PETROCHEMICAL AND CHEMICAL IN CHINA

FLANDERS INVESTMENT & TRADE MARKET SURVEY

China’s Petrochemical And

Flanders Investment & Trade Guangzhou

Content

1. General Introduction ………………………………………………………………………………………………………………..…… 3

2. Petrochemical Industry …………………………………………………………………………………………………………………. 6

3. Chemical Energy …………………………………………………………………………………………………..……………………… 11

4. New Chemical Materials ……………………………………………………………………………………………………………… 16

5. Chemical Industrial Parks ……………………………………………………………………………………………………………. 23

6. Additional Information ……………………………………………………………………………………………………………….. 25

2

1. General Introduction

Since 2000, the scale of China’s chemical industry has been the world’s no.1; its main business revenue is estimated to reach CNY 9.5 trillion in 2015 (increased by 86.6% from that of 2000) and CNY 19.5 trillion in 2020. In the first half of 2015, China’s and chemical industry’s imports were worth USD 175.6 billion, with a decreasing rate of 28.5%. The industry’s top 5 provinces are the eastern coastal Shandong, Jiangsu, Guangdong, Zhejiang and Liaoning, each of them outputs over CNY 500 billion and their subtotal exceeds 50% of the country’s gross amount.

In the recent years, China’s achievements are mainly represented by the following projects:

refining at 10 million tons / year  production of from and heavy oil at 500000 tons / year cpp  liquid phase hydrogenation of diesel at 2.6 million tons / year  production of ethylene at 1 million tons / year  production of pta fully with own know-how at 1 million tons / year  production of -base at 500000-600000 tons / year  production of coal-to-olefin at 600000 tons / year  production of coal-to-propylene at 500000 tons / year  production of and acrylic ester, rubber, with own know-how

In the coming years, China mainly needs the following projects in the chemical industry:

 production of coal-to- at 4 billion m3 / year  production of at 200000 tons / year  production of indirect coal-to-oil at 1.8 million tons / year  refining at 15-20 million tons / year  production of methyl (or synthetic ) at 1 million tons / year  big production of potash  big desulfurization and denitrification

Capacity utilization of China’s production of traditional chemicals in 2014

Description Capacity utilization rate process of crude oil 66% sodium hydroxide 81% sodium carbonate 81.4% 81.5% ammonium dihydrogen phosphate 71.9% diammonium phosphate 81.3% calcium carbide 62.2% Pat 61.1% Methanol 64% 70.2% silicone methyl 58% hydrochloric acid 45% polymerized rubber 64% cis- 48% 74.1% 68%

China’s Petrochemical and Chemical Industry 3 Polyformaldehyde 44%

Estimated average increasing rate of China's demands for chemicals in 2014-2020

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

TDI

PPS

SBR

R32

ABS

PPG

MDI

Tyre

Urea

R125

Diesel

PMMA

Spandex

Benzene

Gasoline

Isoprene

Kerosene

Pesticides

Butadiene

AceticAcid

Siliconeoil

Acrylicacid

Para-

Polystyrene

Carbon fibre

Aramidfiber

Polyethylene Epoxyethane

Siliconeresin

Epoxypropane Polypropylene

Polycarbonate

P-phthalicacid

Methylalcohol

Ethyleneglycol

Siliconerubber

Ethenylacetate

Methylbenzene

Potashfertilizer

Specialpolyester

Polyformaldehyd

Polyvinylchloride

Cis-polybutadiene

Sodiumhydroxide

Siliconemonomer

Sodiumcarbonate

Syntheticammonia

Phosphatefertilizer

Polyphenyleneether

Superabsorbent

Polyamide resinplastics

Polytetrafluoroethylene Nitrilebutadiene rubber

Isobutyleneisoprene rubber China’s annual output capacity and self-efficiency of its key in-shortage chemicals (10000 tons)

69% 4000 62% 80% 3000 80% 1500 60% 80% 3000 47% 60% 47% 60% 60% 2000 1000 31% 2000 40% 40% 40% 3200 1000 2200 500 1200 1000 20% 20% 20% 1792 1097 526 0 0% 0 0% 0 0% 2013 2020 2013 2020 2013 2020

Ethylene % PX % Ethanediol %

800 59% 60% 600 76% 80% 600 80% 100% 63% 600 58% 46% 60% 54% 56% 400 400 400 40% 50% 620 54% 540 560 486 200 200 200 52% 280 20% 320 0 50% 0 0% 0 0% 2013 2020 2013 2020 2013 2020

Potassic fertilizer % % Spe. %

China’s output of key chemical products in first half of 2015

Description Volume Increasing rate chemical fertilizer (net) 37.06 million tons 6.5% sodium hydroxide 15.203 million tons - 1.9%

