thread Content

Analysis and forecast of supply and demand in China’s polyoxymethylene (POM) industry. The global financial crisis triggered by the United States in 2008 affected every industry and company, and particularly in the fourth quarter of 2008, the chemical and plastics industries faced great difficulties in operating. The main reasons are as follows. First, oil prices plummeted sharply; this drop in oil prices had a direct impact on a range of downstream products. The prices of chemical and plastic products followed suit, with chemical product prices falling significantly in October. Meanwhile, the costs associated with raw material inventory remained high, which led to a rapid reduction in the profit margins for companies. Secondly, the severity of the economic crisis suddenly intensified, leading to a surge in cautious attitudes among downstream buyers; demand dropped rapidly, prices continued to fall, and in some cases costs even exceeded prices. This made it even more difficult for companies to make profits, prompting many chemical manufacturers to decide to suspend or reduce production. The financial crisis that began in 2008 had an impact on both the production and demand for polyoxymethylene worldwide; global demand is set to slow down, with global consumption of polyoxymethylene expected to grow at an average rate of around 3% per year in the coming years. The global consumption is expected to reach 850,000 tons in 2008 and 950,000 tons by 2012. The existing production capacity is more than sufficient to meet market demand. Among them, industries such as the automotive and electronics sectors in the United States and Western Europe were significantly affected, with annual demand growth rates of 2.8% and 2.5% respectively, while demand in Japan remained at similar levels to those in 2006, showing no significant increase. Demand in the Asian region, including the Chinese mainland, is also expected to slow down in the coming years, with an annual growth rate of 6%. Production of polyoxymethylene in China: The methanol plant of Daqing Oilfield, belonging to China National Petroleum Corporation, invested 567 million yuan to adopt technology from the American company Solenis and build a POM production facility with an annual capacity of 20,000 tons. The design work for this facility began in 2002, and it came online in 2004. The project of Shanxi Jincheng Orchid Science and Technology Co., Ltd., which involves an investment of 580 million yuan and a production capacity of 20,000 tons per year of POM, was approved by the **Planning Commission in 2004; its current production capacity has reached 30,000 tons per year. Building on its existing polyoxymethylene production facility with an annual capacity of 10,000 tons, Yunnan Yuntianhua Co., Ltd. invested in constructing a new plant with a capacity of 20,000 tons of polyoxymethylene. On July 23, 2006, the new polyoxymethylene facility began producing qualified products. In 2006, the polyoxymethylene production unit of Yunnan Yuntianhua Co., Ltd. manufactured 11,000 tons of polyoxymethylene. On April 12, 2007, the 60,000-ton/year polyoxymethylene project of Yunnan Yuntianhua was inaugurated in the Chongqing (Changshou) Chemical Industry Park. This 60,000-ton/year polyoxymethylene project utilizes Polish polyoxymethylene technology, with a total investment of 2 billion yuan. The entire project consists of three sets of 20,000-ton polyoxymethylene production units. The first phase was completed in July 2008, and the remaining two sets of production units will also be fully built and put into operation by 2010. Once all the facilities are completed and put into operation, Yuntianhua’s polyoxymethylene production capacity will account for one-third of the country’s total capacity. On March 29, 2008, the first phase of Shanghai Lanxing New Materials Company’s production facility, capable of producing 40,000 tons of polyoxymethylene per year, was completed and put into operation in the Shanghai Xinghuo Development Zone. The second-phase project with an annual production capacity of 60,000 tons of polyoxymethylene is under construction. Within five years, Shanghai will have polyoxymethylene production facilities with an annual output of over 100,000 tons, making it one of the largest polyoxymethylene production hubs in the world. As of now (December 2008), China’s polyoxymethylene production capacity is 222,700 tons per year. The main manufacturers include: Baotailing Engineering Plastics (Nantong) Co., Ltd. (60,000 tons per year), Yunnan Yuntianhua Co., Ltd. (50,000 tons per year), DuPont-Kuraray Polyoxymethylene (Zhangjiagang) Co., Ltd. (20,000 tons per year), Shanxi Jincheng Lanhua Science & Technology Co., Ltd. (30,000 tons per year), Daqing Oilfield Methanol Plant (20,000 tons per year), and Shanghai Lansing New Materials Company (40,000 tons per year). The main polyoxymethylene projects under construction in China at present include the second phase of Shanghai Lanxing New Materials Company, owned by Sinochem Group Lanxing Company, with a production capacity of 60,000 tons per year, which has already begun construction ； The polyoxymethylene projects of Xinjiang United Chemical Co., Ltd. with a capacity of 40,000 tons per year and Yunnan Yuntianhua Co., Ltd. with a capacity of 60,000 tons per year have also begun construction. In China, there are not many enterprises that possess the technology for producing polyoxymethylene on an industrial scale; as a result, the range of available products is limited. For