Landing of The World's Largest Free Trade Zone! Big Forecast For The Development of Chemicals!

The world's largest free trade zone officially landed

On January 1, 2022, the "Regional Comprehensive Economic Partnership Agreement" (RCEP) formally came into effect, marking the official landing of the free trade zone with the largest population, the largest economic and trade scale, and the most potential for development in the world.

The first batch of countries to take effect include Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam and other ASEAN countries and China, Japan, New Zealand, Australia and other non-ASEAN countries. RCEP will take effect for South Korea from February 1, 2022.

Gradually zero tariffs on more than 90% of the goods trade, the place of origin accumulates and strengthens industrial chain supply chain cooperation

The Big Forecast for the Development of Chemicals in 2022

In the context of carbon neutrality and dual control of energy consumption, the growth rate of some products in my country's chemical industry will continue to slow down in 2021. We tracked the changes in the production capacity growth rate of 22 domestic chemical products in the past two years. The growth rate of most of the production capacity of ethylene, propylene, methanol, PX, TA, ethyl acetate, and aromatic products has slowed down. From the perspective of industry development in 2021 alone, there are no new additions to products such as sec-butyl acetate, phenol, and acetone. The production capacity growth rate of n-butanol, methanol, and vinyl acetate is controlled within 4%, and the annual production capacity Products with a growth rate of over 18% include ethylene, ethylene oxide, ethylene glycol, acetic anhydride, styrene, bisphenol A and other products. Among them, the production capacity of ethylene glycol has increased by 34% this year.

Ethylene: In 2021, China's ethylene production capacity will reach 44 million tons, an annual growth rate of nearly 21%. During the year, the newly-built and put-in-production equipment processes were obviously diversified, among which there were many light hydrocarbon utilization projects; the traditional integrated cracking projects had new additions and capacity expansions; the coal/methanol-to-olefins process had no new production capacity during the year. According to incomplete statistics, the planned production capacity of ethylene in 2022 may exceed 7 million tons per year. The new production capacity is all integrated projects, with relevant downstream supporting facilities. However, there are still some equipment that will sell part of the ethylene surplus, and the domestic ethylene commodity circulation may continue to increase, which will bring a certain impact to the Asian ethylene price. During the "14th Five-Year Plan" period, with the successive commissioning or construction of various projects, the domestic ethylene production capacity is expected to reach 69 million tons per year. Affected by the energy consumption policy, some projects may be shelved or eliminated. With the growth of ethylene and downstream supporting production capacity, the derivatives market will become more competitive, which will force manufacturers to increase research and development efforts and promote product upgrades in the industrial chain.

Propylene: China's propylene production capacity is expected to be around 50.44 million tons in 2021, especially when propane dehydrogenation enters the production outbreak period. It is expected that PDH production capacity will continue to expand at a high speed in the next two years. The characteristics of "two highs" restrict its development space, and the structure of China's propylene production process will also undergo major changes. Looking forward to 2022, the propylene industry will gradually develop into "surplus". The growth rate of production capacity far exceeds the growth rate of demand, and the burden on the industry is increasing. Moreover, the downstream supporting projects of propylene are mostly polypropylene. The internal competition pressure is not inferior to that of the propylene industry, and its profitability will change Reversely affect the propylene market. There are also projects that extend part of the original downstream equipment to the upstream industrial chain, and these projects will gradually squeeze out the original market share and demand. At the same time, as the volume of domestic commodities continues to increase, the import volume of propylene may continue to shrink, and the export volume may continue to grow. In the future, the internal competition in the propylene industry chain will become more intense, and the market competition pattern will evolve from single-product market competition to market competition in which products and product chains are integrated.

Ethylene oxide: In 2021, the total domestic production capacity of ethylene oxide has exceeded 6 million tons per year, an annual increase of over 18%. The earnings performance of ethylene oxide was not as good as in previous years. As of the end of October, the average earnings estimate was less than RMB 50/ton. Ethylene has a guiding effect on the cost of ethylene oxide, which is mostly reflected in the level of cost reference and mentality. Affected by the policy during the year, the price trend of ethylene and ethylene oxide showed a big difference. Once the long-term profitability of previous years was changed, the fluctuation range of profit and loss was more obvious. During the year, the ethylene oxide market still maintained a relatively high linkage with downstream products, especially the polycarboxylic acid water-reducing agent monomer market. The influence of the ethylene glycol market on ethylene oxide is mostly manifested in the production conversion when the profit fluctuates significantly. In 2022, ethylene oxide has stated that it is estimated that the new capacity will be at least 650,000 tons/year. In addition to the growth and process improvement in traditional fields, some companies have begun to expand into the field of high value-added electrolyte materials.