4 ethylene 8.45 million tons 2.3% tyre 455 billion pcs - 3.9% synthetic materials 59.74 million tons 9.0%

To more utilize the strengths of its resources, China plans to increase the diversification of raw chemicals as below:

Description Diversification (% of output volume of non-petroleum-based products) 2013 2020 gasoline 5% 7.2% diesel 2% 7% ethylene 4% 29% propylene 9% 48% ethanediol 5% 57%

On the chemical industry, China’s 13th Five-year (2016-2020) Plan focuses on 4 fields:

1. Petrochemistry – focusing on refining, the production of olefin, aromatic hydrocarbon and organic chemicals 2. New chemical energy – focusing on the production of synthetic natural gas, coal-to-liquids, coal-to-alcohol ether fuel (methanol fuel, fuel, methyl ether, polyoxymethylene dimethyl ethers), biomass new energy (biobase ethanol fuel, biodiesel) and coal’s grading conversion 3. New chemical materials – focusing on the production of engineering plastics, high-end plastics, high-performance rubber materials, , fluorine silicon materials, high-performance , high absorption materials, functional membrane materials and electronic chemicals. 4. Upgrade of the traditionals – focusing on chemical fertilizer, pesticide, chlor alkali, sodium carbonate, tyre and inorganic salt.

The aims of China’s 11th Five-year (2006-2010) Plan on energy-saving and emission-reduction in the chemical industry were not achieved, the following of the 12th Five-year (2011-2015) Plan will possibly not be achieved either:

 reduction of the energy consumption by 15%  reduction of COD and NOx by 10%  reduction of the emission of ammonia nitrogen by 12%

 reduction of the emission of CO2 by 8%

These difficult duties will have to be shifted to the next 5 years again, mainly on the treatment of phosphogypsum slag, calcium carbide slag, yellow phosphorus slag, alkali slag, waste gas, waste water with pesticide, or organic intermediate and emission of CO2.

China’s Petrochemical and Chemical Industry | November, 2015 5 2. Petrochemical Industry

China’s petroleum refining made an output of 715 million tons in 2014, which was the No.2 in the world after the U.S.A. and 15% of the global figure; its annual average increasing rate in the past decade was 7.7%; it has already witnessed over-capacity. China’s processed oil is basically self-sufficient. There are 196 petroleum refineries in the country with an average capacity of 3.65 million tons / year for one refinery, which is only 50% of the world’s average. The ration between China’s demand for diesel and gasoline is estimated to decrease to 1.4 in the coming years. The imported petroleum in China will be used more for production upgrade and more open for smaller and private refineries. The country is in great demand of technologies on refining sulfur and acid-bearing heavy and inferior crude oil, and pushing new quality standard on gasoline and diesel which sets the maximum sulfur content as 10 ppm. In the country, the production of clean gasoline basically means desulfuration of catalytic cracking gasoline and reduction of olefin.

China’s leading petroleum refiners are:

 www..com  www.cnpc.com.cn  www.cnooc.com.cn  www.chemchina.com.cn  www.sxycpc.com  www.norincogroup.com.cn  www.sinochem.com

China’s top 7 petrochemical bases are:

 Caojing, Shanghai City

 Ningbo, Zhejiang Province

 Huizhou, Guangdong Province

6  Gulei, Fujian Province

 Xizhong Island, Liaoning Province

 Caofeidian, Hebei Province

 Lianyungang, Jiangsu Province

Ethylene In 2014, for ethylene in China, the output capacity was 20.79 million tons (estimated to be 32.3 million tons in 2020), the output volume was 18.503 million tons (estimated to be 29.7 million tons in 2020), the import volume was 1.497 million tons, the import volume converted from downstream derivatives was 17.4 million tons.

The break-down of China’s import of ethylene in 2013

Origin Ethylene monomer Ethylene glycol Styrene 0.7% 50.5% 57.9% 26.5% Pacific * 99.3% 37.5% 31.9% 65.9% North America 0% 5.0% 9.3% 5.9% Europe 0% 4.3% 0.9% 1.7% Others 0% 2.7% * Mainly from South Korea and Japan, a little from Taiwan Island.

