Overcapacity! Is the chemical industry facing a shakeout?

Ethylene has long been regarded as a key indicator to determine the production level of the chemical industry. In 2022, China's ethylene production capacity will reach 46.75 million tons per year, surpassing the United States to become the world's largest ethylene producer. It is expected that by 2025, China's ethylene production capacity will exceed 70 million tons/year, which will basically meet the domestic demand, and may even have surplus.

Ethylene industry is the core of petrochemical industry, and its products account for more than 75% of petrochemical products, which plays an important role in the national economy. Ethylene, propylene, butadiene, acetylene, benzene, toluene, xylene, ethylene oxide, ethylene glycol, etc. produced by ethylene plant are the basic raw materials of new energy and new materials. Up to now, 32 large refinery and chemical integration projects with more than 10 million tons produce ethylene. In addition, the production cost of large-scale refinery and petrochemical integration is relatively low. The Guangdong Petrochemical Refinery and petrochemical integration project can produce 20 million tons of oil and 1.2 million tons of ethylene every year. Compared with the oil refining enterprises of the same scale, the added value of the products of the refinery and petrochemical integration enterprise can be increased by 25% and the energy consumption can be reduced by about 15%.

Using ethylene as raw material, it can produce polycarbonate, lithium electric diaphragm, photovoltaic EVA, α-olefin, POE, carbonate, DMC, ultra-high molecular weight polyethylene and other new energy and new material products. According to statistics, there are 18 kinds of ethylene downstream products and new energy, new materials and other tuyere industry associated. Due to the rapid development of new energy and new industries such as new energy vehicles, photovoltaic and semiconductor, the demand for new energy and new materials continues to rise.

As the core of the petrochemical industry, ethylene surplus, marking the petrochemical industry may usher in a reshuffle and differentiation, not only competitive enterprises eliminate backward enterprises, advanced production capacity will inevitably eliminate backward production capacity, but also the ethylene downstream industry chain on the subdivision of the leading extinction and rebirth.

Photovoltaic EVA

Photovoltaic film has now become an indispensable part of photovoltaic modules, 1GW photovoltaic modules corresponding to EVA particles demand about 5,000 tons. In recent years, photovoltaic industry develops rapidly, and the demand for photovoltaic EVA resin grows rapidly.

Guangdong Petrochemical Refining and Chemical Integration Project can produce 20 million tons of oil and 1.2 million tons of ethylene every year. Juzhengyuan (Jieyang) new material Base project will utilize the ethylene and syngas resources of Guangdong Petrochemical Project to realize an industrial chain from syngas - acetate - vinyl acetate to vinyl acetate copolymer (EVA) new materials. In recent years, the demand for photovoltaic EVA resin increases rapidly in our country.

Shenghong Petrochemical plans to increase EVA production capacity by 750,000 tons, which will be gradually put into production by the end of 2024. Besides Oriental Shenghong, other refining and chemical integrated companies such as Sinochem, Zhongke Refining and Chemical, and Rongsheng Petrochemical have also participated in EVA projects.

Ultrahigh molecular weight polyethylene

With the rapid development of new energy vehicles, high-speed rail, medical bionics, high-performance fiber and other industries, the demand for ultra high molecular weight polyethylene has increased significantly. In the field of new energy, ultrahigh molecular weight polyethylene has become one of the most popular lithium battery diaphragm materials due to its strong puncture resistance, high temperature melting without collapsing, and extremely high safety performance.

Shenghong Refining and Chemical has 16 million tons/year of refining and chemical integration project, and the ethylene cracking plant scale is 1.1 million tons/year. On December 27, 2022, the 20,000 tons/year Ultra-high molecular weight polyethylene (UHMWPE) device of Shenghong-Sierbang Petrochemical was successfully used in a one-off operation. This marks the in-depth promotion of Shenghong's "1+N" new energy and new materials strategy.

MLCC release membrane

MLCC (Chip multilayer ceramic capacitor), also known as the "rice of the electronics industry", is one of the largest and fastest growing chip components in the world. The fastest growing downstream applications include smart phones, automotive electronics, wearable devices and 5G communication base stations. The release membrane in MLCC uses PET base membrane as the base material.

In 2021, Kanghui New Materials Technology Co., LTD., a wholly-owned subsidiary of Hengli Petrochemical, independently developed high-end MLCC release base film to achieve stable and efficient production, forming the whole industry chain of crude oil - vinyl - ethylene glycol - polyester new material.

carbonate

Battery grade carbonate is the core material of lithium battery production. The prosperity of lithium battery brings the carbonate electrolyte additive into a high boom cycle.

Zhejiang Petrochemical is the first refinery and chemical integration project in China to be planned in accordance with the overall planning of 40 million tons of oil refining per year. Zhejiang Petrochemical Co., LTD. 's annual output of 200,000 tons of dimethyl carbonate and 132,000 tons of ethylene glycol project was put into operation in October 2020, with the largest single unit production capacity in the world. Satellite Chemical has an annual output of 1.25 million tons of ethylene and 730,000 tons of ethylene oxide, and the company plans a 750,000 tons/year carbonate plant.

