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china chemical newspaper: the situation of excess production capacity of some chemical products is still not improving, which makes many general managers worried. it is really difficult to find good products, since it is so easy for us to get into the trap of excess production. but during the 2010 summit forum on china chemical industry investment tendencies in beijing last week, many experts did not think so. according to them, there are three methods for avoiding excess production:
1. traditional products should be decreased.
in traditional chemical industry, demands for many products in the market are approaching saturation; some of them are even produced to excess. thus, experts believe, in the next few years, domestic chemical products are entering the period of maturation, some even with excess production, facing upgrading and adjustment, including soda ash, chlor-alkali, methanol, urea and glyphosate and other agrochemicals. the profits for petroleum refining are gradually decreasing. with the growth of middle east petrochemical capacity in 2010, gross profit rates for ethylene in the domestic markets will also be lower.
2. therefore, nearly all experts believe the highlights for traditional chemical industry are downstream products.
for example, methanol can be used for the downstream products with high profits and large market demands, and methanol protein is one of them. according to xu jingsheng, vice engineer of china technological and development center of chemical economy, methanol protein is a single cell protein, with higher nutritional value, used to supplement protein in human and animal bodies, and it is used in food. mr. xu said it is short of protein feed in domestic markets. 4.2 million tons of methanol protein is consumed every year, that is, 8.4 million of methanol. if the production and technological problems can be solved, it will be a highlight for development.
take yellow phosphorus, for instance. the deputy secretary of china inorganic salt industry association, wang peilin, says the amount of sodium tripolyphosphate in the production of washing-powder decreased from 20%-25% to 10%-12%. it has exerted a major big influence on the marketing of yellow phosphorus. it is worthwhile to take good advantage of yellow phosphorus tail gas. mr. wang made this calculation: if one generates power with tail gas, the cost for yellow phosphorus production will decrease by rmb 1200 yuan; if producing sodium formate with tail gas, the cost for yellow phosphorus production will lower rmb 2000 yuan; if manufacturing c1 series chemicals of high profit with tail gas, cost will bring down rmb 2500 yuan.
mr. wang proposed that a comprehensive application of yellow phosphorus could include the usage of slag and the recycling of ferrophosphorus! mr. wang said choosing developing tail gas products should be a focus for enterprises, since we have complete purification technologies. the profits will not be underestimated via feasible plans, based on the regional conditions.
take chlor-alkali as another example. the vice president of china national chemical and planning institute, bai yi, feels it ought to avoid "the old three products" for chlor-alkali; downstream products such as chlorinated rubber, intermediates with chlorine should be developed. she said not only the traditional products, but also engineering plastics, polyurethane, silicon fluoride need development of its downstream products. the capacity for organosilicon monomer is big enough, so the downstream products should be developed. it is not feasible for organosilicon monomer enterprises to produce only 60,000 tons without the development of downstream products.
3. new products with bigger differences are better.
some other chemical products are not in danger of excessive production; instead, they have a large market demand. but the experts attending the summit were reminded that there will also be hidden troubles, since they face homogenization.
take printing ink for instance. xu jingsheng said oily ink, as a main ink product in the markets, obtains aromatic hydrocarbon, harmful to the environment, so we should focus on soluble inks. besides, with social development and the steady improvement of environment protection, water-based ink will replace oily ink, becoming the new development direction for ink products. the law on food packing makes all these regulations of safety principles for food packing and it also has environmental requirements, so developing water-based ink is a big step. analyst hou honglin, securities research institute for fundamental chemistry also believes that there is a bright future for water-based ink. he said that water-based ink is made of water-based resin, addition agent, pigment, water and other raw materials; it has neither smell nor toxicity, neither flammable nor explosive, which can eliminate the harms done to humans and pollution done to the commodities, is currently the most ideal printing ink. in 2008, volume for water-based ink reached 137,600 and 163,400 tons, yet the real quantity totaled 79,700 tons, thus it remains a bigger market.
take, for example, heat insulating materials for building. academician of china academy of engineering, professor of chemical engineering department in tsinghua university jin yong, the main energy consumption in the future will be from buildings. in many cities, the largest consumer of energy is neither factories, nor transportation, but the buildings where people live. due to this, heat insulating materials, both energy-saving and environmental-friendly, will have a broader market. according to li jianbo, deputy secretary of the china polyurethane industry association, heat insulating materials include glass wool, mineral wool, phenolic foam, polystyrene plastic foam, and polyurethane rigid foam. the weak point for glass wool is that the heat insulating is not ideal, and it grows mildew. rock wool is falls off easily. phenolic foam is used for air conditioners and wind pipes, and is easy to pulverize; the quantity of polystyrene plastic foam is increased when the energy standard is 50%, and its weakness is that it creates large amounts of poisonous gas when in high temperatures and it is liquefied and flows. the new building for china central television, which caught fire last year, used this material. but polyurethane rigid foam becomes the most ideal heat insulating material for its flame-retardant properties, waterproof capacities and stability. there are a few companies producing this material, with polystyrene plastic foam in the leading role. the energy standard has improved from 10% to 30%, to 50% and it will reach 70% in the future. but the market share of polyurethane rigid foam only amounts to 7% and companies may pay special attention to this, said li jianbo.
