China's high-end plastics market has great room for growth

The global economic recovery after the epidemic will be a slow and uncertain process. The development of new energy vehicles has led to a weakening of demand for refined oil. China’s refining and chemical consumption pattern will shift from the production of refined oil to the production of chemical raw materials. Petrochemical products will dominate the demand growth. The new wave of refining and chemical investment has reduced oil and increased, with olefins, aromatics and Bulk chemical products such as high-end chemicals are the target products. Ethylene, propylene, butadiene and other products have entered a new round of capacity expansion. Paraxylene (PX) has gradually realized import substitution. Most product markets will face surplus, and industry competition will become more intense.

At present, there is a structural shortage of chemical products in my country. Many high-end products such as new chemical materials, special chemicals, membrane materials, and high-performance composite materials for high-end manufacturing, aerospace, national defense and military industries are obviously dependent on imports. Taking high-end synthetic resins as an example, my country's high-end polyolefin self-sufficiency rate in 2019 is only about 50%. In the fields of metallocene products, high-performance PIPES, etc., it still relies to a large extent on imported resources, and there is huge room for replacing imports in the future.

The development trend of the plastic downstream industry

1. The automotive industry's demand for high-end chemical materials continues to grow

The automobile industry is a typical representative of the manufacturing industry. A car is composed of more than 10,000 parts and involves more than 4,000 materials. Automobiles are one of the key downstream demand areas for high-end chemical materials. In 2019, my country's automobile industry will use about 3.5 million tons of high-end chemical materials, and the market volume will be about 58.3 billion yuan. Among them, 1.49 million tons of high-end polyolefins and 610,000 tons of engineering plastics.

The automobile industry is still the key application field of my country's high-end chemical materials. The number of cars per 1,000 people is still growing, from 140 in 2018 to 166 in 2020, which is far lower than that in developed countries, and there is huge room for future market development. The proportion of lightweight materials in automobiles is increasing. Plastics and composite materials are represented. At present, plastics and composite materials for German bicycles account for 22.5% of the entire automobile, while China is only 9%. It is expected that plastics and composite materials will be used in 2025. The material will reach about 12% of the vehicle's weight. The rapid development of new energy vehicles such as electric vehicles and fuel cell vehicles has opened up new applications for new materials. The energy of new energy vehicles comes from electric energy provided by energy storage batteries or fuel cells without conversion. This difference has led to a new demand for high-end chemical materials in this field. It is estimated that by 2025, the demand for high-end chemical materials for automobiles in my country will reach 5.16 million tons, of which the consumption of high-end polyolefins will reach about 2 million tons, and the consumption of engineering plastics will exceed 1 million tons.

2. There is a lot of room for substitution of high-end chemical materials in the field of electronics and electrical appliances

Electronic appliances include electronics, electrical and electrical appliances. Among them, electronics is information processing and conversion module equipment, including electronic circuits such as circuit boards and diodes; electrical refers to application equipment in the process of transmitting and using electricity, including wires, switches, etc.; electrical appliances refer to specific power conversion equipment, which is electronic and electrical Power-consuming terminal carriers, such as mobile phones, televisions, etc. The demand for high-end materials in the field of electronics and electrical appliances mainly includes two aspects: “table” and “inside”. “table” refers to the interior and exterior decoration and structural parts of high-end chemical materials, mainly used in household appliances and other fields; “inside” refers to high-end chemical materials Used in electronic signal processing, conversion, transmission and other module components, including printed circuit boards, integrated circuits, antenna elements, etc. In 2018, my country's consumption of high-end chemical materials in the field of electronics and electrical appliances totaled 5.61 million tons, of which the demand for plastics was about 2.5 million tons, mainly engineering plastics, high-performance PP, etc., with an output value of over 50 billion yuan.

In the future, electronic and electrical products will be more portable and intelligent, and the application and popularization of 5G will accelerate this change. The construction of 5G base stations brings demand for PCB substrate PTFE materials. The PCB board is one of the core components of 5G, and the current PCB board material is mainly epoxy resin. The 5G era puts forward higher requirements on the dielectric properties of PCB board substrates, which are difficult to meet with traditional epoxy resins, and PTFE (polytetrafluoroethylene) is the material with the best dielectric properties found so far, which is conducive to complete and rapid signal Transmission, currently has applications on high-end PCB boards, and it is expected that 5G will bring more than 200,000 tons of demand for PTFE materials.

Display materials are developing rapidly, and the PVA market is in strong demand. At present, my country's display material market is dominated by LCD, and OLED has developed rapidly in recent years. Whether it is LCD or OLED, polarizers are inseparable. It is composed of PVA film, TAC film, pressure-sensitive adhesive layer, protective film, etc., among which PVA film and TAC film are the most important film layers, and PVA film is about It accounts for about 10% of the cost of the polarizer. At present, the global PVA film used for polarizers presents a dominant position in Japan's Kuraray. As the world's number one manufacturer and consumer of the electronic information industry, China has contributed the most to the global demand for polarizers. In 2018, the demand for polarizers in China reached 145 million square meters. It is estimated that by 2025, the compound annual growth rate of demand for polarizers in my country is about 6% to 220 million square meters.

