Massive expansion in polyol capacity under way as Chinese group aims for multinational status
Byline: Liz White
Polyether polyols producer Shandong Bluestar Dongda Chemical Co. is investing RMB 6 billion ($900 million) in a major capacity expansion, building another 200-kilotonnes-per-annum (ktpa) unit to add to its existing polyols capacity of 160 ktpa. This unit is expected to be on stream, in the High-Tech Industrial Zone of Zibo City, Shandong, in the second half of 2012, said Lui Yi, general manager and vice party secretary.
Lui also revealed that the group plans to add a further 150 ktpa in the second half of 2013, to bring its total capacity to 510 ktpa.
“ChemChina’s strategy for the polyols business is to become a major multinational player,” Lui said, adding that, within this strategy, “Our expectation is that within the next five years we will not only be the biggest Chinese producer, but also the biggest in Asia.”
Bluestar Dongda is already the biggest producer of polyether polyols in China, Lui claimed, in a 12 Oct interview at the 2010 conference of the Center for the Polyurethanes Industry, held in conjunction with UTECH North America 2010 in Houston, Texas.
Bluestar Dongda’s strategy is to become a bigger supplier to the PU sector and a mainstream multinational provider, Lui said, indicating that this was one reason for its presence at the UTECH exhibition in the US.
The company’s aim is to sell perhaps 10 or 20 kt of polyols in 2011 in the North American market, Lui said, rising to 20-30 ktpa as the new capacity comes on stream.
Discussing whether its polyols will be competitive on price, Lui said that already in his short stay in the US, in all segments of the US market, “you see tonnes of Chinese product:” he sees no reason why Bluestar Dongda products would not compete effectively.
Globalisation of the business is also a major focus for ChemChina itself, Lui noted.
Bluestar Dongda also makes prepolymers and systems and, “It is in the strategy,” to expand these, Lui said. But he acknowledged that the PU systems business requires more investment and technical support than polyols — and that the group might have certain restrictions as regards other materials.
Bluestar Dongda “needs to play catch-up to world-leading companies” in this field. “But it is in our strategy and we are working very hard to make it happen,” he stressed.
Lui noted that raw materials and technology for the PU sector have developed rapidly in China, and said that, in the current economic crisis, China has suffered little effect. So Bluestar Dongda is protected to a certain extent by the strength of the economy.
In view of these aspects, “the business believes there are very good opportunities for Chinese PU materials suppliers to be competitive suppliers globally and specifically for selling into the North American market,” Lui said.
Asked about overcapacity in polyols, Lui commented that in China the internal market grew even in the depths of the crisis, at beyond 8 percent annually and this will rise to 11 percent. So internal demand is high, and the total PU sector in China is also growing very rapidly.
Lui said China’s large capacity for polyether polyols helps the rapid growth of the PU sector in the country.
The company makes the whole spectrum of commodity and speciality polyether polyols, apart from PTMEG (polytetramethylene ether glycol) — but has no plans to move into polyester polyols currently, Lui said.
Bluestar Dongda, whose original technology was developed with a Japanese company, “recognises that R&D is mother’s milk for future development” and aims to spend a large amount on development, Lui said.
ChemChina has two daughter companies making TDI (toluene diisocyanate), a 50-ktpa plant at Taiyuan Organic Chemical Co., and a 70 ktpa capacity plant at Changzhou Chemical Industry Co. These have their own expansion plans, Lui said.
Bluestar Dongda also sells a little into Europe currently and “it is in our global planning to develop this market,” Lui said, noting that it is also working on plans to sell its prepolymers further afield.
The Bluestar Dongda executive declined to reveal what resources Bluestar Dongda will invest in to sell into the US in terms of sales teams and offices.
Lui himself has since 2004 been secretary general of the Chinese Polyurethane Marketing Association, a sister group of the CPUIA (the Chinese Polyurethane Industry Association). This work puts Lui in a very good position to understand the history, background and future development of the products.
* Thanks to Dr Augustin Chen from Synuthane, for interpreting for this interview.
A massive chemical enterprise
Bluestar Dongda is a daughter company of ChemChina (China National Chemical Corp.) – a totally government-owned business and the largest chemical enterprise in China, according to Lui. As well as its current capacity for 160 ktpa of polyether polyols, Bluestar Dongda’s products include ethylene and propylene oxide (EO and PO), and 60 ktpa of prepolymers or systems.
The group’s website says that in China’s eleventh five-year plan, Bluestar Dongda is to expand capacity to 250 kt each of EO and PO (from 70 ktpa currently).
Lui said Bluestar Dongda’s polyol sales have a turnover of RMB 1.8 billion. If downstream prepolymer and systems sales are included this rises to RMB 3 billion. ChemChina group will have 2010 turnover of RMB 170 billion, Lui said.