China’s Petrochemical and Chemical Industry | November, 2015 7 Raw material diversification of China's ethylene production (10000 tons) 3500

3000

2500

2000

1500

1000

500

0 2014 2020

Others Methanol to olefin Coal to olefin

Origins of ethylene equivalent consumed in China in 2014 (10000 tons) 70

830

1850 140

850

China Middle East North American Asia Pacific Others

Leading producers of ethylene in China are:

 www.sinopec.com  www.cnpc.com.cn  www.cnooc.com.cn  www.norincogroup.com.cn  www.chemchina.com.cn  www.shenhuachina.com  www.fundenergy.com.cn  www.wison.com  www.sxycpc.com  www.chinacoal.com

8  www.baofengenergy.com  www.shccig.com  www.legendholdings.com.cn Propylene In 2014, for propylene in China, the output volume was 18.75 million tons, the equivalent consumption volume was 27.8 million tons, import is in need.

Leading producers of propylene in China are:

 www.chinadhe.com  China Soft Packaging Group Holdings Ltd.  www.haiweigroup.net  www.sypcc.com  www.ytpu.com EVA copolymer Presently China has output capacity of 600000 tons / year for EVA copolymer, around 65% of the demand is met by import, more output capacity of 1.4 million tons / year is under construction or planning.

The present producers are:

 www.basf-ypc.com.cn  bypc.sinopec.com  www.levima.cn/index.php?a=view&m=company&id=2  www.dfpc.com.cn Polyethylene In 2014, for polyethylene in China, the output capacity was 14.8 million tons (estimated to be 22 million tons in 2020), the output volume was 12.85 million tons (estimated to be 20.9 million tons in 2020) composed by 29 companies and 66 sets of equipments, the import volume was 9.108 million tons. For high-end polyethylene, China annually produces around 1.6 million tons and imports around 1.75 million tons.

In 2014, for ultra-high molecular weight polyethylene in China, the output capacity was 39000 tons (estimated to be 80000 tons in 2020), the output volume was 30000 tons (estimated to be 60000 tons in 2020), the import volume was 24000 tons (estimated to be 30000 tons in 2020);

Leading producers in China are:

 www.cnpc.com.cn/cnpc/lhqy/201404/9a5202be4c7749059f29525fc4c1013a.shtml  www.csclc.com.cn  www.cnpc.com.cn/cnpc/lhqy/201404/e4b9ecdc154846038fec903b8f2620ec.shtml  www.huajinchem.com  www.spc.com.cn Polypropylene In 2014, for polypropylene in China, the output capacity was 19.31 million tons (estimated to be 29 million tons in 2020), the output volume was 13.81 million tons (estimated to be 24.65 million tons in 2020) made by over 100 companies, the import volume was 5.028 million tons. China needs 65000

China’s Petrochemical and Chemical Industry | November, 2015 9 tons of high-end mPP per year which is all imported, 10000 tons of it can be produced in China in 2020 according to estimation.

Leading producers in China are:

 bypc.sinopec.com  www.spc.com.cn  www.mpcc.com.cn  english.sinopec.com/about_sinopec/subsidiaries/refineries_petrochemicals/20080326/3042.shtml  www.lypcc.com.cn

10 3. Chemical Energy

Statistics on China’s major energy chemicals (10000 t/a)

Description 2014 2020 (estimated) Output Output Import Export Consumption Output Output Consumption capacity capacity direct liquefaction 108 90 441 406 coal-to-oil indirect liquefaction 60 31 912 866 coal-to-oil methyl alcohol- 70 50 285 171 to-gasoline coal-to-natural gas 27 6 372 298 methyl alcohol 6860 4250 433 75 4608 9000 7650 8450 methyl ether 1350 500 0 0 500 1500 800 800 synthetic ammonia (net) 7705 5699 20 1 5718 8000 6400 6400 urea (net) 3872 3218 3 626 2595 4450 3700 3000 phosphatic fertilizer (net) 2350 1685 30 405 1310 2400 1750 1550 potash fertilizer (net) 600 557 503 21 1039 700 650 1150

Methyl alcohol

Raw materials of China's production of methyl alcohol in 2014

Non anthracite coal Anthracite coal Natural gas Coke oven gas

China’s Petrochemical and Chemical Industry | November, 2015 11 China's downstream products consuming methyl alcohol in 2014

Traditionals like and aceticacid Alcohol ether fuel Methyl alcohol to gasoline Methyl alcohol to olefin Others

In 2014, China’s consumption volume of methyl alcohol was 46.86 million tons, with an annual increasing rate of 27% in the recent years. For big methyl alcohol production company at annual output capacity over 300000 tons, there are nearly 70 in the country. China requires that any of its new coal-to-methyl alcohol project should have output capacity of at least 1 million tons / year, that for new coke oven gas-to-methyl alcohol project should be at least 0.1 million tons / year. The country prohibits new production of methyl alcohol and its downstream products with natural gas. Methyl ether China has over 80 methyl ether production companies at gross annual output capacity of 13.5 million tons and gross output volume (same as the actual consumption volume) of 5 million tons in 2014, the main production process of methyl ether is dewatering of methyl alcohol. In China, 97% of methyl ether is used as fuel and it will be promoted as household fuel for remote areas to replace coal and LPG, methyl ether for automobiles has not been commercialized but will be developed more. Pipe transport of methyl ether and methyl ether as petrochemical raw material will be developed. Clean and high-efficiency conversion of coal

China’s top 5 coal production regions

Region/Province Output volume in 2013 (100 million tons) Inner Mongolia 9.9 Shanxi 9.6 Shaanxi 4.9 Guizhou 1.9 (estimated) 1.6 At the end of 2012, China had 1.42 trillion tons of identified coal reserves.

