Net News: In recent years, China's polycarbonate industry has ushered in new opportunities for development, increasing production capacity. Although the self-sufficiency rate of domestic polycarbonate production capacity is only about 50%, the industry is in a period of concentrated release of production capacity, and it is expected to rapidly develop into a situation of oversupply in 2-3 years. In this regard, experts warn that we should be vigilant against overcapacity and be cautious about investment.

Project-intensive launching

After 2005, China started the construction boom of polycarbonate, world-class producers Diren, Mitsubishi, Bayer (now Cosco) have invested in the construction of factories in China. In 2015, Ningbo ZheTie Dafeng Chemical Co., Ltd. put into operation a new 100,000 tons/year production plant using its own non-phosgene technology, rewriting the history of domestic polycarbonate production plant with no more than 10,000 tons of independent technology.

According to the "Blue Book on the Development of China's Polycarbonate Industry in 2018" (referred to as "Blue Book") published by the Polycarbonate Branch of China Synthetic Resin Supply and Marketing Association in August 2018, China has become the largest producer of polycarbonate in the world. By the end of June 2018, China's polycarbonate production capacity had increased from 480,000 tons/year in 2013 to 945,000 tons/year. With the production capacity of 100,000 tons/year put into operation in July last year, the total production capacity reached 1045,000 tons/year, accounting for about 20% of the global total production capacity.

According to statistics, in 2018, the domestic production of polycarbonate was more than 700,000 tons, and the net import volume was about 1.31 million tons, which has remained above one million tons for more than 10 consecutive years.

However, there will be a large number of capacity-intensive releases in the future to fill this supply gap. In 2018 alone, many related projects have been signed and constructed: Hainan Huasheng New Material 2.26 million tons/year non-phosgene polycarbonate Phase I project has been started, Jilin Xingyun Chemical Industry Group, Zhongsha Petrochemical Company (Tianjin) and Pingdingshan Shenma Group have also signed 240,000 tons/year, 260,000 tons/year and 800,000 tons/year polycarbonate projects respectively. According to incomplete statistics, there are more than 2 million tons/year polycarbonate plants under construction or about to start construction in China, and nearly 4 million tons/year production capacity is being planned.

According to the statistics of polycarbonate branch of China Synthetic Resin Supply and Marketing Association, the production capacity of polycarbonate in China is expected to exceed 3 million tons per year by 2022, with an average annual growth rate of 30%. By 2020, there will be 14 polycarbonate production enterprises in China and more than 16 in 2022.

Demand growth is steady

After years of development, China has become the world's largest consumer of polycarbonate.

According to the Blue Book data, the apparent consumption of polycarbonate in China in 2017 was about 1.8 million tons, accounting for more than 40% of the total global consumption. With the steady development of domestic economy and the implementation of supply-side reform, the consumption structure of polycarbonate in various application fields in China has not changed significantly, and the growth rate of demand will be maintained at 3%~5%. If estimated at 4% growth rate, the domestic demand for polycarbonate is expected to be 2.1 million to 2.2 million tons by 2022. Plus imports, China's polycarbonate supply will be excessive by 2022.

Watch out for overcapacity

Zheng Yuan, chairman of China Synthetic Resin Supply and Marketing Association, said that the "blowout" growth of polycarbonate production capacity, on the one hand, will promote the rapid development of China's polycarbonate industry, substantially improve self-sufficiency and meet the domestic market demand. On the other hand, new problems will arise, such as the unequal growth rate of domestic polycarbonate production capacity and demand, as well as the repeated construction of a large number of homogenization projects, which can meet the market demand of large-scale middle and low-end products, but also may lead to overcapacity of the industry as a whole. In addition, in the field of high-quality and special performance polycarbonate, it is still mainly the market of a few foreign-funded enterprises with strong technical strength, and domestic enterprises have not made significant breakthroughs.

In this regard, the China Petroleum and Chemical Industry Federation issued the early warning report on the production capacity of key petrochemical products in May 2018, the first early warning on polycarbonate. The report pointed out that China's polycarbonate production capacity has maintained an average annual growth rate of more than 20% for four consecutive years, and the productivity utilization rate has reached 72.7%. However, in the next three years, domestic polycarbonate projects will be concentrated on construction, and the downstream areas of electronics, electrical and building materials will grow slowly. The traditional CD-ROM will be impacted by new transmission methods, and the demand for polycarbonate will continue to shrink. Therefore, the polycarbonate industry needs to guard against overcapacity.

Zheng emphasized that the polycarbonate industry should face up to the real situation of the current industrial development, rational investment and avoid the situation of huge investment without return. The vicious competition caused by over-investment in the polyformaldehyde industry should be a lesson for the past.

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