The rapid growth of flexible circuit board materials drives the demand for materials such as polyimide films and liquid crystal compounds. The emergence of terminal requirements such as wearable devices and flexible displays requires flexible circuit board support, the main material of which is polyimide or PET film. In the future, the demand for PI (polyimide) for flexible circuit boards in my country will usher in rapid growth. With the rapid development of downstream fields such as smart home appliances and wearable devices, circuit boards will maintain a growth rate of more than 10%. The proportion of flexible circuit boards in circuit board demand has increased significantly, and more than 60% of the world's flexible circuit boards are produced in China. However, the production of PI for flexible circuit boards in my country is still highly dependent on imports, and this part of the market has huge space to replace imports.

On the whole, the development of electronic appliances is inseparable from the support of high-end chemical materials. It is estimated that by 2025, the total demand for high-end plastics in this field will reach 4.16 million tons, with a compound annual growth rate of 7%, and the output value will exceed 78 billion yuan.

3. The demand for high-end plastics in the field of construction pipes has grown steadily

The demand for high-end chemical materials in the field of construction pipes mainly includes building reinforcement, new building materials and high-end pipes. At present, my country's plastic water supply pipes are basically self-sufficient, but high-pressure pipes for gas transmission are still mainly imported. In 2018, my country's construction pipe industry consumed 5.55 million tons of high-end chemical materials, of which the demand for high-end polyolefins, engineering plastics and other plastic products was 3.21 million tons, and the market size was about 42 billion yuan, mainly high-end polyolefin pipes. It is estimated that by 2025, my country's total demand for high-end plastics for construction pipes will reach 4.5 million tons, with a compound annual growth rate of 5.1%, and the overall demand growth rate will be relatively stable.

The future growth rate of hexene and octene copolymer multimodal polyethylene pipes is considerable. In the past ten years, the world's annual demand for multimodal polyethylene is about 14 million tons, of which my country's demand is about 3 million tons, accounting for 28% of the world's total consumption. The vast majority of my country's consumption of multimodal polyethylene is used in the field of plastic pipes, of which the consumption of water supply pipe materials and gas pipe materials is about 2.2 million tons and 500,000 tons, respectively. It is estimated that by 2025, the demand for multi-peak polyethylene will reach 3.8 million tons. At present, most polyethylene pipe materials in my country are copolymerized with butene, and hexene-1 copolymerized pipe resin has better rheological properties, fast and slow cracking resistance, ESCR (environmental stress cracking resistance) than similar butene-1 products. ) Performance and other features. With the continuous expansion of demand areas, the performance requirements for tube materials are getting higher and higher, and the proportion of hexene and octene copolymer tube materials will also become higher and higher.

The high-end construction market drives the demand for polybutene-1 pipes. Plastic pipe is the main application field of polybutene-1, accounting for more than 50% of the total consumption of PB-1. Compared with the current domestic general-purpose PPR pipes, the high isotacticity polybutene-1 pipe has the advantages of higher hoop stress tolerance, smaller water pressure loss, and better creep resistance. It enjoys the reputation of "plastic gold". Especially suitable for indoor high-grade hot and cold water pipes. In 2018, the domestic high isotactic polybutene-1 market has a capacity of about 20,000 tons, of which 85% is used for pipes. In the future, driven by the development of the construction industry and the substitution of high-end pipes for low-end pipes, it is expected that the demand for high-grade polybutene-1 will maintain an average annual growth rate of about 5%, and the demand will reach 30,000 tons by 2025.

4. The demand for high-end plastics in the field of daily packaging is growing rapidly

The field of daily packaging is one of the most demanding areas for high-end materials in my country. In 2018, the demand for high-end materials in my country's daily packaging sector was about 1.75 million tons, and the market size reached 23.3 billion yuan, covering high-end polyolefins, engineering plastics and biodegradable materials.

The proportion of metallocene polyethylene applications has increased significantly. Compared with traditional polyethylene, metallocene polyethylene has the advantages of good toughness, resistance to cracking, good thermal stability, and good low-temperature heat-sealability. In 2018, the global demand for metallocene polyethylene exceeded 20 million tons. Food packaging was the largest consumption area, accounting for 36% of total consumption, and non-food packaging accounted for 47%. The downstream industries in the European and American markets are relatively mature and are the world's largest metallocene demand market. At present, China's metallocene polyethylene consumption accounts for only 3% of polyethylene consumption. It is expected that my country's metallocene polyethylene will maintain an average annual growth rate of 13% in the "14th Five-Year Plan" period.

The rapid development of high barrier materials. As my country's economy enters a new stage of development, packaging application fields and specific application environments continue to evolve. In the field of food packaging, high barrier plastics have developed rapidly in recent years and are gradually replacing materials such as metal and glass. High barrier packaging films mainly include nylon, Polyvinylidene fluoride and EVOH. In 2018, my country's total consumption of high barrier materials was about 350,000 tons, and the consumption of PVDC, PA and EVOH was 310,000 tons, 100,000 tons and 11,000 tons respectively. Although high-barrier packaging materials are currently widely used in foreign countries, the domestic use of barrier materials only accounts for 5% of the total packaging materials due to their higher prices. The domestic barrier packaging materials market has great potential. It is estimated that by 2025, the consumption of high-barrier packaging in my country will account for 15% to 20% of the total consumption of plastic packaging. The growth rate of demand for high-barrier materials will be about three times that of packaging materials. By then, the demand for high-barrier materials will reach nearly 900,000 tons. The compound annual growth rate is as high as 12%.

