Chemical industry to see full revaluation under dual carbon strategy

The "double carbon" strategy will become the underlying logic of China's economic development, energy transformation and resource protection for a considerable period of time, and the path to carbon neutrality is multi-faceted.

On the supply side, the chemical industry, as one of the typical high-energy-consuming industries, will certainly be deeply involved in it, and the chemical industry has ushered in a new round of total control version of supply-side reform. On the demand side and the energy side, the chemical industry, which is in the middle and upper reaches, provides the necessary resources and raw materials for the development of the new energy industry, which are often strategic resources or products of the "double high".

The "new world" and the "old world" are not distinctly cut off, but develop in tandem. Under the guidance of the national "double carbon" strategy, the supply of some chemical materials will be constrained due to the requirements of resource protection and energy consumption control, while the rapid development of the new energy industry will significantly boost its demand, ushering in a historic golden development period for the relevant chemical industry. In addition, the leading white horse in the chemical industry, which is very strong in traditional fields, will rely on its capital and resource advantages to enter the new energy track, which is large enough and has good enough prospects. Under the "carbon neutral" strategy and new energy support, the chemical industry will usher in a comprehensive revaluation. The future of the chemical industry will closely revolve around the three key words "carbon neutral", "new energy" and "revaluation".

Upstream chemical raw materials such as soda ash, fluorine, phosphorus and silicon will continue to benefit from "carbon neutral + new energy"

Upstream chemical raw materials such as soda ash, fluorine, phosphorus and silicon, which are restricted by "carbon neutrality" and resource security issues, but also benefit significantly from new energy demand, will usher in a historic change.

Soda ash

Photovoltaic glass is gradually put into production, and soda ash is transformed into "photovoltaic alkali". In the soda ash industry supply is contracting trend, but photovoltaic glass demand will continue to grow with high certainty, which will also make the soda ash industry in 2022 or there is a certain supply gap.

Fluorine

Emerging industries to create new demand growth poles, fluorspar supply will now be a gap. Fluorspar as a scarce strategic mineral resources are being gradually increased protection, while with the rapid development of new energy, will change the fluorspar industry in the past consistent development logic, new energy, new materials will replace refrigerants in the future to become the most important downstream applications of fluorspar. Phosphorus

The rapid development of new energy will reshape the industry's development logic. Phosphate rock as a national strategic resources and downstream "double high" characteristics, the expansion of production is severely limited. Lithium iron phosphate is currently the most mainstream lithium cathode product with rising demand for phosphorus resources, and the industry is expected to continue its high boom.

Silicon

Industrial silicon industry concentration is expected to increase in the context of the double carbon, photovoltaic boom is expected to drive industrial silicon rigid demand growth. Demand for industrial silicon will grow rapidly with the booming photovoltaic industry and the increased penetration of silicones. With considerable incremental demand, the industrial silicon industry is expected to increase its start-up rate in the future, and the tight supply situation is expected to improve marginally.

New energy changes bring big opportunities for the chemical materials industry

Under the background of carbon neutral, new energy market demand is expected to achieve rapid growth, leading to a simultaneous increase in demand for upstream materials. Since this year, the leading chemical company has accelerated the layout of new energy materials, which is expected to obtain a high competitive advantage by virtue of resources, scale effect and industry chain integration capability.

Lithium iron phosphate

Lithium iron phosphate demand explosion is an important opportunity for the transformation and upgrading of traditional phosphorus chemical enterprises. Since this year, as new energy vehicles and energy storage market demand explosion, lithium iron phosphate demand rapid growth, the next 5 to 10 years may show 10 to 20 times the growth, thus driving lithium iron phosphate upstream iron phosphate and purified phosphoric acid demand growth. At present, the leading lithium iron phosphate companies in the next few years are planning a large expansion plan, but in terms of raw materials are dependent on external procurement, so there is an urgent search for upstream phosphorus resources supporting the demand.

Lithium battery electrolyte solvent

Electrolyte is the "blood" of lithium batteries. The role of electrolyte is to transport and conduct lithium ions between the positive and negative electrodes, known as the "blood" of lithium batteries. The electrolyte is made up of three components: solvent, solute (lithium salt) and additives, with additions of 80%, 12% and 5% respectively. The solvent used for the electrolyte is mainly carbonate organic solvent, including dimethyl carbonate (DMC), diethyl carbonate (DEC), propylene carbonate (PC), ethylene carbonate (EC), methyl ethyl carbonate (EMC) and so on.

Electrolyte additives VC, FEC

VC and FEC are currently the most used electrolyte additives. Electrolyte additives are an important raw material indispensable for the production of lithium batteries, accounting for about 5% of the mass fraction in lithium batteries. Among them, vinylidene carbonate and fluorinated vinyl carbonate are still the most common additives used in electrolytes due to their ability to optimise the film formation of SEI films, reduce low temperature internal resistance and improve the low temperature performance of batteries. In addition to these, commonly used electrolyte additives include propane sulfonate lactone, vinyl sulfate, lithium difluorophosphate, etc. According to BCF data, the total demand for electrolytes in China in 2020 is about 279,000 tons, including 164,700 tons of power electrolytes, 94,900 tons of digital electrolytes and 19,400 tons of energy storage electrolytes. In the future, under the pull of new energy vehicles and energy storage, the demand for VC and FEC will grow at a high speed.

