China’s PU industry on the path to recovery; plans for technology upgrades

Suzhou, Jiangsu – Demand has risen in China’s polyurethane industry since the second quarter, notably in cold chain, refrigerators and freezers, according to a China conference held in November by the China Polyurethane Industry Association (CPUIA). Freezer production reached a record high in the quarter.

‘Coronavirus had rather minor impacts on [China’s] PU industry, and I believe most companies in the sector are likely to reach their original targets for year-on-year growth,’ CPUIA chairman Yang Maoliang told the conference.

Earnings at Chinese diisocyanate makers such as Wanhua and Dahua nosedived over the first half of 2020, but have been improving since the third quarter. Other segments generally reported higher earnings compared with a year ago, CPUIA said.

Last year, China produced CNY150bn ($22.7bn)-worth PU feedstock and CNY200bn-worth PU products. The country accounted for 95% of the world’s production of freezer containers, 60% of footwear and 70% of toys.

In 2019, China’s PU feedstock capacity arrived at 12.4mT/year, with a nearly 4% average annual growth rate since 2015. Production of such materials amounted to 8mT in 2019, with a 6.5% annual growth rate since 2015.

‘We haven’t had high growth rates since 2015, but the industry has been in quality development,’ Yang said.

Over the first three quarters of 2020, China produced 4.4mT of the PU feedstocks TDI, MDI and PPG, down by 7.5% from a year ago. Apparent consumption of these materials during the period stood at 4mT, showing an 8.3% year-on-year increase.

The rates of decline are smaller compared with the half year figures, and feedstock prices have been on the rebound from its low point around April, Yang said. Prices for PO and PPG both reached five-year highs in Q3.

China’s consumption of PU products, including solvents, amounted to 11.5mT in 2019, representing 3.6% average annual growth since 2015. Rigid foam products were at a stable level during the period, and shoe sole resin has been on a downturn over the past two years. The rest of the segments have been expanding steadily, CPUIA said.

China’s capacity for most PU products has exceeded a third of the global total, with looming risks of excess investment in several segments, Yang said. The sector still faces low concentration, competition and a lack of higher-end products, and it is missing up-to-date regulatory standards, especially in solid waste treatment, he said.

The industry association hopes to tackle these problems in the 14th Five Year Plan for 2021–25, as well as drive the industry towards a higher level of smart manufacturing during the period. It also listed a number of key technologies to promote in the sector over the coming years, including:

•    PO-PPG integration: promoting the use of tube reactors and microfluidic reactors for continuous production
•    Bio-degradable feedstocks and carbon dioxide-based polyols
•    CHPO: replace calcium hydroxide with sodium hydroxide with NaOH as the saponification agent employed in the chlorohydrin process for PO production
•    Environmentally friendly additives, including foam stabilisers, catalysts, chain extenders and blowing agents
•    Composites: advancing the development of PU composites and moulding machinery.

‘High-quality development for downstream segments can only be achieved with joint progress in feedstock,’ Yang said.