Chinese PTA manufacturers set off a small climax of PIA transformation

Under the current trend of increasing oversupply in China’s PTA (purified terephthalic acid) market, some PTA manufacturers try to replace the "track", upgrade their existing PTA production equipment, and switch to the more profitable PIA (refined isophthalic acid). Dicarboxylic acid) production, and gradually set off a small climax of device transformation.

In 2019, China's PIA import dependence rate was as high as 90.51%, and it was heavily dependent on imports. At the same time, PTA and PIA are similar in structure, so the transformation of the production line is relatively small. At present, Ningbo Yisheng's 300,000 tons/year PTA modification device has been put into production. Due to the shortage of PX raw materials, some old PTA installations in Southwest China are also considering the above-mentioned transformation. Judging from the PIA production schedule in 2020, there are still nearly 480,000 tons of annual production capacity to be put into use, and the total production capacity is expected to rise to 1.03 million tons. By then, China will become the world's largest PIA production center. However, there are bottlenecks in PIA production: 1. The raw materials are difficult, and MX is difficult to obtain. 2. The raw materials are corrosive and the production process is difficult, which cannot meet the requirements of stable production. 3. The cost control is poor. In addition, with the parallel production in the second half of 2020, and the domestic supply is becoming saturated, some subsequent PTA companies consider technological transformation of PIA devices, and there are still some market bottlenecks.

Under the background of large refining and chemical industry, PTA overcapacity has reached the end of prosperity

After 2010, the PTA industry chain has gone through two rounds of large-scale expansion cycles, the first round was in 2011-2014; the second round started in 2019, and the capacity release period officially entered in 2020, and it has not yet ended. According to statistics from Longzhong’s plant commissioning table, by the end of 2022, PTA still has a total production capacity of nearly 24.5 million tons. We estimate that the production capacity will increase from 52.49 million tons at the beginning of 2020 to the estimated total production capacity of 81.99 million at the end of 2022. The production capacity growth rate reached 67.27%. The new production capacity mainly comes from the raw materials of leading downstream companies and the expansion of PTA's main suppliers. The expansion of PTA production capacity will lead to a reshuffle of the industrial supply pattern, and the era of high prosperity will end.

Change the runway, the production enterprise strives for survival: PTA device changes to PIA

Large refining and chemical companies continue to put in new capacity, which will quickly squeeze out the market share of traditional polyester raw materials (PX, PTA, MEG). In addition, the technical level, energy consumption level and economic benefits of the newly commissioned equipment are completely better than those of the old equipment. The figure below shows that the production cost of Hengli Petrochemical 4# using Invista's 8th generation (P8) latest technology will be less than 500 CNY/ton, and the production cost of the enterprise has become a key constraint. In the medium and long term, as the pace of production of new devices accelerates, the mid-term overcapacity phase is inevitable. Some of the first-type old devices with higher marginal costs of less than 1 million tons may be forced to phase out, and the production capacity may be cleared or history will repeat itself. Therefore, some PTA companies are considering changing the runway to change production to survive.

The relationship between PIA and PTA devices: PTA and PIA have similarities in structure, so the transformation of the production line is relatively small. Due to the shortage of PX raw materials, some old Southwest PTA installations are considering changing the runway.

Uses: The main use of PIA is unsaturated polyester, powder coating resin, and PET bottle grade polyester. These three uses are PIA's largest consumer areas. In addition, PIA is also used in the manufacture of motion picture film couplers, coatings and polyester fiber dyeing modifiers and medicines.

Market: The PIA market is small and high-end, with high profits in the first two years. From 2017 to 2019, the PIA listing price of Yanshan Petrochemical can be seen, since March 2017, the market price of isophthalic acid has reached 19,000 CNY/ton, which is more profitable.

Before Ningbo Yisheng’s 300,000-ton/year PIA plant was officially put into operation in 2020, Yanshan Petrochemical was the only PIA manufacturer in China with a production capacity of 50,000 tons/year. This set of equipment is also the first successful case of a PTA plant in China converted to PIA. At present, the mainstream way of PIA devices in the world is to rely on existing PTA devices for transformation and switch to PIA, which can greatly reduce the investment cost of the device.

bottleneck:

1. The raw materials are difficult, MX is hard to get;

2. The raw materials are highly corrosive, the production process is difficult, and it cannot meet the requirements of stable production;

3. Poor cost control

The PIA import substitution market is very large: According to Longzhong's incomplete statistics: In 2019, the domestic market of methylphthalic acid imported 353,000 tons. In 2019, my country's apparent consumption of PIA was about 390,000 tons, and its import dependence was as high as 90.51%. It can be seen that, up to now, the import substitution market for China's PIA industry is very large.

Oversupply, or repeat the pattern of excess PTA industry chain

2020 will usher in the peak period of PIA production capacity, and the situation of oversupply may repeat the current surplus pattern of the PTA industry chain. According to Longzhong’s incomplete statistics, many domestic PIA devices will be put into production in 2020. From the figure below, the domestic Ningbo Yisheng’s 300,000-ton PTA modified device has been put into production; in addition, the new PIA project of Ningbo Formosa Plastics is about to be completed, and the other new devices are also Fast-track construction is underway. The total production capacity of these four units is as high as 980,000 tons per year. If they are put into operation as scheduled in 2020, China will become the world's largest PIA production center by then, and the domestic market will become saturated. In 2019, China’s PIA demand was only 390,000 tons. Under the mismatch of supply and demand, industry competition may become more intense in the future, and there are still some market bottlenecks in the PTA technological transformation of PTA enterprises.