China’s top 4 coal chemical bases are:

12  http://www.ningdong.gov.cn

 http://www.dlmhg.gov.cn

 http://www.ysia.gov.cn

 http://www.kalamaili.com

For coal-to-oil, China has 8 production companies (1 for direct liquefaction, 2 for indirect liquefaction and 5 for methyl alcohol-to-gasoline) at gross annual output capacity of 2.28 million tons (1.08 million tons for direct liquefaction, 0.5 million tons for indirect liquefaction and 0.7 million tons for methyl alcohol-to-gasoline) and gross output volume of 1.72 million tons in 2014. The turnover for 1 ton of direct liquefaction coal-to-oil is CNY 4963.00, that for 1 ton of indirect liquefaction coal-to-oil is CNY 7625.00, that for 1 ton of methyl alcohol-to-gasoline is CNY 9300.00.

For coal-to-natural gas, China has gross annual output capacity of 5.2 billion m3 (3.1 billion m3 for coal- to-natural gas, 2 billion m3 for coke oven gas-to-natural gas mainly using the technology of coke oven gas-to-, 0.05 billion m3 for production of chemical -to-natural gas mainly using the technology of extraction from waste gas of synthetic ammonia) and output volume of 1.3 billion m3 in

China’s Petrochemical and Chemical Industry | November, 2015 13 2014. The gross annual output capacity will reach 70.2 billion m3 in years. The leading companies running coal-to-natural gas projects in China are:  xj.chinakingho.com  www.huinenggroup.com  www.china-cdt.com (the projects are at the area of Hexigten Banner and Fuxin City)

In 2014, China’s consumption volume of natural gas was 192.3 billion m3; it was annually raised by 10- 20 billion m3 in the past decade, mainly in the sectors of city supply and transport with LNG and CNG; the use of NGL is also growing. In 2020, the supply of natural gas to Chinese market may reach 420 billion m3, the domestically produced volume may be 185 billion m3 of conventional natural gas, over 30 billion m3 of shale gas, and nearly 30 billion m3 of coalbed methane. Import of natural gas is important to China, as its own output of mined natural gas (shale gas and coalbed methane) is difficult to increase.

Coal represented 75.6% of China’s production of primary energy in 2013, and may represent 47% of the production and 40% of the consumption in 2050. Presently, the transport of coal in China is mainly made by train. To utilize coal more cleanly, the country is developing more bases in the West to convert coal to oil and natural gas locally then transport them to the East, the gross volume of gas for this transport is planned to reach 40 billion m3 annually in the coming decade. Pipes for transport of coal water slurry are also being developed.

The following are the key relative technologies China needs:  Comprehensive utilization of coal’s chemical constituents  Joint production and its peak shaving of liquid fuel, chemicals, electric power and thermal energy  Optimization of the utilization of coal and petroleum by means of coal-to-hydrogen, joint refinery of petroleum and coal, etc  Efficiency raise of coal process  Joint gasification of coal and biomass, integration of windpower-to-hydrogen and coal

chemistry, conversion of CO2 by chlorophyte (mainly for the Northwest regions), oil and gas

driving by CO2 (may be first realized at Ordos Basin, Ningdong Town at Ningxia Region, and Yiminhe Town at Inner Mongolia Region)

Nitrogen fertilizer For synthetic ammonia, China had gross annual output capacity of 74.17 million tons (80.70 million tons for urea) and output volume of 60.53 million tons (45.53 million tons for nitrogen fertilizer) in 2014; the production suffers from serious seasonal overcapacity, and is being moved to coal-rich regions like Inner Mongolia, Xinjiang, Shanxi. China’s export of urea is strong, at 13.62 million tons in 2014. The structure of raw materials for synthetic ammonia is more optimized as 52% for anthracite, 24% for non anthracite coal and 23% for natural gas and coke oven gas. Advanced production technologies have been widely introduced, however the domestic market demand greatly shrinks and the business profit is very limited. The key technologies needed now are joint production of synthetic ammonia (natural gas, methyl alcohol, clean energy, chemicals) and value-added modification of nitrogen fertilizer. Phosphatic fertilizer