In addition, Sungma, an integrated refining and chemical company, has expanded its range of carbonates to include vinyl carbonate (VC) and vinyl fluorocarbonate (FEC).

COC/COP

New materials of cycloolefin polymers mainly include two types, one is cycloolefin copolymer (COC) and the other is cycloolefin homopolymer (COP). COC was obtained by the addition copolymerization (VAP) of norbornene and ethylene. The other class is cycloolefin homopolymer (COP), which is produced by hydrogenation of norbornene monomer through ring-opening shift polymerization (ROMP).

Cycloolefin polymers have 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 corrosion resistance, very low dielectric loss, excellent biocompatibility, and are widely used in optics, medical treatment, semiconductor and other fields, showing huge market potential.

POE

POE is the elastomer obtained by random copolymerization of ethylene and alpha-olefin (1-butene / 1-hexene / 1-octene). POE occupies the largest proportion in the photovoltaic field.

POE is a high performance polyolefin thermoplastic elastomer, which is another key upstream material of EVA external photovoltaic film. POE has better PID resistance, resistivity, water vapor barrier and other properties than EVA. Benefiting from the increased permeability of photovoltaic double-sided double-glass components, N-type battery high-power development, POE film application proportion gradually increased.

Shenghong's 800 tons POE pilot plant has been put into production, and the company will build 500,000 tons of capacity in the future. Risheng Petrochemical has arranged 350,000 tons of alpha-olefin plant and 400,000 tons of POE plant.

Head business or will be reshuffled

Ethylene surplus, forced refining and chemical integration device, constantly complement chain, chain extension and strong chain, improve the competitiveness of the device, from crude oil integration of raw material advantage, as long as there is a market prospect or a certain market capacity of products, will pull out a line, which also accelerates the survival of the fit of the chemical industry, The production of bulk chemical products, fine chemical products, enterprise pattern will usher in changes, the production variety, the scale is more and more centralized, the number of enterprises will gradually reduce, the existing head enterprises will face restructuring and regeneration, the whole chemical industry in the next three years or will usher in a reshuffle.

The rapid development of consumer electronics, automobile intelligence and household appliance intelligence, such as communication equipment, mobile phones and wearable devices, drives the rapid growth of the demand for new chemical materials. These new chemical materials and monomer head enterprises will evolve faster, such as 18 new energy and new material products downstream of ethylene.

Fan Hongwei, chairman of Hengli Petrochemical, said that under the whole industrial chain operation framework, how to continue to maintain a strong competitive advantage, explore more new profit points, this is our focus on thinking about the problem, to give full play to the upstream industrial chain advantages, around the downstream products to broaden and deepen the industrial chain, to establish a new competitive advantage. We will promote the steady expansion of downstream products and build a fine chemical industry chain.

Comfort 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 laminated lithium battery protective film online. Hengli Petrochemical is the only company capable of mass producing 5DFDY products in China, and the domestic output of MLCC release base film accounts for more than 65%.

With the integration of refining and chemical as the platform for horizontal extension and vertical extension, make the segmentation field bigger and stronger, form the integrated development of the segmentation field, enter into the head enterprise, such as ethylene downstream 18 new energy, new material products of the head enterprise may face the change of main departure.

As a matter of fact, as early as 2017, Shenghong Petrochemical took advantage of the whole industrial chain to build 300,000 tons of EVA per year. The newly added capacity of 750,000 tons of EVA will be gradually put into production by the end of 2024 and completed by 2025. By then, Shenghong will become the world's largest high-end EVA supply base, and its global market share of photovoltaic Eva will rank first in the world. In one fell swath, Shenghong entered the leading enterprise of EVA, and its advantages of scale and technology made it difficult for new forces to catch up.

The number of industrial parks and enterprises in China's chemical industry centers and major provinces will gradually decrease again. More than 80 chemical industry parks in Shandong will even gradually disappear to half of them. In Zibo, Dongying and other places where chemical enterprises are concentrated, half of them will also be gradually eliminated. For an industry, a hundred years of great changes, not you are not good, but your opponent is too strong.

The 18 kinds of new energy and new material products of ethylene downstream are in the stage of industry expansion and dynamic changes in technology and technology. Their upstream and downstream layout can better maintain the sustainable competitive advantages of the leading enterprises.

This integrated layout can iron out the profit fluctuations caused by market fluctuations and supply and demand fluctuations, and improve the defense capability of enterprises. Technology iteration of new energy batteries, information communication, consumer electronics and other technologies is fast, and constantly puts forward new requirements for the performance of new chemical materials. Faced with technology iteration, these integrated refining and chemical enterprises have a better technology verification environment. Even a temporary wrongful conviction is convenient for other links to cover.