Isoprene Rubber Has Broad Market Potential

Xu Qingsheng

Isoprene rubber (IR) is a macro molecular substance polymerized
from isoprene monomer, with a structure and properties that are
basically similar to those of natural rubber (NR). It features
excellent elasticity, wear resistance, heat resistance, low
temperature flexibility, etc. Its heat resistance surpasses NR.
Therefore it is an ideal alternative for NR. Under the present
conditions of insufficient local NR production and high
dependency on imported NR in China, to develop IR industry can
ease the tight supply of NR.

Domestic demand relies entirely on imported IR

Although China has done research and trial production of IR,
there is no commercial production till now. All domestic demand
for IR is satisfied by imports. Most of the IR for China is
imported from Russia. China's import of IR climbed during
2001-2003 and dropped slightly in 2004, whereas it dropped
dramatically in 2005, due to the low price of NR.
    Starting from August 2004, the price of NR was lower than
the price of synthetic rubber. From the fourth quarter of 2004,
local IR consumers started to change manufacturing formulas in
order to increase the usage of NR. In the first half of 2005,
most of the former IR consumers had already completely replaced
synthetic rubber by NR. Reserves of NR shrank rapidly, which,
in addition to the abnormal factors such as dry climate, led to
a tight supply of spot NR. Therefore the NR price started to surge
sharply upward after May 2005 - the average price rising, by
December 2005, to 41.2% above that of the preceding January. The
low price of NR in the period of August 2004 - July 2005 directly
affected the import and consumption of IR in 2005.
   In recent years, the IR needed for some parts of domestic
all-steel radial tires for heavy duty trucks has been imported
from Russia. The imported IR from Russia amounted to 8 630 tons
in 2005 and 11.7 thousand tons in the first ten months of 2006.
The annual average price of imported IR in primary forms
originating from Russia increased from US$1 290 per ton in 2005
to US$1 739 per ton in 2006. When the IR price was lower, local
manufacturers even used the imported IR to produce bias tires,
achieving good economic performance. If 20% of NR is replaced
by IR, the formula and process can be applied without any
modifications. Given that the local tire industry is projected
to consume 2.5 million tons of NR in 2010, the consumption of
IR may reach 500 thousand tons, reducing the imported NR by 500
thousand tons. Presently, the consumption ratio of IR in tire
manufacture in Russia has reached 50%. If China can actualize
the same ratio, the demand for IR would be even higher. There
are huge prospects for developing IR production in China.

Development of IR production is inevitable

    1) Developing local IR production can help China cut down
the high reliance on imported NR.
Economic growth has driven the rapid increase of consumption for
NR in China. By 2002 China was already the world's largest
consumer and importer of natural rubber. Domestic NR production
has been going up. Local consumption has, however, increased
even faster. China imported around 1.41 million tons of NR in
2005, and the nation's dependency on foreign countries increased
from 64% in 2002 to 74% in 2005.
   Because of the space and soil restriction for planting rubber
trees, it is very difficult for China to increase the natural
rubber planting area. According to a prediction of the China
Rubber Industry Association, China's output of NR will reach
only 750 thousand tons in 2010. Therefore it is necessary for
China to maximize the local supply and use a larger ratio of
synthetic rubber to ameliorate the high dependency on
international NR supply. As the most favorable substitute for
NR, IR will have rather good development prospects in China.

    2) High NR price brings opportunity for the development of
IR
Presently over 93% of NR worldwide is supplied by the Southeast
Asia region. Since 2000, the growth of global NR output has been
lower than the growth of consumption for four consecutive years,
leading to a sharp reduction of NR inventory and an upsurge of
prices. The international market price of NR doubled from a low
of US$600/t to US$1 200/t. From now on, major natural rubber
producing countries will strive to maintain the international
natural rubber price at a reasonable level in order to protect
rubber farmers' interests, therefore it will be difficult for
the international natural rubber price to drop back to US$ 600/t.
The high price of NR brings opportunities for the development
of IR.

    3) The expansion of the ethylene industry provides
sufficient feedstock for IR production
Cost of isoprene monomer makes up over 60% of the total cost of
IR production. Hence the key factor that determines the
development of IR industry is guaranteeing the cheap and stable
supply of isoprene monomer. Among the production methods of
isoprene, extraction of C5 fraction from the byproduct of
ethylene cracker is the most competitive one because of low
investment and production cost. The rapidly developing ethylene
industry in China can provide more and more C5 fractions
containing isoprene. Therefore as China's ethylene industry
continues to develop, a sufficient isoprene supply can be
obtained.
   The output of ethylene in China totaled 7.555 million tons
in 2005, increasing 20.4% compared with 2004. China is building
a number of new large scale ethylene crackers gradually during
the period of 2006-2010, driving the total ethylene production
capacity to reach 15.5 million t/a in 2010, which will guarantee
the supply of isoprene. The amount of isoprene produced from
ethylene crackers that use naphtha and light diesel oil as
feedstock takes up around 2%-3% of total ethylene output, so it
will be possible for China to obtain 200 thousand-300 thousand
tons of isoprene annually in the future, resulting in 190
thousand-290 thousand tons of IR because IR is manufactured
through a typical solution polymerization process.

    4) China's synthetic IR technology has basically reached
commercial level
Presently China has completed pilot and industrialized tests of
IR, with a rather high technology level.
   Sinopec Shanghai Petrochemical Company Ltd. has built up a
40 thousand t/a C5 fractions separating industrial test unit
with a isoprene production capacity of 10 thousand t/a. The
technology of extracting isoprene from C5 fractions of ethylene
cracker is basically developed.
   Changchun Institute of Applied Chemistry, Chinese Academy of
Sciences has already successfully developed IR synthetic
technologies with titanium catalyst and rare earth catalyst
respectively, demonstrating that China has the necessary
industrial conditions for IR synthesis.

Table 1 Import of IR in China    (thousand tons)
Year         2001    2002    2003    2004    2005   Jan.-Oct.
2006
Amount          9.1     16.0    40.5    37.1    16.4    1