Breaking through 70 million tons per year! By 2025, China may face an excess of ethylene! The chemical industry is facing a reshuffle!

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This post was last edited by 654262293 on 2023-2-21 08:21: Over 70 million tons per year! By 2025, China may face an excess of ethylene! The chemical industry is facing a reshuffle! Published on February 18, 2023, at 14:53 in Beijing. Ethylene has always been regarded as a key indicator determining the production level of the chemical industry. In 2022, China’s ethylene production capacity reached 46.75 million tons per year, surpassing that of the United States and making China the world’s largest producer of ethylene. By 2025, China’s ethylene production capacity is expected to exceed 70 million tons per year, which will largely meet domestic demand and may even result in a surplus. The ethylene industry is the core of the petrochemical industry; its products account for over 75% of petrochemical products, giving it an important role in the national economy. Ethylene, propylene, butadiene, acetylene, benzene, toluene, xylene, ethylene oxide, ethylene glycol, and other substances produced by ethylene plants serve as basic raw materials for new energy and new materials. To date, 32 large-scale integrated refining and chemical processing projects with an annual production capacity of over 10 million tons all produce ethylene. Moreover, the production of ethylene through large-scale integrated refining and chemical processing results in relatively lower production costs. The integrated refining and chemical processing project in Guangdong Petrochemical can process 20 million tons of oil per year and produce 1.2 million tons of ethylene. Compared with refineries of similar scale, such integrated enterprises can achieve a 25% increase in the added value of their products and a reduction of energy consumption of around 15%. Using ethylene as a raw material, it is possible to produce various products for the new energy and new materials sectors, such as polycarbonates, lithium-ion battery separators, photovoltaic EVA, α-olefins, POE, carbonates, DMC, and ultra-high molecular weight polyethylene. According to statistics, there are 18 downstream products derived from ethylene that are related to industries in the field of new energy and new materials. Due to the rapid development of new energy and new industries such as electric vehicles, photovoltaics, and semiconductors, the demand for such new energy and new materials continues to rise. The excess of ethylene, which is at the core of the petrochemical industry, indicates that this sector may experience restructuring and differentiation. It involves not only the elimination of less competitive companies by more competitive ones, but also the disappearance of old production capacities as newer ones take their place; in addition, there will be changes among the key players in the downstream industries that rely on ethylene. 1. Photovoltaic EVA adhesive films have now become an essential part of photovoltaic modules; approximately 5,000 tons of EVA particles are required for every 1 GW of photovoltaic modules. In recent years, China’s photovoltaic industry has developed rapidly, leading to a sharp increase in the demand for photovoltaic EVA resin. The Guangdong Petrochemical Integration Project is capable of processing 20 million tons of oil per year and producing 1.2 million tons of ethylene. The Juzhengyuan (Jieyang) New Materials Base project makes use of the ethylene and syngas produced by the Guangdong Petrochemical Project to create an industrial chain that goes from syngas-acetic acid-vinyl acetate to ethylene-vinyl acetate copolymer (EVA) materials. In recent years, demand for photovoltaic EVA resin in China has been growing rapidly. Shenghong Petrochemical plans to add 750,000 tons of EVA production capacity, with gradual commissioning starting by the end of 2024. In addition to Dongfang Shenghong, other integrated refining and chemical companies such as Sinochem, China National Chemical Corporation, and Rongsheng Petrochemical have also launched EVA projects. 2 Ultra-high molecular weight polyethylene: With the rapid progress in technologies related to new energy vehicles, high-speed railways, medical biomimicry, high-performance fibers, and other industries, the demand for ultra-high molecular weight polyethylene has seen significant growth. In the field of new energy, ultra-high molecular weight polyethylene has become one of the most popular materials for lithium battery separators due to its strong resistance to external punctures, its ability to remain intact at high temperatures, and its excellent safety properties. Shenghong Refining and Chemicals’ integrated refining and chemical project has an annual capacity of 16 million tons, with the ethylene cracking unit having an annual capacity of 1.1 million tons. On December 27, 2022, the 20,000-ton/year UHMWPE production plant operated by Shenghong-Sibur Petrochemical was successfully commissioned in one go. This marks the further advancement of Shenghong’s “1+N” strategy for new energy and new materials. 3MLCC release films. MLCCs (multilayer ceramic capacitors) are also known as the \"rice of the electronics industry\"; they are among the most widely used and fastest-growing surface-mounted components in the world. The sectors with the fastest growth in demand for these components include smartphones, automotive electronics, wearable devices, and 5G communication base stations. The release films in MLCCs all use PET-based films as the base material. In 2021, the high-end MLCC release film developed independently by Kanghui New Materials Technology Co., Ltd., a wholly-owned subsidiary of Hengli Petrochemical, was produced on a stable and efficient basis, thereby establishing a complete industrial chain for \"crude oil–ethylene–ethylene glycol–polyester new materials\". 4. Carbonate: Battery-grade carbonates are key materials in the production of lithium batteries, and the growth of lithium batteries has pushed carbonate electrolyte additives into a period of strong demand. Zhejiang Petrochemical is the first integrated refining and chemical project in China to be planned on a one-time basis for an annual refining capacity of 40 million tons. The project at Zhejiang Petrochemical, which produces 200,000 tons of dimethyl carbonate per year along with 132,000 tons of ethylene glycol, came online in October 2020; the capacity of each production unit is the highest in the world. Saturn Chemical has an annual production capacity of 1.25 million tons of ethylene and 730,000 tons of ethylene oxide, and the company has planned a carbonate production facility with an annual capacity of 750,000 tons. Moreover, the range of carbonate products produced by integrated refining and chemical companies has continued to expand to include vinyl carbonate (VC) and fluorinated vinyl carbonate (FEC). The new 5COC/COP cycloolefin polymers mainly fall into two categories: one is cycloolefin copolymers (COC), and the other is cycloolefin homopolymers (COP). COC is a polymerized product obtained through the addition copolymerization (VAP) of norbornene and ethylene; the other type is the cycloolefin homopolymer (COP), which is a polymerized product obtained by hydrogenation following ring-opening shift polymerization (ROMP) of norbornene monomers. Cycloolefin polymers possess excellent optical properties (high light transmittance, high refractive index, low birefringence), high-temperature resistance (high glass transition temperature), dimensional stability (low water absorption), high strength, chemical resistance, extremely low dielectric loss, and good biocompatibility. They are widely used in fields such as optics, medicine, and semiconductors, showing great market potential. 