China SM capacity build-up drives Asia industry rationalisation

Clive Ong

27-Feb-2014

By Clive Ong

SM is a liquid chemical used to make resins such as polystyrene (PS), expanded PS (EPS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers such as styrene-butadiene-rubbers (SBR) and styrene-butadiene-latex (SBL).SINGAPORE (ICIS)–China’s strong build-up of styrene monomer (SM) capacity over the years has been the driving force in the ongoing regional petrochemical sector rationalisation, whereby older production facilities are being retired, industry sources said on Thursday.

By 2015, the country’s total SM is projected to reach 8.43m tonnes/year, about a 50% increased from 2010, according to Chemease, an ICIS service in China.

Over a four-year period to 2010, SM capacity in the country has more than doubled to 5.61m tonnes/year, the data showed.

China has been steadily building up petrochemical capacity with an aim towards self-sufficiency, given its humongous requirements. The country is the world’s second biggest economy and remains the biggest petrochemical importer in Asia.

With the strong growth in domestic SM capacity, China is now less reliant on import cargoes, but its consumption is continuing to grow, industry sources said.

SM is a liquid chemical used to make resins such as polystyrene (PS), expanded PS (EPS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers such as styrene-butadiene-rubbers (SBR) and styrene-butadiene-latex (SBL).

Outside of China, SM capacity growth in Asia has stalled, with a numbers of producers deciding to mothball their plants over the years, fearing the loss of China as a major buyer.

“Most SM makers in Asia have not expanded capacity in recent years while some have instead reduced their capacity,” a Taiwan-based SM buyer said.

In Japan, two producers have announced the impending closure of their SM facilities.

Nihon Oxirane will be shutting down its 425,000 tonne/year SM plant in Chiba by May 2015, while Asahi Kasei Chemicals has announced that its 320,000 tonne/year unit in Mizushima will cease operations in March 2016. (Please see table below)

“A deterioration in the supply-demand balance is expected, as the expansion and construction of large-scale plants in Asia are planned,” according to Asahi Kasei, which will keep its other SM plant with a 390,000 tonne/year capacity to exclusively cater to the Japanese domestic market.

China’s SM capacity growth is being support by demand, given the strong expansion in the downstream styrenics sector in recent years. The rest of Asia provides a stark contrast, with PS and EPS plants in the region either having to scale down or completely shut production.

“PS and EPS expansions are mostly in China as the key users are mostly there. The trend will likely continue into the foreseeable future,” a southeast Asia-based PS maker said.

Schedule of SM plant closures in Japan and China

Plant

Location

Capacity  (tonnes/year)

Remarks

Asahi Kasei Chemicals

Mizushima, Japan

320,000

To shut in March 2016

Nihon Oxirane Co

Chiba, Japan

425,000

To shut in May 2015

Denka

Chiba, Japan

240,000

Shut in 2012

Mitsubishi Chemical

Kashima, Japan

371,000

Shut in 2011

 

 

 

 

Plant

Location

Capacity added

(Tonnes/year)

Remarks

Taixin Xinpu Chemicals

Jiangsu E. China

320,000

August 2013

Keyuan Chemicals

Zhejiang E. China

100,000

2013

Dong Xing Chemicals

Guangdong S. China

60,000

End-2013

CNOOC

Hainan S.China

120,000

Aug 2014

Arbe Chemicals

Jiangsu E. China

500,000

End-2014

Dashu Chemicals

Zhejiang E. China

250,000

2015

Jiujiang Chemicals

Jiangxi E. China

80,000

2015

Jingmen Chemicals

Hubei Central China

80,000

2015

Fu De Neng Chemicals

Jiangsu E. China

500,000

2015

Shuangliang Chemicals

Jiangsu E. China

500,000

2015

CNOOC

Zhejiang E. China

600,000

2015-2016

Jinshan Chemicals

Shanghai E. China

600,000

2016

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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