PBAT production capacity surged to 7 million tons, upstream monomer BDO rose over 31,000

PBAT production capacity surges, and upstream prices keep rising

Affected by the nationwide implementation of the plastic restriction order, PBAT's domestic market demand has soared since December 2020, and the supply is in short supply, and the number of new entrants is increasing.

At the beginning of 2021, the domestic PBAT production capacity was 687,000 tons, and the planned production capacity was 4.633 million tons. In just 4 months, so far, the PBAT production capacity has soared to 7.398 million tons.

PBAT upstream raw material industry status

The synthetic route of PBAT is shown in the figure above. The raw materials are adipic acid (AA), terephthalic acid (PTA), and butanediol (BDO). Among them, BDO raw materials account for the highest proportion, which is the lifeblood of the PBAT industry.

1. BDO

BDO is mainly used to produce PTMEG, CBL, PU, PBT, PBS, etc.

With the rise of the spandex and PBAT industries, coupled with the forced shutdown of foreign manufacturers caused by the epidemic, BDO has gradually tightened its supply since the second half of last year, and its price has risen by more than three times, setting a new high in 12 years.

As can be seen from the above figure, BDO rose to about 31,000 yuan at the beginning of March this year, until the price fell below 25,000 on May 4th.

According to statistics, in 2020, the production capacity of major domestic BDO manufacturers is about 2.4 million tons, and the output is about 1.6 million tons. Moreover, most of the companies that produce BDO are internally digested and supply their industrial chain production, making it difficult to sell to the market externally.

Many companies, Xinjiang Meike and Xinjiang Tianye do not have many downstream equipment, and their BDO production is mainly for export, and they are the main suppliers in the market.

In the past, the domestic supply of BDO was relatively surplus, and the profitability of the industry has also been sluggish for a long time. With the national implementation of the plastic restriction order, domestic PBAT projects have sprung up like mushrooms after a rain. The current capacity under construction and existing capacity has exceeded 7 million tons, and it may continue to increase in the future. .

If all planned PBAT projects are put into production, the incremental demand for BDO will exceed the total existing capacity.

2. PTA

After 2016, the PTA market began to recover in the supply-side reform. From 2016 to 2018, Tongkun Petroleum released 2.2 million tons of production capacity. In 2019, the Sichuan Energy Investment and Xinfengming installations were put into operation. In 2020, Hengli Petrochemical Line 5, Xinfengming The second phase and the successive commissioning of other companies' layouts have brought the total PTA production capacity to 56.96 million tons per year, further increasing the possibility of overcapacity.

In the next few years, with the successive commissioning of production facilities, the production capacity of PTA will be further expanded by 27.2 million tons per year, and all of them are large-scale facilities of leading enterprises. The cost will be significantly reduced and the industry concentration will be further increased.

3. Adipic acid (AA)

The main downstream applications of adipic acid are concentrated in PU slurry, shoe sole stock solution, other types of elastomers, PA66 and so on. At the same time, the rise of the PBAT industry can also digest part of the production capacity.

From 2016 to 2020, my country's AA production capacity increased from 2.385 million tons/year to 2.71 million tons/year, with a four-year compound annual growth rate of 3.25%; the operating rate during the same period has been at a low level for a long time, varying from 52.58% to 56.58%. The situation far greater than the demand has not been improved. Affected by the epidemic, adipic acid also ushered in a wave of price increases at the beginning of this year.

There are many manufacturers of adipic acid in the world. As of the end of December 2020, the total global adipic acid production capacity reached 4.908 million tons/year, and the Asian region was 3.04 million tons/year, becoming the world’s main supplier.

PBAT downstream application prospects

The apparent consumption of PE in 2020 is 36.8 million tons, of which about 53% is used for film products. From this calculation, the consumption of film products is 19.5 million tons. Among them, shopping bags, agricultural film and takeaway packaging bags, which are most strictly controlled by the plastic ban, consume more than 9 million tons of domestic consumption a year.

At present, the annual consumption of degradable plastics in my country is about 550,000 tons, the market size is about 11 billion yuan, and the replacement rate for non-degradable plastics is only 1.2%. If the ban on plastics is further strictly enforced, the demand for PBAT will further increase in the future, and PBAT will become a mainstream plastic product with broad development prospects.

According to calculations by Tianfeng Securities, after the implementation of the policy, the future demand for degradable plastics in the three areas of food delivery, express delivery, and agricultural film will reach 1.5453 million tons, corresponding to about 27 billion yuan in the degradable plastic market. Compared with my country's current market demand of 42,000 tons, the market has room for growth of 36 times.