PO & Polyether Polyols

Over the next 5 years, global capacity expansion will mainly happen in China. Manufacturers such as Yantai Juli and Fujian Southeast Electrochemical will expand their TDI capacities. In 2019, the price of TDI is expected to get close to its cost, which will to a great extent force some small- and medium-sized TDI manufacturers, particularly those in Asia, the Middle East and South America, to close their plants. TDI producers in China will also be reshuffled, resulting in a more concentrated industry.

Besides, China's TDI manufacturers are formulating or have already drawn plans to expand capacity to achieve efficiencies of scale. They also merge or partner with polyols manufacturers in response to the likely fiercer competition in the future.

By the end of 2018, the global MDI capacity totaled 8.69 million tons/year. According to the plans for new and expansion projects already announced, the global MDI capacity will have increased by 2.91 million tons/year to 11.6 million tons/year by 2024.

In Asia, China will see an additional MDI capacity of 1.2 million tons/year in the coming years. In Americas, the United States will witness such a capacity of 1.11 million tons/year. This is probably a result of the pursuit of efficiencies of scale by MDI manufacturers in China and the bullishness on the U.S. economy among their U.S. counterparts. As the new capacities come onstream, China and America’ share of the global capacity will further increase in the future.

It can be seen that the new MDI capacities are concentrated in Asia and Americas, particularly China and the United States. The plans for new capacities of Wanhua, BASF and Covestro also reflect their strategic plans.

Over the next five years, the global new PO plants will be mostly built in China, with cooxidation process and direct oxidation proccess playing the dominant role. As required by the Catalogue for Guiding Industrial Restructuring, the chlorohydrination process has been restricted. Thus, in the coming years new capacities will be added to China's PO industry to facilitate the shift towards more environmental-friendly production.

Over the next 5 years, expansion of global polyols capacities will mainly take place in China. Technological barriers to polyether polyols industry are lower than those to the isocyanate and PO sectors. The operating rate of polyether polyols plants has remained low at about 60% for the years. The CAGR of future capacity is estimated to reach 4%. Major manufacturers that will significantly increase their capacities include Wanhua, CNOOC and Shell, Inov, Shandong Bluestar Dongda Chemical and Tianjiao Chemical Material.

According to PUdaily, the problem of excess production capacity in global adipic acid industry was still prominent in 2018. The growth of global AA capacity has slowed markedly over the past three years. In 2018, the average operating rate of global adipic acid facilities was modest, standing at about 54%, according to estimates.

From the many AA facilities under construction, it can be seen that the problem of overcapacity will not be alleviated from 2019 to 2023, and therefore market competition will become increasingly fierce. As a result, new incomers will face tremendous pressure. According to the construction progress of new adipic acid plants in China, it is projected that China's AA capacity may exceed 2.8 million tons/year.

In recent years, the domestic demand for TPU has been growing at a rate of over 10%. Market information shows that by the end of 2018, manufacturers that had announced plans to build new and expansion TPU projects included Shandong Lecron, Huafon, Wanhua, Miracll Chemical and Xuchuan Chemical. By 2021, China’s TPU capacity is expected to exceed 1 million tons.

By the end of 2018, the global BDO capacity had reached 4.475 million tons/year. Of which 3.642 million tons/year were in Asia, accounting for 79.6% of the global total. Asia has grown into one of the world's major regions supplying BDO.

In Asia, BDO capacities are concentrated in Taiwan (China), Chinese mainland, Japan and South Korea, with Chinese mainland experiencing particularly rapid growth in its capacity in recent years. By the end of 2018, Chinese mainland had a total BDO capacity of 2.339 million tons/year, accounting for about 53% of the world's total capacity.