one example is paint. it is known that the price for paint is influenced by the raw material and the profit rate keeps 5%; experts think that it also needs to start down a different path. bai yi thinks the paint industry should develop its own fields, such as architectural coatings, anticorrosive paint and marine paint. xu jingsheng feels there is a distance between automotive coatings, coating of green environmental protection in the domestic markets and paints in the international markets. there is much space for development of special coatings, fire-retardant paint, heat insulation coating, waterproof and decontamination paint as well as water paint. journalists noticed that all the experts mentioned powder paint in terms of differentiation of paints. it is understood that powder paint, characterized by environment protection, reduction of fire, high recovery, high efficiency for coating, will be a focal point of paint in the future.
another example is agrochemicals. hou hongsen made an analysis, believing that emulsifiable concentrate (ec), powder and other traditional agrochemical types are inferior due to their disadvantages in the environment, ecology and food security. new types such as water powder (wp), suspension concentrate (sc), emulsion in water (ew), and microemulsion (me), characterized by low toxicity, high efficiency, safety, environmental-friendliness and low cost as well as low price, cost per ton can be lowered to rmb 3000-4000 yuan.
take waste gas and its treat agent, for instance. according to hou hongsen, a major method for wet desulphurization is amine application. disopropanolamine and other raw materials will gradually replace ethanolamine. those enterprises realizing the transformations will have more opportunities. nanjing hongbaoli company, ltd., is the only producer of ethanolamine on a large scale. due to its competitiveness, the capacity will total 40,000 tons and its profit will also be raised.
bai yi cited another example when mentioning these differences. she held that competing through cost reduction is not practical in the domestic markets for petrochemicals, which are very advantageous in their raw materials in middle east. differentiation is a good solution for the petrochemical companies. polypropylene in the production of bumpers can very easily be observed by the domestic chemical companies, since they can reform technologies and products to meet the demands from domestic companies, whose advantages are incomparable for the foreign companies.
experts feel that paint companies should focus on differentiation, and powder coating has a bright future. many experts believe that domestic companies export low-end products, which are made into high-end products and sell them in domestic markets, especially in the fields of fine chemical products and special chemicals. in fact, many fine chemicals have a promising prospect, which domestic companies are afraid of trying. in the forum, experts introduced some fine chemicals with bright futures.
one good example is fluoropolymers. zhang fang, chief of china petrochemical and industrial institute’s fine chemical department, said fluoropolymers are an important product of organic fluorines. in domestic markets, only polytetrafluoroethylene (ptfe) is produced, taking up 90% of the total, of which the foreign companies only produce 50%, even though the low-end products are produced in the domestic markets for export. high-end products rely on imports, whose price doubles its export price. in fact, polytetrafluoroethylene (ptfe) with high efficiency, fluorubber, fluorinated ethylene propylene (fep）are cause for concern.
take polylactic acids, for instance. it is widely used as medical material for its biocompatibility and degradation, namely, controlled drug release, tissue engineering and suture. traditional medicine rubbish are very dangerous, and it needs special treatment. but the medicine material made of polylactic acid can directly be degraded into air. it can also be used into textiles. the clothings worn by the soldiers use this material and it has the features of crease-resist and deodorization. bai yi said, a company in hubei province produces this material with a yearly capacity of 1000 tons, and there are many orders from europe. the supply can not match demand.
for example, don’t forget electronic chemicals. according to xu jingsheng, the product techniques for electronic chemicals are complicated, but they have high value. compared to low-end products, their profit margin can reach 30%. but it is an emerging industry with complex techniques; many companies cannot produce such products. epoxide resin in led is a special packing material, and is in huge demand. but no companies can produce it. film in led is another example. domestic companies can only produce tn, stn and other media and low films and they cannot produce tft. mr. xu posited that there are about 60 producers of led in china, and it is the biggest market in the world. recently, many production lines are brought in. yet in the field of led chemicals, 50% of the products cannot be made here in china.
water treatment agents are another example. they bring in little profit. but if it is formed into a water treatment project with film products and special equipment of water treatment, the profit will be higher. big enterprises such as petrochina and sinopec have such demands, hoping that water treatment projects can be contracted to other enterprises. it will be a hopeful field.
for example, engineering plastics and modified plastics deserve our attention. according to china engineering industry association secretary zheng kai, engineering plastics for vehicles occupy 40%, but our domestic markets cannot match this. besides, nylon washers, sleepers and nylon with high strength and other products can be used in railways. all these supply good prospects for engineering plastics and modified plastics. zheng kai also told the attendants that some plastics have bright futures. polyformaldehyde will replace pvc and be used as food packing material; polyphenylene oxide will substitute pvc, since cables exported to europe require non-halogen. it can also be applied into pcb (printed circuit board). world famous plastic producers such as ge, basf, dupont, bayer and dsm set up factories in china. but the technology for producing such high-end products is not mature. for example, polycarbonate, in the domestic market, is has a production capacity of 330,000 tons, and is produced by foreign enterprises. therefore, focusing on high-end products is a must.
will the products list given by the experts at the forum have some impact on china’s domestic companies?
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