Proportion of Ethylene-Based PVC Paste Increased
Preface: According to the different feedstock, PVC paste is mainly divided into calcium carbide-based PVC paste and ethylene-based PVC paste. In recent years, the proportion of ethylene-based PVC paste has increased year by year. In the future, ethylene-based PVC paste will possibly still occupy a certain advantage in the value chain competition.
The direct upstream feedstock of PVC paste is VCM. There are two main ways to obtain VCM, one is the calcium carbide process, and the other is the ethylene process. Most of China’s PVC powder producers adopt the calcium carbide method influenced by the rich coal resources in China, while some adopt the ethylene method. However, the proportion of the calcium carbide method gradually declined, while that of the ethylene method improved.
The PVC paste industry is obviously in a mature period. Ethylene-based PVC paste has some advantages in policy, cost, export and quality. From 2015, the proportion of ethylene-based PVC powder capacity climbed constantly. As of 2023, it’s estimated that the proportion of ethylene-based PVC powder capacity will be 25.71%, up 5.26 percentage points from 2015.
The capacity expansion of calcium carbide-based PVC paste is blocked affected by related policies.
The Minamata Convention on Mercury entered into force on August 16, 2017, in China. As a signatory, China promised to reduce domestic mercury use as much as possible. The largest amount of mercury in China is the mercury catalyst used in the production process of calcium carbide-based PVC. Therefore, after the Minamata Convention came into effect, it becomes more difficult to pass the EIA of calcium carbide-based PVC project.
China has put forward a target of “Dual Carbon”, that is, striving to reach a carbon emission peak by 2030 and realize carbon neutrality by 2060. Under such a background, Inner Mongolia, the major PVC-producing region in China, stipulated in Guarantee Measures for Ensuring the Completion of Dual Control Targets and Tasks for Energy Consumption during the 14th Five-Year Plan in 2021 that from 2021 onwards, projects producing coke (semi-coke), calcium carbide, PVC, etc. will no longer be approved.
The calcium carbide process is restricted by these policies, while the ethylene process is not limited to policies.
Ethylene-based PVC paste enjoys more advantages in export.
In recent years, the oversupply of China’s PVC paste strengthened gradually, so the export dependence degree climbed. From 2018 to 2022, China’s PVC paste export volume saw a significant increment, with an average growth rate of 85.39%. In 2019, the unit shutdown at LG Chem in the Republic of Korea benefiting China’s PVC paste export. The export volume in 2021-2022 moved up significantly, mainly because PVC paste enterprises actively sought export opportunities amid intensified supply pressure. The diversification of export trading partners propped up the export volume in 2022. In 2022, the export volume was 106kt, and the export dependence degree was higher than 10%, hitting a historical high.
All foreign countries produce ethylene-based PVC except China. From the comparison of the quality, ethylene-based PVC has more advantages in the water content and molecular weight of vinyl chloride, which can improve thermal stability, whiteness, aging resistance, mechanical strength, etc. In addition, the production process of ethylene-based PVC eliminates the problem of mercury pollution, so it is more environmentally friendly than the calcium carbide process. In 2022, the supply of goods exported to Europe increased significantly. Anhui Tianchen Chemical is the major PVC producer in China. At present, Anhui Tianchen Chemical purchases ethylene-based VCM as the feedstock to produce PVC paste for export. In the future, China’s PVC paste export demand may increase further, and China’s PVC paste resources will be mainly sold to Europe.
Looking to the future, ethylene-based PVC paste will still enjoy advantages. On the one hand, newly added ethylene capacity may come on stream intensively in the future, so the cost advantages of ethylene-based PVC will continue. On the other hand, related policies will possibly benefit the ethylene-based PVC market. The calcium carbide-based PVC market still faces the challenge of mercury pollution. Moreover, future export opportunities are more conducive to the development of ethylene-based PVC. The ethylene-based PVC industry still has certain advantages in terms of policy, cost, export and downstream applications in the future, and the proportion of ethylene-based PVC is expected to be further improved.
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