14 For phosphatic fertilizer, China had output capacity of 23.5 million tons (net), output volume of 16.85 million tons (net) and consumption of 13.1 million tons in 2014. 71% of the production is based on the locations of phosphorus resources. The production enjoys the world’s leading technologies, with a phosphor gypsum general utilization rate at 27%. The problems are, over-capacity of the production, too much relying on import of sulfur, lack of environment-friendly storage of phosphor gypsum, etc. The key technologies needed now are those for advanced production of soluable and slow released phosphatic fertilizer, phosphoric acid by wet method, and those for higher utilization of phosphor gypsum. Potash fertilizer For potash fertilizer, China had output capacity of around 6 million tons (mainly based in Xinjiang Region and Qinghai Province), output volume of 5.57 million tons, consumption of 10.39 million tons

(converted into K2O) in 2014, the import was therefore big in the past 5 years. China has developed advanced technologies like solid-liquid transformation, general utilization of magnesium and lithium resources, exploitation of insoluable potassium resources, etc. Chinese companies are construting overseas potash fertilizer production bases in Africa, Southeast Asia, North America, Russia and Belarus. China has 14 potash fertilizer producers, the top 3 are (each has annual production capacity of around 1 million tons):  www.qhyhgf.com  Geermu Zangge Potash Fertilizer Co., Ltd.  www.sdiclbp.com Value added fertilizers These fertilizers include modified, slow released, compound and soluable fertilizers. In 2013, China’s output volume of compound fertilizer was around 34.5 million tons. In 2014, China’s output volume of soluable fertilizer was over 3 million tons. In the country, 16% of nitrogen fertilizer, 85% of phosphatic fertilizer, 25% of potash fertilizer are processed into complex fertilizer; the share of complex fertilizer in chemical fertilizer is 32%. China is also developing liquid fertilizer like UAN and direct fertilizing with liquid ammonia. The value added fertilizers are not sufficiently promoted in the market, they are now more used for high-end cash crops, less for field crops. China is controlling the overall consumption of chemical fertilizers, and plans to realize zero increase of the consumption by 2020. E-commerce may be a breakthrough for the sales.

China’s Petrochemical and Chemical Industry | November, 2015 15 4. New Chemical Materials

Statistics on China’s synthetic materials in 2014 (10000 tons)

Description Output Import Export Apparent Consumption synthetic resin 7468 2096 323 9245 synthetic fiber 3986 64 364 3687 synthetic rubber 370 160 15 516 gross of synthetic materials 11823 2321 702 13448 synthetic fiber monomer 3550 1027 63 4514

The key points of China’s development of synthetic materials are:  development of advanced macromolecular materials  development of the relative raw materials like olefin, petrochemical aromatic hydrocarbon, coal-to-ethylene glycol and isoprene Synthetic resin

Statistics on China’s synthetic resin in 2014 (10000 tons)

Description Output Import Export Apparent Consumption general thermoplastic resin 4710 1166 192 5685 general thermosetting resin 1469 92 47 1513 high-performance resin 1289 838 83 2047 Total 7468 2096 323 9245

In China, the production cost of polyethylene and polypropylene is not competitive, the production of polyvinyl chloride has to stop using mercury catalyst for environmental protection purpose, the relative advanced technologies and advanced urea-formaldehyde resin, -formaldehyde resin, resin and acrylic resin etc are needed by the market. Synthetic fiber

Statistics on China’s synthetic fiber in 2014 (10000 tons)

Description Output Import Export Apparent Consumption fiber 3581 24.9 274.8 3331.1 262.1 15.7 68.7 209.1 polyacrylonitrile fiber 67.7 17 9.2 75.5 spandex 44 2.5 4.5 42 polypropylene fiber 26.8 0.7 3.1 24.4 vinylon 11.1 1.9 3.9 9.1 fiber 0.3 0.87 0.05 1.12 aramid fiber 0.8 0.45 0.18 1.09 PTT fiber 3 0.2 0 3.2 Total 3985.6 64.2 364.4 3687.4

China is specially developing aramid fiber, carbon fiber, PTT fiber and Spandex.