example, Yunnan Yuntianhua Co., Ltd. can only produce a few grades of this material, while Shanghai Lanxing New Materials Company has just over 10 grades. In contrast, major international multinational companies have 30 to 40 different grades to choose from. Therefore, in terms of both production scale and product variety, domestic polyoxymethylene production technology remains relatively backward. The manufacturing technology still has some shortcomings; raw material and utility costs are high, product quality is not stable, and coupled with price competition from imported products, the polyoxymethylene produced by various factories is far from sufficient to meet domestic demand. In addition to the gap in production technology compared to foreign countries, there is also a significant disparity in the processing technologies and equipment for polyoxymethylene abroad; for example, when processing polyoxymethylene, foreign companies generally use mold temperature controllers, while few domestic companies employ such devices. Moreover, there is a huge gap in the technology used for manufacturing molds in China as well. Finding ways to overcome the negative effects of these disparities is key to the effective use of polyoxymethylene. Although there are dozens of types of polyoxymethylene, 90% of the products available in the domestic market currently are of the standard type, which represents a gap compared to foreign markets where modified products are used to a greater extent – their usage rate exceeds 30%. In the processing and application of polyoxymethylene, the following problems generally occur: mold fouling, yellowing of the products, strong processing odors, high shrinkage rates, brittleness of the products, poor surface finish, warping and deformation, voids or bubbles, flow marks, and silver streaks. The occurrence of these problems is related, on the one hand, to the inherent properties of polyoxymethylene itself; moreover, it is sensitive to light, and exposure to light can cause it to decompose, leading to product yellowing. On the other hand, they are caused by outdated processing techniques or equipment – for example, poor precision of injection machines and inaccurate temperature control, which result in the decomposition of polyoxymethylene and subsequent yellowing of the products. Imported products are impacting the domestic market. China relies heavily on imports for polyoxymethylene; currently, imports account for around 50% of domestic consumption. Several foreign companies, led by Japanese manufacturers, drive down the prices of common grades of polyoxymethylene resin that can be produced domestically, while raising the prices of special grades, thereby squeezing the profits and survival space of domestic polyoxymethylene producers. Currently, imported products still dominate the domestic market price of polyoxymethylene. Changes in supply and demand: The production capacity of domestic polyoxymethylene manufacturers is far from sufficient to meet the needs of domestic end-users, so a considerable amount of polyoxymethylene is imported from abroad each year. This, in turn, encourages foreign companies to invest in polyoxymethylene production facilities in China. The domestic polyoxymethylene market is largely dominated by foreign companies. The price of ordinary grades of polyoxymethylene is low, but high-end products maintain relatively high prices. If the production capacity of polyoxymethylene increases significantly and supply exceeds demand, generally speaking, the price of polyoxymethylene in the domestic market will fall. Polyoxymethylene possesses strength and hardness comparable to that of certain metals, and is typically used in applications that require high precision. It is widely employed in industries such as electronics, automotive, and machinery. However, due to the impact of the financial crisis on these industries, demand for polyoxymethylene has decreased, resulting in lower transaction volumes and falling prices. Currently, domestic demand for polyoxymethylene is growing rapidly, while production capacity is severely insufficient. In addition to Yuntianhua, several other domestic companies plan to build polyoxymethylene production facilities, and several well-known international manufacturers of polyoxymethylene also have plans to set up plants in China. Table: Statistics on Planned and Ongoing Polyoxymethylene Projects Sequence Number Project Owner Project Capacity Project Progress 1 Sinochem Lanxing Company 160,000 tons/year Under construction 2 Yunnan Tianhua Group 40,000 tons/year Under construction 3 Xinjiang United Chemical Co., Ltd. 40,000 tons/year Under construction 4 CNOOC Tianye Chemical Co., Ltd. 60,000 tons/year Under construction 5 Tianjin Bohai Chemical Co., Ltd. – Tianjin Alkali Plant 40,000 tons/year Under construction 6 Kaifeng Longyu Chemical Co., Ltd. 100,000 tons/year Under construction 7 Shenhua Ningxia Coal Group 60,000 tons/year Under construction 8 Jiangyou Investment Promotion Bureau, Sichuan 10,000 tons/year Planned Based on this analysis of China’s polyoxymethylene production and market, in the coming years, the situation where demand exceeds supply for this material in China is set to change. At present, the development of the polyoxymethylene industry in our country is far behind the advanced levels abroad, and demand for such products relies heavily on imports. Although our country began developing polyoxymethylene quite early on, decades of progress have led to breakthroughs in technical capabilities.