Degradable plastics usher in the wind. In recent years, global degradable plastics have ushered in the trend with the support of policies. Commercialized degradable plastics include bio-based polylactic acid (PLA), regenerated cellulose, starch plastics, and polyhydroxy fatty acid ester polymers (PHAs). Etc., petroleum-based polybutylene succinate (PBS), polycaprolactone (PCL), polycyclocaprolactone (PCHC), carbon dioxide degradable plastic (PPC), and polyadipate/p Butylene phthalate (PBAT), polysuccinic acid/butylene terephthalate (PBST), polyadipate/butylene succinate copolymer (PBSA) and coal-based poly Glycolic acid (PGA) and so on. In 2020, the more mature products in my country’s market are PBAT, PBS and PLA, with a total production capacity of 375,000 tons/year. The production capacity of biodegradable plastics under construction recently exceeds 1 million tons/year, mainly PBAT, PBST, PLA, PGA, etc. . In 2019, my country's consumption of plastic bags, express packaging, agricultural films, and take-out lunch boxes is about 6 million tons, and it is expected to exceed 8 million tons by 2025. According to an estimate of 20% penetration rate of degradable plastics in these fields in 2025, more than 1.5 million tons of degradable plastics will be consumed. With the improvement of processing performance and modification technology, more advantageous materials such as PBAT, PBST and PGA will usher in greater development during the "14th Five-Year Plan" period.

Broad prospects for the development of high-end plastic products

At present, my country's demand for high-end plastic products totals 16.5 million tons, the self-sufficiency rate of high-end polyolefins is 50%, the self-sufficiency rate of engineering plastics is 53%, and the degradable plastics are basically self-sufficient. Driven by the rapid development of downstream industries such as automobiles, electronic appliances, construction, and packaging, it is estimated that by 2025, the demand for high-end plastic products will reach about 27 million tons, with an average annual compound growth rate of 8%.

In recent years, foreign companies have focused on research and development in the plastics field mainly for single packaging materials, such as Borealis, ExxonMobil, and Dow all have developed corresponding products; physical/chemical recycling technologies, such as Saudi Basic Industries Corporation’s certified Recycled polymers; lightweight, functional modified materials and high-end membrane materials; high-voltage/ultra-high-pressure polyethylene base materials, cross-linked polyethylene (XLPE) cable materials, insulating materials; implant materials related to medical health and life sciences , Intervention materials, import materials, etc.

When planning and deploying related materials, Chinese enterprises are guided by terminal demand, combined with the material self-sufficiency rate and future demand growth rates, and focus on materials with low self-sufficiency rates and high demand growth rates.

1. High-end polyolefin materials such as special metallocene polyolefin. Such as very low density PE, PERT, POE, hexene, octene copolymer multimodal polyethylene, metallocene PE/PP, etc.

2. High-performance plastics. Such as high clean PP, ultra-high voltage wire and cable materials, high melt strength PP, medical antibacterial PP and high VA content EVA, TPO, PC, EVOH materials, etc.

3. High-end building materials. Such as high-end pipes such as high pressure and gas, copolymerized multimodal polyethylene pipes, polybutene-1 pipes, etc.

4. Degradable plastics. Focus on degradable plastics such as PBS, PBAT, PGA, and PCL, PHA, PGA in the medical and health fields, such as disposable packaging, agricultural film and other fields. Because PLA raw materials are mainly derived from crops such as corn, it is not a development direction in my country. The development of PLA substitute material PGA is the top priority. However, biodegradable plastics are currently only a partial replacement for packaging materials, agricultural film, etc., and large-scale applications are still facing many difficulties. Such as the problem of the mismatch between the material degradation environment and the garbage disposal environment, the high manufacturing cost and the safety issues of various additives and plasticizers, the controllability of the degradation time of agricultural mulch films in different areas and different environments, etc., the bioavailability should be regulated as soon as possible. The naming and publicity of degradable plastics should prevent misleading the society and the public; establish standards and identification systems; establish a recycling system for degradable plastics.

5. Single packaging materials, medical and health-related implants, interventions, and introduction materials, high-pressure/ultra-high-pressure polyolefin materials. While developing high-end materials, attention should be paid to the environmental pollution of synthetic materials. The environmental endurance will restrict the rapid development of synthetic materials. The prominent problem of synthetic material pollution is one-off, for which it is necessary to abandon the one-off consumer culture. Priority should be given to reduction at the source, the development of recyclable and reusable alternatives, efforts to develop physical and chemical recycling technologies for waste plastics, to achieve closed-loop recycling of materials, and to achieve the goals of protecting the environment and reducing carbon emissions from the source.