16

Statistics on China’s synthetic fiber monomer in 2014 (10000 tons)

Description Output Import Export Apparent Consumption PTA 2732 98 46 2783 ethylene glycol 390 845 0 1235 1,3-propanediol 1 1 0 2 132 52 0 184 164 22 0 187 91 2 16 77 1,6-hexanediamine 15 5 0 20 tetrahydrofuran 25 2 1 26 Total 3550 1027 63 4514

PTA in China is basically self-sufficient, but more than half of its main raw material, PX, is imported at high price. In 2014, China’s apparent consumption of PX was 18.97 million tons; the government is promoting its production and trying to ensure to the people that the production will not harm the environment. China’s development of coal-to-aromatic hydrocarbon is just started, it will not yet influence the demand of PX. Coal-to-ethylene glycol has strong cost competitiveness in China and great importance for the upgrade of coal chemistry. 1,6-Hexanediamine is another key product to China, the production of hexanedinitrile (which China fully imports now) by means of 1,3-butadiene is therefore important. The integration of PDO-PTT production is recommended, as China has had own technology of PDO and PTT’s cost-saving is progressing. Synthetic rubber

Statistics on China’s rubber in 2014 (10000 tons)

Description Consumption natural rubber 455 petroleum-based synthetic rubber 445 non petroleum-based synthetic rubber 71 Total 971 specialty among the above-mentioned 274

Macromolecular materials

Statistics on China’s macromolecular materials in 2014 (10000 tons)

Description Output Net import Consumption engineering plastics 184 209 392 high-end plastics 324 518 841 polyurethane 711 30 741 fluorosilicon resin 29 3 32 other high-performance resin 41 - 0.6 41 petroleum-based special synthetic rubber 129 117 246 non petroleum-based special synthetic rubber 70 1 71 high-performance fiber 4 1 5 functional membrane materials 22 18 40 Total 1513 896 2409

China’s Petrochemical and Chemical Industry 17 Statistics on China’s engineering plastics in 2014 (10000 tons)

Description Output Import Export Apparent Consumption 30 148 22.3 155.7 pmma 45 22.5 1.2 66.3 resin engineering plastics 28.1 41.4 10.2 59.3 polyformaldehyde 32 25.4 4.7 52.6 special polyethylene terephthalate 46.2 18.2 17.5 47 polyphenylene ether 0.9 5 5.9 polyphenylene sulfide 0.6 1.6 2.2 speical engineering plastics 0.8 2.4 0.04 3.2 Total 183.6 264.5 55.94 392.2

Statistics on China’s high-end polyolefin plastics in 2014 (10000 tons)

Description Output Import Export Apparent Consumption copolymerization pe 280 350 0 630 octene copolymerization pe 5 50 0 55 EVA resin 34 70 4.5 99.5 ultra-high molecular weight polyethylene 3 2.4 0 5.4 mPE 2 43 0 45 mPP 0 6.5 0 6.5 Total 324 521.9 4.5 841.4 China needs to develop high carbon α – olefin copolymerization PE and MAO catalysis polyolefin, and also hexane-1, octane-1, etc.

Statistics on China’s polyurethane in 2014 (10000 tons)

Description Output soft-foamed polyurethane 161 hard-foamed polyurethane 210 synthetic leather size 211 stoste of sole 43 elastomer 79 spandex 44 149 / 54 Total 951 conversion into polyurethane 741 China’s polyurethane products are basically self-sufficient, its raw materials like MDI, TDI and polyether are basically self-sufficient, but the special isocyanic acid are still mainly imported.

Statistics on China’s Fluorosilicon resin in 2014 (10000 tons)

Description Output Import Export Apparent Consumption PTFE 8.74 0.63 2.17 7.20 other fluorine resin 2.68 0.47 1.35 1.8 silicone oil 14.0 4.0 2.0 18.0 silicone resin 3.5 0.5 0.0 4.5 Total 28.92 5.6 5.52 31.5

18

As the world’s biggest processer of fluorite and producer of basic fluorine chemicals with more than half of the global output, China is developing mainstream fluorine chemicals, and still rely on import for the most advanced fluorine chemicals and their relative products like fluorine-containing ion exchange membrane. China is strong at the production of silicone monomer and silicone materials like silicone rubber.

Statistics on China’s rubber materials (10000 tons)

Description Consumption 2014 Estimation on 2020 natural rubber 455 460 petroleum-based polymerized styrene butadiene rubber – 136 160 special synthetic rubber sbr (solution sbr) (18) (28) cis-polybutadiene – 101 110 br (rare earth br) (21) (29) polyisoprene rubber 4 60 others 204 288 non petroleum-based silicone rubber 70 150 special synthetic rubber others 1 2 Total 971 1220 The key task of China’s synthetic rubber industry is making substitution of natural rubber, 80% of which needed by the country is imported; the production of polyisoprene rubber and synthetizing 2-methyl- 1, 3-butadiene with 2-methylpropene is therefore important.

