PBR: Fiercer Market Competition in China

By Yan Feng

1. Capacity increases steadily & operating rates drop

As of the end of March 2015, China’s total capacity to make polybutadiene rubber (PBR) reached 1.715 million t/a. During 2012-2014, the capacity grew most rapidly, adding 790 kt/a. China’s major PBR producers are listed in Table 1.
As of the end of March 2015, Sinopec’s capacity (including joint venture enterprises) reached 708 kt/a, around 41.28% of the national total; PetroChina’s capacity was 425 kt/a, around 24.78% of the total; and private and joint venture enterprises had 582 kt/a, around 33.94%.
The number of product varieties of PBR made in China has increased constantly, and the level of China-made technology has improved gradually. Except for the PBR units in Sinopec Gaoqiao Petrochemical Co., Ltd., PetroChina Dushanzi Petrochemical Co., Ltd. and TSRC-UBE (Nantong) Chemical Industrial Co., Ltd. that use the foreign technologies, all other PBR units use domestic production technologies – rare-earth PBR products and related technologies, in particular, are worth attention.
In recent years, China’s capacity to make PBR has grown constantly. However, with disappointing demand and troubled raw material supply, the operating rates of PBR units have been reduced constantly. The average operating rate was 65.9% in 2011, dropped to 55.5% in 2013, and fell further to 46.6% in 2014.
In the next few years, a number of PBR plants will be completed in China and put into operation. The design capacities of the main projects are 60 kt/a in Sinopec Zhenhai Refining & Chemical Co., Ltd., 80 kt/a in Liaoning Shengyou Rubber Technology Co., Ltd., 50 kt/a in Formosa Plastics (Ningbo) Co., Ltd., 80 kt/a in Jiutai Energy (Zhungeer) Co., Ltd., 70 kt/a in Shanghai Huayi Acrylic Acid Co., Ltd., and 100 kt/a in Tantu Special Material Co., Ltd. of Jiangsu Xuhe Group. If all these plants go into production on schedule, it is expected that China’s capacity will reach around 2.355 million t/a by 2018. Capacity will increase continually, but the growth of demand will tend to be stable, so the overcapacity, and possibly oversupply, will grow.

2. Consumption climbs constantly but grows more slowly

In recent years, China’s apparent consumption of PBR has increased steadily. It was 685.8 kt in 2007 and climbed to 894.8 kt in 2011 with an average annual growth of 14.37% during 2007-2011. The apparent consumption was 982.1 kt in 2014, down 8.09% YoY, and the average annual growth of apparent consumption was around 10.9% during 2009-2014. China’s PBR self-sufficiency was 70.14% in 2007 and climbed to 77.56% in 2011 and 81.46% in 2014. China’s PBR supply and demand in recent years are shown in Figure 1.
At present, China uses PBR mainly in tire production, shoemaking and modifying HIPS (high impact polystyrene) and ABS (acrylonitrile-butadiene-styrene) resins. Tire production accounts for around 70.3% of the total PBR demand, while the proportions are around 9.1% for shoemaking, around 10.2% for HIPS and ABS resin modification, around 6.8% for cycle tires and around 3.6% for other sectors like rubber hoses and rubber belts.
In the next few years, urbanization and the construction of infrastructure like high-speed railways will be further accelerated, and the domestic demand for cars as well as the retained quantity of China-made automobiles will increase further. In addition, with stable development of the electrical and electronic sector and others, the consumption of HIPS and ABS resin will grow rapidly, promoting stable growth of PBR demand. However, with slower growth of export, fluctuations in raw material and PBR-substitute markets as well as the use of PBR-consuming units to make other materials, the overall growth of PBR demand will slow down considerably. It is expected that the total demand for PBR in China will be 1.1 million-1.15 million tons by 2018. China’s capacity will reach around 2.36 million t/a at that time, resulting in dramatic overcapacity, and market competition will be fierce.
In the domestic consumption mix, the auto industry will still be first, with gradual growth; however, that sector’s share of PBR consumption will decrease. The demand for PBR in impact modification will increase rapidly, being the main driving force to promote the future development. With regard to product varieties, with the acceleration of the tire sector’s green environmental protection process, rare-earth varieties of PBR will become the mainstream of PBR development.        

Table 1    China’s major PBR producers

Producer    Capacity (kt/a)    Product variety
Sinopec Beijing Yanshan Petrochemical Co., Ltd.    150    Nickel-series PBR and rare earth PBR
Sinopec Gaoqiao Petrochemical Co., Ltd.    178    Nickel-series PBR and low cis-PBR
Sinopec Qilu Petrochemical Co., Ltd.    70    Nickel-series PBR
Sinopec Baling Petrochemical Co., Ltd.    60    Nickel-series PBR
PetroChina Jinzhou Petrochemical Co., Ltd.    50    Nickel-series PBR and rare earth PBR
PetroChina Dushanzi Petrochemical Co., Ltd.    65    Nickel-series PBR, low cis-PBR and rare earth PBR
PetroChina Daqing Petrochemical Co., Ltd.    160    Nickel-series PBR
Sinopec Maoming Petrochemical Co., Ltd.    100    Nickel-series PBR
TSRC-UBE (Nantong) Chemical Industrial Co., Ltd.    72    Cobalt-series PBR
Fujian Fuxiang Chemical Co., Ltd.    50    Nickel-series PBR
Shandong Yuhuang Huayu Rubber Co., Ltd.    160    Nickel-series PBR and rare earth PBR
Xinjiang Tianli Lande Fine Petrochemical Co., Ltd.    50    Nickel-series PBR
Shandong Huamao New Materials Co., Ltd.    100    Nickel-series PBR
Shandong Wanda Chemical Industries Co., Ltd.    50    Nickel-series PBR
YPC-GPRO (Nanjing) Rubber Co., Ltd.    100    Nickel-series PBR
Zhejiang?Transfar Synthetic Material Co., Ltd.    100    Nickel-series PBR
Shandong Zibo Qixiang Tengda Chemical Co., Ltd.    50    Rare earth PBR
PetroChina Sichuan Petrochemical Co., Ltd.    150    Nickel-series PBR
Total    1 715