Methanol: In 2021, China’s methanol production capacity was 96.905 million tons, an annual increase of less than 3%. During the year, the rate of new capacity slowed down significantly. Coupled with the industry’s carbon neutrality and energy consumption dual control policies, the industry has entered a period of adjustment, and new follow-ups There is also a slowdown in capacity increase. According to rough statistics, there will be about 12 million tons of new methanol capacity in my country in the next three years (the actual progress of some projects may be delayed), of which there are many capacity expansion projects, and some enterprises with small capacity are producing methanol from mine thermal exhaust gas. In addition, we also need to pay attention to the industrialization process of the future carbon dioxide catalytic hydrogenation to methanol project. On the downstream side, olefins still account for half of my country’s methanol demand. However, traditional downstream demand has increased steadily during the year. Some small varieties are more worthy of attention, such as silicone, BDO, silicone, dimethyl carbonate (DMC) and other industries. Some high-profit downstream development may cause market price changes.

Ethylene glycol: China’s ethylene glycol production capacity is expected to reach 25.505 million tons in 2022, and China’s polyester production capacity is 74.585 million tons; if China’s imports are calculated at 7 million tons, it is predicted that the total supply will reach 32.505 million tons and the total demand It will reach 24.986 million tons. The relationship between supply and demand in the Chinese ethylene glycol market is still difficult to balance, and the basic relationship of oversupply is difficult to improve. The growth rate of downstream demand is limited. It can be seen that the gap between the supply and demand of ethylene glycol is still widening year by year, and the oversupply will become an important factor restricting the price increase of ethylene glycol for many years.

PX: It is estimated that 6 sets of PX devices are planned to be put into operation next year, with a total production capacity of 11.89 million tons/year. If all can be put on schedule, the PX production capacity is expected to increase by 41.3% next year. As new devices generally support downstream PTA devices, most of which are self-supplied by the group, China's PX imports will still show a decreasing trend next year. Although PTA also has new production capacity, PX demand has also increased theoretically, but the terminal polyester production capacity has not increased much. After the oversupply of PTA, the operating rate may not be as expected, so the increase in PX demand is limited. Therefore, in 2022, the output of PX countries will increase substantially, squeezing the supply of imported goods, and the market will weaken as the supply gradually exceeds the demand.

PTA: It is expected that the domestic PTA market trend may continue to be weak in 2022. From the perspective of supply, with the increase of 6.5 million tons of PTA capacity in 2021, the overcapacity of PTA has become the consensus of the industry. Although there is a new production of downstream polyester, the growth rate is far less than that of raw material PTA. From the demand side, the demand for downstream polyester and terminal textiles has increased slowly, while textile exports have declined year-on-year, and inventories in all links of the industrial chain have remained high. In addition, there are uncertainties in the crude oil market, and the fundamental game is still in a see-saw state. The current PTA industry has formed an oligopoly market. After squeezing out high-cost devices, some form of price alliance cannot be ruled out. Therefore, the PTA market in 2022, or the same as 2021, will maintain a period of low processing fees. Around 400-600 CNY/ton.

Glacial acetic acid: A total of about 5.2 million tons of domestic glacial acetic acid plants are planned to be newly built in the next five years. It is necessary to pay attention to Guangxi Huayi, Hualu Hengsheng, Zhejiang Petrochemical and other projects. Some projects have a relatively long construction period and policy influences. The specific construction time is yet to be determined. Based on the continuous high price of glacial acetic acid in recent years, the production of glacial acetic acid is very profitable, so the glacial acetic acid project has been favored by many investors, and there are still many intentional projects. In terms of demand, the main force to be added in the future will still be PTA, and other downstream sources such as chloroacetic acid, vinyl acetate, acetonitrile from acetic acid, etc. are all added. Acetate production capacity is surplus, and new additions will be limited in the future.

Acetate: At present, the domestic industry concentration of ethyl acetate is relatively high, and there is obvious overcapacity. In recent years, Jiangsu Lianhai, Shanghai Huayi and Henan Shunda have all withdrawn from the ethyl acetate market. According to statistics, there are not many new ethyl acetate projects. Zhuhai Qianxin’s 300,000 tons/year plant is scheduled to be put into operation in early 2022, but at the same time, it plans to close the 250,000 tons/year plant in Jiangmen, so the total capacity change is limited.

Butyl acetate: There are currently 8 butyl acetate companies, of which Qianxin has the largest production capacity and is a leading domestic company. Sec-Butyl Acetate In 2021, the domestic production capacity of sec-Butyl Acetate remains unchanged, and there are still 5 companies with a total production capacity of 430,000 tons. It is reported that enterprises cannot reach full capacity production during the year. Under the influence of the power curtailment policy in some areas, the load is maintained at around 3-5%. Dingying follows upstream for a long time for maintenance. In recent years, no new news about sec-butyl ester has been heard. Acetic anhydride's total domestic production capacity of acetic anhydride will change significantly in 2021. Among them, Mengxuan New Materials and Anhui Tiancheng will start production, and Mengzhou Dingxing's plant will expand, and the overall effective production capacity will increase to 760,000 tons/year. There are still plans for new plant production in the future.