6POEPOE is an elastomer obtained through the random copolymerization of ethylene and α-olefins (1-butene/1-hexene/1-octene); POE accounts for the largest share in applications within the photovoltaic sector. POE is a high-performance polyolefin thermoplastic elastomer, and it represents another key upstream material for outdoor photovoltaic adhesive films besides EVA. POE boasts superior properties such as resistance to PID (potential-induced degradation), higher resistivity, and better water vapor barrier performance compared to EVA. Benefiting from the increasing penetration of bifacial double-glass photovoltaic modules, the development of higher-power N-type cells, and the growing use of POE adhesives, their share in applications is steadily rising. Shenghong’s 800-ton POE pilot plant is now in operation; the company plans to build another facility with a production capacity of 500,000 tons. Rongsheng Petrochemical has established an α-olefin plant with a capacity of 350,000 tons and a POE plant with a capacity of 400,000 tons. The leading companies in this sector may undergo further restructuring. The surplus of ethylene forces integrated refining and chemical processing facilities to continuously enhance their capabilities by extending and strengthening their production chains, thereby improving their competitiveness. Thanks to the advantage of having integrated raw material supply starting from crude oil, any product with market potential or sufficient market demand will see the development of corresponding production lines, which accelerates the process of survival of the fittest within the chemical industry. There will be changes in the production of both bulk and specialty chemical products, as well as in the structure of companies operating in this field; production will become more concentrated in terms of both product types and scale, and the number of companies will gradually decrease. The existing leading companies will need to restructure themselves, and the entire chemical industry is likely to see significant changes over the next three years. The rapid development in areas such as communication devices, mobile phones, and wearable devices – which fall under the category of consumer electronics – as well as the advancement of intelligent technologies in automobiles and home appliances, has led to a surge in demand for new types of chemical materials. The leading companies in these growing fields of chemical materials and monomers will evolve even more rapidly, such as the 18 new energy and material products derived from ethylene. Fan Hongwei, chairman of Hengli Petrochemical, said that within the framework of full-industry-chain operations, how to maintain a strong competitive advantage and identify more new sources of profit are key issues we need to consider. It is necessary to make full use of the advantages of the upstream industry chain, expand and deepen the industry chain around downstream products, in order to establish new competitive advantages. Efforts will be made to steadily expand the production of downstream products in order to build a refined chemical industry chain. Kanghui New Materials, a subsidiary of Hengli Petrochemical, is the only company in China and the second in the world capable of producing 12-micron silicon-coated release laminated lithium battery protection films on an industrial scale. Hengli Petrochemical is the only company in China that can mass-produce products of the 5DFDY specification, and it accounts for over 65% of China’s total production of MLCC release base films. By leveraging integrated refining and chemical production as a platform for horizontal and vertical expansion, it is possible to strengthen positions in specific sectors and achieve integrated development within those sectors. Companies that enter this field end up among the leading players; for example, in the area of 18 new energy and new material products derived from ethylene, the leading companies may find themselves replaced by others. In fact, as early as 2017, Shenghong Petrochemical took advantage of its integrated industrial chain to launch a production facility with an annual capacity of 300,000 tons. An additional 750,000 tons of EVA production capacity will begin to be operational by the end of 2024, with full operation achieved by 2025. By then, Shenghong will become the world’s largest supplier of high-end EVA, holding the highest market share in the global photovoltaic-grade EVA market. Thus, Shenghong will rank among the leading EVA manufacturers, and its scale advantages combined with technical expertise will make it difficult for competitors to catch up. The number of existing chemical industry hubs and industrial parks in provinces with strong chemical industries in China will continue to decline gradually; more than 80 chemical parks in Shandong may even see their numbers halve over time. In areas where chemical enterprises are concentrated, such as Zibo and Dongying, half of these enterprises will also be phased out gradually. For an industry, these unprecedented changes on a century-scale are not due to a lack of excellence on your part, but rather because your competitors are too strong. The 18 new energy and new material products derived from ethylene are in a stage of industry expansion, with technologies and processes still evolving; an appropriate upstream and downstream layout can help the leading companies maintain their competitive advantages. Such an integrated layout helps to mitigate fluctuations in profits caused by market and supply-demand changes, thereby enhancing a company’s resilience. Given the rapid pace of technological advancement in areas such as new energy batteries, information and communication technologies, and consumer electronics, new requirements are constantly being placed on the properties of specialty chemical materials. These integrated refining and chemical manufacturing companies have a better environment for testing new technologies; even if they make mistakes temporarily, other aspects of their operations can provide support.