Fierce Competition in China's Ethyl Acetate Market
By Wang Zichang  

Ethyl acetate is used extensively in the coatings, inks,
pharmaceuticals, adhesives, cosmetics and organic synthesis
sectors. With the sustained stable growth of China's national
economy, the construction and automobile sectors are developing
rapidly and environmental protection laws and regulations are
becoming stricter. It is already common practice to use
high-grade solvents in the production of coatings, inks and
adhesives. Demand for ethyl acetate solvents has therefore grown
rapidly.

1. Producers concentrated in South China and East China

The world's capacity to produce ethyl acetate was nearly 2.0
million t/a in 2006 and the output was around 1.45 million tons.
The consumption structure of ethyl acetate in foreign countries
is somewhat different from China. The biggest application sector
for ethyl acetate in the United States is coatings production.
In Japan ethyl acetate is used mainly in the production of
coatings and inks. In China however it is mainly used in the
adhesive and pharmaceutical sectors.
   China's total production capacity for ethyl acetate in 2006
was 900 thousand t/a and the output was 630 thousand tons. Major
producers are located in South China and East China. Ethyl
acetate capacity of Jiangsu Sopo Group, China's largest producer,
has reached 200 thousand t/a. The company has achieved
upstream/downstream integration with acetic acid, making it
very competitive. 80% of the ethyl acetate produced by the
company is for export. Large ethyl acetate producers in China
all use the esterification process. Large producers have good
product quality, relatively low production costs and quite
strong competitive edge.

2. Output growing faster than consumption  

With the rapid growth of the national economy in China in recent
years, the demand for coatings, inks and adhesives has increased
dramatically, promoting stable growth of ethyl acetate
consumption. The growth of ethyl acetate output is however even
more rapid. Consumption was 297.9 thousand tons in 2001 and
reached 530.2 thousand tons in 2006, the average annual growth
being 12.2%. The average annual growth of ethyl acetate output,
however, reached 20.4% during that period. Starting from 2006
China turned from a net importer of ethyl acetate to a net
exporter. In 2006, 109.4 thousand tons of ethyl acetate was
exported from China, an increase of 90.6 thousand tons over 2005
- accounting for 17.4% of the total output, 13.4 percentage
points higher than that in 2005.
    Ethyl acetate consumption regions in China are concentrated
in East China, Central South China, North China and Northeast
China. The coatings, pharmaceutical and adhesive sectors are the
biggest sectors for ethyl acetate consumption, accounting for
around 85% of the total.
    The domestic ethyl acetate market is oversupply and fiercely
competitive today. The market price shot up during 2004 from RMB5
000 per ton to RMB9 200 per ton at the beginning of 2005, but
started to drop afterwards, reaching RMB8 000 per ton today.

Table 1  Major Ethyl Acetate Producers in China in 2006
(thousand t/a)
Producer                                            Capacity
Jiangsu Sopo Group                                    200
Shandong Muhua Group Co.                              160
Shandong Jinyimeng Group                              120
Guangdong Jiangmen Qianxin Chemical Development Co.    100
Shanghai Wujing Chemical Co.                         100
Yangzijiang Acetyl Chemical Co.                        80
Jiangxi Nanchang Ganjiang Solvent Plant               80
Guangdong Shunde Shunguan Gas Solvent Co.             30
Source: CNCIC

Table 2  Supply and Demand of Ethyl Acetate in China
     from 2001 to 2006   (thousand tons)
Year                     2001    2002    2003    2004    2005
    2006
Output                  249.0    294.0    330.0    418.0
    473.0    630.0
Import                  53.5    48.0    42.7    34.6    46.4
    9.6
Export                    4.6      9.8       11.8    20.7    18.8
    109.4
Apparent consumption    297.9    332.2    360.9    431.9
    500.6    530.2
Source: CNCIC