Pure benzene: my country's pure benzene production capacity will continue to expand substantially in 2022. By the end of 2022, China's pure benzene production capacity will exceed 3.4 million tons/year. By then, the total domestic production capacity will reach about 22 million tons/year. The downstream supporting enterprises have followed up to a certain extent, and the oversupply situation is not obvious. In 2022, the domestic pure benzene industry chain will continue in 2021, showing a situation of high output, independent and controllable market, and strong demand. The dependence on imports has shown an overall decline in recent years, and there are more downstream expansions, especially The expansion of styrene has made the demand side stronger than in previous years. Considering domestic fundamentals in 2022, domestic production capacity will continue to rise, mainly concentrated in large refining and chemical companies. Domestic companies' price dominance over market prices is almost completely better than that of external stocks. Downstream expansion will enable a certain balance between supply and demand. However, the rapid expansion of downstream production capacity will increase the demand for pure benzene, but it is still necessary to be alert to the influence of its own market and price system and the industrial chain after the expansion of downstream production capacity. Reverse price suppression.

Toluene and xylene: In 2022, my country's toluene and mixed xylene production capacity will continue to expand at a large pace. The theoretical increase in toluene production capacity will be 2.96 million tons and mixed xylene production capacity will be increased by 5.37 million tons. In the new installations next year, toluene and mixed xylenes will still be mainly used for self-use, but most of Jinzhou and Jinxi Petrochemical products are planned to be exported. Shenghong Refining & Chemical also has some external sales. With the commissioning of new installations, not only the production capacity of toluene and mixed xylenes will increase. , The growth of commodity volume will also be higher than last year. Judging from the timing of the planned commissioning of each device, the domestic supply of toluene and mixed xylenes in the first half of the year will increase first, which will reduce the domestic demand for mixed xylenes and shrink imports. The contradiction between domestic supply and demand for toluene is expected to increase and exports. The pressure grows. Among the devices put into production in the second half of the year, toluene and mixed xylenes are basically not exported, and they are used as intermediate products to produce PX and pure benzene. In the second half of the year, a relatively large number of PX devices have been put into operation. At the same time as this part of the device is put into operation, the demand gap for mixed xylene will be increased again.

Styrene: 2022 will be a year of concentrated expansion of styrene. Yantai Wanhua, Shandong Lihuayi, Zhenhai Refining & Chemical Liande, Bohua Development, Lianyungang Petrochemical and other large installations will be released for mass production, and domestic production capacity will be released. , While the output continues to break through, the self-sufficiency rate is also expected to rise substantially. At the same time, from the perspective of import supply, although there are still expectations of continued shrinkage, after experiencing a rapid downward trend in 2021, the space for further shrinking is relatively limited, and the source of US dollar imports still has a place in the domestic market. In addition, combined with several major downstream capacity expansion plans, the overall growth rate is relatively lower than that of styrene. The PS industry’s new production is most concentrated. In terms of EPS, some delayed production projects are the main part. The new release of ABS is relatively limited. Focus on styrene. And the opportunities and challenges brought about by the mismatch of the downstream industrial chain's phased production.

Phenol: In 2022, the growth rate of my country's phenol production capacity will not slow down. Zhejiang Petrochemical (Phase II), Liaocheng Luxi Polycarbonate, Guangxi Huayi, Jiangsu Ruiheng, Qingdao Bay Chemical and Yantai Wanhua and other multiple phenol ketone plants It is planned to be launched on the market next year. If the capacity of the newly built installations is fully released, my country’s total phenol production capacity will reach 5.138 million tons by then, and the domestic self-sufficiency rate will further increase. This will inevitably cause pressure on imports. Imports are expected to decline in 2022. At the same time, phenol- The integration of the bisphenol A-PC industry chain is developing steadily. The new downstream capacity of bisphenol A is expected to increase, and the increase in demand for phenol is well supported. The oversupply caused by the rapid expansion of phenol production capacity is relatively digested, but buyers dominate the market. It is difficult to change.

Acetone: 2022 coincidentally will be the period of concentrated production of domestic acetone plants. According to the statistics of Jinlianchuang, 6 sets of acetone plants are planned to be put into operation. Most of the new production capacity will be equipped with downstream bisphenol A plants. The trend of complete industry is even more obvious. Next year, the supply of acetone will still show an increasing trend. With a substantial increase in output, it will inevitably have an impact on the purchase. Asian exporting countries may seek other supply directions or fight for profits with domestic companies. However, there are also many new downstream bisphenol A production capacity, and several MMA units are planned to be put into production. Therefore, the development of acetone and downstream industries is still relatively stable, and the overall supply and demand remain relatively balanced.

Bisphenol A: In 2022, driven by the steady expansion of downstream PC and epoxy production capacity, the growth rate of my country's bisphenol A production capacity will increase. There will be Zhejiang Petrochemical (Phase II), Liaocheng Luxi Polycarbonate, Guangxi Huayi, Jiangsu 8 sets of new BPA installations including Ruiheng, Qingdao Gulf Chemical and Cangzhou Dahua are planned to be put on the market. By then, the total production capacity of BPA in my country will reach 4.405 million tons. It is worth noting that a large number of new projects will be invested and constructed as a whole. With the emergence of chemical forms, phenol-bisphenol A-PC is still the trend of the development of the industrial chain, there is still a gap in the supply of bisphenol A, and the tone of the steady advancement will not change. In addition, although some high-end products mainly rely on imports, in the context of a significant increase in domestic supply, the degree of dependence on imports of bisphenol A has declined year by year.