By Zhang Qian, OilChem China

Competition between domestic goods and imports

The supply of domestic bisphenol A (BPA) has been growing in the past six years (referring to Figure 1 for details in 2014-2019), largely because of a ramp-up in domestic BPA capacity and an increase in operating rates of domestic plants. In 2019 alone, Changchun Chemical Industry (Jiangsu) Co., Ltd.’s Phase III 135 kt/a plant was put into operation smoothly in the middle of June 2019; Lihuayi Weiyuan Chemical Co., Ltd.’s Phase II 120 kt/a BPA plant was put into production on September 16, which, according to the schedule, was supposed to add domestic capacity to 1.695 million t/a.

Figure 1  China’s BPA supply, 2014-2019

   The higher self-supply rate of domestic BPA resulted in a tapering in import volumes from 2014 to 2017. However, the import volumes regained some ground in 2018, mainly because higher domestic prices reopened the arbitrage window. BPA consumption in 2019 increased in line with capacity increments in the downstream polycarbonate (PC) industry. As of July 2019, the import volume of domestic BPA amounted to 365 900 tons, increasing by 30.51% on a year-on-year basis.
   While import volumes were increasing, operating rates of domestic BPA plants managed to keep high. And the market turned into a battlefield between domestic and import goods. The domestic prices moved downwards on a large scale during January-August, although there were short-lived rises seen during the period.

Concentrated capacity release of both BPA and PC

   PC capacities in China have been growing in the recent five years given the encouraging governmental policies. Meanwhile, in the epoxy resin sector, a big number of smaller producers were driven out and the total capacities shrank, mainly due to strict environmental protection supervisions over the industry. In that, PC eroded the penetration of epoxy resin in the BPA market.
   In 2019, the start-up of Sichuan Zhonglan Guosu New Material Technology Co., Ltd.’s 100 kt/a PC unit and Hubei Ganning Petrochemical New Materials Co., Ltd.’s 70 kt/a PC unit has underpinned the prominence of PC as for BPA consumption, accounting for 50% by the written time.
   It is estimated that domestic phenol/acetone capacity will increase by 3.72 million t/a t by 2030 (Table 1), and the total phenol capacity will hit 2.3 million t/a; while BPA capacity is expected to rise by 3.4 million t/a (Table 2), and the consumption of phenol will increase about 2.95 million tons. As a result, the growth rate of phenol/acetone capacity will be far lower than that of BPA, and the feedstock supply will tighten and the feedstock prices will gain momentum in the future. As for downstream sectors, the PC industry will see a capacity expansion at 1.9 million t/a (Table 3) and the consumption of BPA at 1.71 million tons, while the epoxy resin industry is likely to expand at a slow rate, so the BPA industry will be facing a threat of overcapacity.                

   Table 1   Phenol/acetone capacity expansions   (kt/a)

   Table 2    BPA capacity expansions   (kt/a)

   Table 3    PC capacity expansions   (kt/a)