Statistics on China’s functional membrane materials in 2014

Usage Products Demand Market scale Self- (million m2) (100 million CNY) sufficiency water treatment MF, UF 55 63.8 63% RO, NF 30 39.2 14% separation for pervaporation, organic steam separation 6.54 32% for separation 8.64 13% hemodialysis 10 16.65 18% ion exchange for electroosmosis 1 30 75% for electrolysis (fluorine) 0.18 10 0.30% for fuel battery (fluorine) 0.7 5% lithium cell separator, package 410 40.6 35% Optics PET-based, CA-based, PVA-based 830 64.8 55% photovoltaic EVA-based, for sealing 510 51 55% PET-based 260 26 55% PVF/PVDF-based, to protect backboard 390 39 10% Others for electric conduction, dielectricity … 23 42% Total 419.93 42.9%

Statistics on China’s high-performance fiber in 2014 (10000 tons)

Description Output Net Import Consumption aramid fiber 0.8 0.3 1.1 carbon fiber 0.3 0.8 1.1 PTT 3.0 0.2 3.2 Total 4.1 1.3 5.4

China’s Petrochemical and Chemical Industry 19

The import of carbon fiber is big, mainly because the cost of domestic production is too high, this needs to be changed. China will focus on the development of high molecular weight carbon fiber, poly-p- phenylene terephthamide, ultra-high molecular weight polysthylene fiber, polyphenylene sulfide fiber, PTT fiber, and their raw materials. Special chemicals In 2014, China’s gross output value of special chemicals was CNY 2.4 trillion with a volume of 120 million tons, coating was the main product, amounting to CNY 370 billion; the other leading products are , concrete admixtures, etc. Generally, 10% of the special chemicals were imported, specially the electronic chemicals, over 50% of them were imported.

Self-efficiency of China’s special chemicals

Products Self-efficiency electronic chemicals < 50% food additives, feedstuff additives, , adhesives, additives, rubber additives, water treatment chemicals, paper-making chemicals, concrete 50-95% admixtures, oil field chemicals, leather chemicals, etc , , agricultural chemicals, chemical active pharmaceutical ingredients > 95% and intermediates

China’s focuses are:  electronic chemicals (the market in China amounted to CNY 170 billion in 2014), fluorine coatings  chemicals for integrated circuit  resist of 248nm and 193nm  PPT-class high-purity reagent and gas  polyimide and liquid epoxy packaging materials  chemicals for printed-wiring board  special epoxy resin, polyimide resin, BMI modified sym-triazine resin, thermosetting PPO resin, poly-TA resin  polyimide film, special PET film, electric conduction coatings  dry film anti- reagent and photosensitivity imaging resistance welding reagent  chemicals for flat plate display  high-class TFT liquid crystal materials, polarizers for TFT-LCD  colourful PDP light fen for big screens  chemicals for new-energy batteries  the products for high-power lithium cells, but depending on the development of electric vehicles  PVF backboard film for solar cells  fluorine proton exchange membrane  chemicals for colourful printers  developing agent  safe food and feedstuff additives, with fermentation as the leading processing method  fermented lycopene as food additive  D-ribose as food additive  sugar alcohol as food additive

20  plant extracts, enzyme, micro ecological preparation, organic trace element as feedstuff additives (China’s output volume of feedstuff additives in 2014 was over 7 million tons, taking the world’s No. 1 position. Some mineral element, vitamin and amino acid additives have already been over-produced.)  environment-friendly adhesives (as the world’s No. 1 adhesives production and consumption country, China’s annual output volume of adhesives is around 17.5 million tons)  environment-friendly adhesives, specially urea formaldehyde glue which takes more than half of all adhesives consumed in China  strategic new-generation adhesives, specially those for the aviation and , solar cell and wind power generation  optimization of the production structure, to develop silicone adhesives more, replacing petroleum-based adhesives  high-end surfactant (China is the world No. 2 production and consumption country, after the U.S.A.)  non-ion surfactant, 20% of which needed in China is imported, specially the polyoxyethylene-type which China imports 200000 tons a year  special surfactant containing fluorine, silicone or boron (in 2014, China consumed 1200 tons of special surfactant containing fluorine, 80% of which was imported)  environment-friendly plastic additives  poisonless plasticizers, like non-PAEs and long carbon chain PAEs plasticizers  halogen free flame retardants, like inorganic retardants and organic phosphorus retardants  lead-free thermal stabilizers, like rare earth stabilizers, organic tin stabilizers and calcium-zinc stabilizers  rubber ingredients (China’s output volume in 2014 was around 5.8 million tons which is around half of the world’s output)  white carbon black to replace carbon black, to lower the rolling resistance of tyres  green production process, specially of antioxidant 4020  environment-friendly substitution, specially using naphthenes filling oil and plasticizer DBD  environment-friendly water treatment chemicals (polyaspartic acid …)  flocculant, specially cation poly acrylamide, to replace the inorganic flocculant like poly aluminium chloride mainly used in China presently  corrosive and scale inhibiter, specially polyaspartic acid, to replace the phosphorus products mainly used in China presently  chelating agents, specially chitosan  concrete admixtures, the annual output volume of which in China is around 10 million tons  polycarboxylate superplasticizer  coatings  exterior wall coatings like silicone acrylic (the price of organic silicone is cut), fluorine silicone (good cost performance) and fluorine coatings  coatings for aircrafts, ships and automobiles which are still partly imported  environment-friendly coatings  dye  fluorine dye and its intermediates  new dye for PTT fiber, polylacticacid fiber, soy fiber, bamboo fiber, and new dying process like digital -jet , micro-capsule-dye auxiliary-free non-wash dying  pesticide

