Hengli Petrochemical's new biodegradable polyester material project started

A reporter from China Securities News learned from Hengli Petrochemical (600346) on December 27 that the company's subsidiary Yingkou Kanghui Petrochemical Co., Ltd. ("Kanghui Petrochemical") with an annual output of 33,000 tons of PBS-type biodegradable polyester new material was a one-time project recently. The successful start-up, smooth production and production of qualified products marked the official launch of Hengli Petrochemical's green industry. Some analysts pointed out that with the approach of the comprehensive ban on plastics, the production capacity of the project will rank among the top three in China after it is put into production, which will greatly alleviate the domestic supply and demand gap of PBS-type biodegradable plastics. It is estimated that the annual income will increase by 600 million yuan to 700 million yuan.

According to the "Notice on Solid Promotion of Plastic Pollution Control" jointly issued by 9 departments including the National Development and Reform Commission and the Ministry of Ecology and Environment in July, the "plastic ban order" will be fully implemented from January 1, 2021. On November 30, the Ministry of Commerce issued the "Measures for the Report on the Use and Recycling of Disposable Plastic Products in the Commercial Field (Trial)", which is considered to be a further upgrade of the "plastic restriction order". With the approach of a comprehensive plastic ban, the demand for degradable plastic products will increase substantially.

As a leading private refining and chemical company, Hengli Petrochemical took the lead in responding to this national policy and began to deploy new biodegradable polyester materials. The subsidiary Kanghui Petrochemical began to cooperate with Dalian University of Technology as early as August 2019 to independently develop the production formula of "PBS-type biodegradable polyester new material", and invest in the construction of an annual output of 33,000 tons of PBS-type biodegradable in early 2020. The new polyester material project has successfully realized "starting in the same year and putting into production in the same year".

It is worth mentioning that, as a leader in the development of large-scale, high-end, and differentiated polyester chemical fiber manufacturing in my country, Hengli Petrochemical has the comprehensive competitive advantage of both the scale effect of production capacity and the leading technology research and development. With the comprehensive completion of Kanghui Petrochemical's new biodegradable polyester material project with an annual output of 33,000 tons, Hengli Petrochemical officially enters the degradable plastics market with huge space in the future. The polyester business segment's capacity structure upgrade and scale process advantages will also More obvious.

With the continuous introduction of the "plastic restriction order" policy, on the disk, the concept of degradable plastics has continued to strengthen since October, and the sector has risen by nearly 20%.

Guosen Securities estimates that the four key application areas of domestic disposable tableware, disposable plastic bags, agricultural mulch and packaging plastic films have a total potential demand of 10.17 million tons. Compared with the potential demand space of 10 million tons, my country's biodegradable plastic market supply was only 70,000 tons in 2018, and the market demand has not yet been fully opened. With the strengthening of plastic restriction legislation and law enforcement, the improvement of national environmental protection awareness, technological progress and government subsidies, the reduction of costs brought about by the degradable plastics industry is expected to enter a stage of rapid increase in penetration. Under the expectation of positive industry, the domestic biodegradable plastic industry has entered the expansion cycle, and the cost is expected to drop rapidly.

Insiders pointed out that Kanghui Petrochemical's annual production of 33,000 tons of PBS-type biodegradable polyester new material project has been successfully started at the end of 2020 and put into production first. Hengli Petrochemical is expected to further enjoy the market dividend brought by the policy. In addition, Hengli Petrochemical is the first domestic company to realize the complete industry of "crude oil-aromatics, ethylene-purified terephthalic acid (PTA), ethylene glycol-polyester (PET)-civilian silk and industrial silk, engineering plastics, and film" in China. Private enterprises with chain management and development can provide upstream PTA raw materials for PBS-type biodegradable polyester new materials, further expand the operating capacity of the entire industry chain and reduce production costs.