In 2022, a series of events including the COVID-19 pandemic, the war in Ukraine and resulting food and energy crises, as well as soaring inflation, tightening debt, and urgent climate conditions, have severely impacted the global economy. The global growth continued its slowdown in 2023 and was generally in a period of post-pandemic recovery but with a slow resurgence. Low demand in downstream industries of polyether polyol, intensified industry competition, overcapacity, and low profit margins led to multiple suppliers accelerating the transformation from polyether polyol monomers to material system businesses. Today, we will review the business dynamics of relevant suppliers during the 2022-2023 period.

Covestro

Covestro decided to exit formulated polyether polyols business for the appliance industry in Asia Pacific (except Japan) by the end of 2022, and continued to focus on customer needs in the polyurethane system applications in automobiles, wind blades, pultrusion and reefer containers where tailored solutions and system supply are still valued by customers. It also closed its polyether polyol plant in Kaohsiung, Taiwan in the same year. Covestro, Huntsman, and BASF have gradually shifted the focus from the rigid blended polyols sector towards the research and development of specialty chemicals. Currently, the most prominent competitive advantages in the polyurethane sector lie in cost control capabilities and the comprehensive solution-providing ability in collaboration with complete machine manufacturers. The market share of rigid polyols for the home appliance industry has gradually concentrated into the hands of major players such as Wanhua Chemical and Hongbaoli Group.

Lecron Group

In 2022, Lecron Group terminated the investment and construction of a 45 ktpa polyether polyol expansion and 20 ktpa cyclopentane-based composite polyether integration project. It planned to revamp the production towards an upgraded alternative product, a polyether polyol-based amine-terminated polyether, which offers a larger profit margin and is in higher demand. Polyether amine possesses excellent properties such as low viscosity, long shelf life, high toughness, and aging resistance and can effectively replace polyether in some materials while enhancing the performance of new materials. Currently, the application of polyether amine in China’s wind power industry has surpassed 60%. Aiming to achieve the goal of non-fossil energy accounting for 15% and 20% of primary energy consumption by 2020 and 2030 respectively, China is promoting energy transition and advancing the development of renewable energy industries such as wind power. The proposal of the “peak carbon dioxide emissions” and “carbon neutrality” goals has once again injected momentum into China’s wind power industry, continually boosting demand for polyether amine. Apart from Lecron Group, Shandong Shangzheng New Material, Longhua New Material, Changde New Material and Yangzhou Chenhua are also actively focusing on the polyether amine sector.

Dow Chemical

In 2023, Dow Chemical announced that it would conduct technical upgrades for its 120 ktpa formulated polyether polyol (appliance) project in Zhangjiagang for the production of waterborne polyurethane dispersions (PUDs). Waterborne polyurethane, as a new Eco-friendly polyurethane material that uses water as a solvent, has advantages over traditional polyurethanes including non-pollution, safety, excellent mechanical properties, good compatibility, and ease of modification. In mid-2023, Covestro announced the completion of its new Shanghai PUD plant, and will begin supplying low-carbon footprint PUDs to the Asia-Pacific market in the first quarter of 2024.

SKC

SKC has accelerated the adjustment of its product structure and business model in recent years. In October 2023, SKC decided to sell 100 percent shares of SK pucore, a polyurethane manufacturer, to Glenwood Private Equity, a Seoul-based private equity firm. SK Pucore has over 30 years of experience in the production of polyether polyols since 1991. The aim of this sale is to accelerate the company’s businesses focused on secondary batteries, semiconductors, and eco-friendly materials.

Shell Singapore

By the end of 2023, market reports indicated that Chinese companies such as CNOOC, Eversun Holdings, and Wanhua Chemical were looking to place non-binding bids for Shell’s assets in Singapore. They have already commenced early evaluation of Shell’s assets, which specifically include a 237,000 bpd refinery and a one MMty ethylene cracker. Over the past two years, Shell has also revealed plans to halve its crude processing capacity at its Pulau Bukom oil refinery in Singapore, while simultaneously increasing investments in the solar power sector. With the goal of becoming a net-zero emissions business by 2050, Shell is considering cutting investments in the petroleum sector due to aging equipment.