China’s Petrochemical and Chemical Industry | November, 2015 21  new-generation pesticide, fluorine pesticide  environment-friendly pesticide  intermediates  fluorine liquid crystal intermediates for TFT-LCD  fluorine and heterocycle intermediates  higher efficiency and cleaner process of traditional intermediates

22 5. Chemical Industrial Parks

China's 841 chemical industrial parks and their main locations (provinces/regions)

152 234

95 15 19 80

246 Coal-coal chemistry-electricity-building materials-metallurgy-machine

Petrochemistry, in Liaoning, Jiangsu, Fujian, Shandong, Xinjiang

Natural gas chemistry, in Sichuan

Coal chemistry, in Shanxi, Inner Mongolia, Guizhou, Shannxi, Xinjiang, Shandong

Inorganic chemistry, in Hubei, Yunnan, Shannxi, Sichuan, Hunan, Jiangsu for salt, Hubei, Yunnan for phosphorus

Fluorine and silicon chemistry, in Jiangsu, Zhejiang, Jiangxi, Fujian, Inner Mongolia

General chemistry, in Jiangsu, Zhejiang, Guangdong

The parks’ average unit output value is only CNY 1319 / m2, quite some of them are still backward. Reduction of waste emmission is the core of the improvement needed.

Wastes emission of China’s chemical industry in 2013

Description Volume (10000 tons) waste water 491000 COD (estimated to be 34 by 2020) 52.98 ammonia nitrogen (estimated to be 5.1 by 2020) 8.98 SO2 (estimated to be 166 by 2020) 217.80 ordinary industrial solid wastes 31836.90 dangerous wastes 871.70

China’s top 20 chemical industrial parks are (no particular order): http://www.scip.gov.cn http://www.dayawan.gov.cn http://www.ncip.cn http://www.chemzone.net http://www.pec.qg.gov.cn http://www.cetda.cn http://cip.yangzhou.gov.cn http://www.txedz.cn http://www.zjgftz.gov.cn http://www.dypedz.gov.cn

China’s Petrochemical and Chemical Industry | November, 2015 23 http://www.zhapu.gov.cn http://www.amip.org.cn http://www.daxie.gov.cn http://www.yangpu.gov.cn http://www.mmht.gov.cn http://www.qzshy.gov.cn http://www.wcip.gov.cn http://www.czcip.gov.cn http://www.jciz.gov.cn http://gxq.lcxw.cn

24 6. Additional Information For Flemish exporters of chemicals to enter the Chinese market we recommend to enter the market via Chinese traders/importers instead of searching for the big end-users. The offices in China of Flanders Investment & Trade can arrange tailor-made B2B appointments between Flemish exporters and their potential Chinese partners. Participation in relative exhibitions in China is also good way of starting business. There may also be good business connection in the Chinese community in Flanders and Chinese economic delegations to Flanders.

Leading Chinese importers of chemicals: http://www.sinochem.com http://www.zhechem.com http://www.gzchem.com http://www.dlchem.com http://www.gtchongkong.com http://www.highnic.com.cn http://www.huidachem.com

Leading exhibition in China on chemical industry: http://www.icif.cn

Other useful links: http://www.cpcia.org.cn http://www.chinaembassy-org.be http://www.ccpit.org (This organization has office in Brussels) http://www.bcecc.be http://www.flanders-china.be http://www.bencham.org http://www.eusmecentre.org.cn http://www.china-iprhelpdesk.eu

China’s Petrochemical and Chemical Industry | November, 2015 25

Notes:

 This report only covers the Mainland of China, not including the area of Taiwan, Hongkong and Macau.  Sources of this report:  The 13th Five-Year Plan Seminar of Petroleum and Chemical Industry: Planning Guidelines and Development Strategies, by China National Petroleum and Chemical Planning Institute  http://www.cpcip.org.cn

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