PVDF

Polyvinylidene fluoride (PVDF) has excellent performance and is mainly used in high value-added fields. PVDF's traditional downstream is coatings, mainly heavy-duty anti-corrosion industrial coatings (chemical, marine, offshore), high-end architectural coatings (landmark buildings, airports). According to BCF data, in 2020 China's PVDF demand for 70,000 tons, of which 13,900 tons for lithium batteries, 0.57 million tons for photovoltaic, downstream demand by the rise of new energy to pull high growth. In recent years, PVDF downstream demand structure by the traditional anti-corrosion coatings to the new energy industry transformation. 2020 new energy demand accounted for about 28% of the total demand for PVDF, it is expected that in 2025 the demand ratio will increase to 63%.

EVA

In recent years, due to the application of photovoltaic film, foam, cable material EVA resin demand continued to improve, China's EVA resin apparent consumption continued to grow, to 2020 China's EVA resin consumption rose to 1.864 million tons, an increase of 5.25%. Photovoltaic film is the largest downstream application of EVA, demand accounted for about 35% of the domestic demand for EVA photovoltaic material in 2020 about 600,000-70 million tons, but not many domestic manufacturers, import dependence is still more than 70%, the tight supply and demand balance of EVA prices have risen sharply since the second half of last year. As the EVA industry expansion cycle is long, especially to do with photovoltaic material requires a long climbing period, the next 2 years is expected to supply and demand tensions under the EVA will remain high boom. Chemical leading white horse rely on capital, cost, resources advantage into the field of new energy materials new energy industry broad market space for the strength of the chemical leading with natural attraction, chemical leading white horse into the field of new energy materials is not the future when, but now in progress. Chemical leader with its own raw material advantage, cost advantage, capital advantage, will continue to expand downstream, and actively layout new energy materials business, and national policy support will also greatly enhance the confidence of enterprises and social capital to continue to invest in new energy industry, boosting the rapid development of China's new energy industry, favorable chemical leader ushered in a comprehensive revaluation of value.

Wanhua Chemical

Wanhua Chemical takes MDI and TDI as its core, and focuses on enhancing the capacity of two supporting platforms, namely polyether and modified MDI. As a global leader in polyurethane, Wanhua's MDI business accounts for 50-60% of the market share in China and over 25% globally. Relying on the integrated platform of petrochemicals and industrial chain, the company continues to expand its fine chemicals and new materials business. In the future, projects such as the integration of citral and derivatives, synthetic fragrances, water-based coatings, ADI, nylon 12, lithium ternary materials, iron phosphate and lithium iron phosphate, biodegradable polyester projects, key materials for large-scale integrated circuit flattening, and POE high-end polyolefin will continue to provide a guarantee for its growth.

Hubei Yihua

On October 12, Hubei Yihua Group signed a cooperation agreement with Ningde Times' holding subsidiary Guangdong Bumpu Cycle Technology Co. According to the agreement, the Bumpu Integrated Battery Materials Industrial Park project, with a total investment of about RMB 32 billion, will be located in Yichang, with the core of cathode materials for new energy vehicle power batteries, covering the whole life cycle of batteries, integrating "phosphate ore - raw materials - precursors - cathode materials -Battery recycling". According to Hubei Yihua's announcement, the lithium iron phosphate industry is expected to continue to enjoy a high boom in the coming years driven by downstream demand for new energy vehicles and other products. Refined phosphoric acid and iron phosphate, as raw materials for lithium iron phosphate, are expected to have broad market prospects in the future. The Company's cooperation with Ningbo Bumpu to build an integrated battery material project is conducive to the Company's ability to seize the opportunity of new energy market development, optimize and upgrade the layout of the phosphorus chemical industry chain, bring into play the synergistic effect of coal chemical, phosphorus chemical and chlor-alkali chemical, and improve the Company's market competitiveness and sustainable profitability.

Satellite Chemicals

Satellite Chemical's ethane cracking to ethylene project has significant advantages in terms of cost, environmental protection and energy consumption, while the by-product hydrogen can also be used for hydrogen energy projects in the future, which is in line with the hydrogen energy strategy and has great potential for development in the context of carbon neutrality. In addition, the company accelerates the construction of downstream polyether macromonomer, ethanolamine, ethylene amine and EAA new materials projects at the Lianyungang base, and plans to complete 150,000 tonnes of lithium electrolyte solvents and additives projects (including five solvents DMC, EC, DEC, EMC and PC and two additives FEC and VC) from the end of 2022 to 23 years around the rapidly developing downstream industries such as new energy batteries and photovoltaics, VC), while using by-product hydrogen to promote the hydrogen energy business, further expanding the influence of hydrogen peroxide in the semiconductor and photovoltaic industries, and accelerating the pilot testing of the technology development project for the synthesis of long-chain alpha olefins and POE by ethylene flocculation.

Rongsheng Petrochemical

Rongsheng Petrochemical relies on its refining and chemical platform to continuously extend its industrial chain and actively lay out new downstream materials. Its holding subsidiary, ZPMC, put into operation last year the first phase of 200,000 tonnes/year of industrial grade DMC, and the second phase of ZPMC's planned 300,000 tonnes EVA plant is expected to be put into operation within this year, which will further enhance the company's profitability by releasing the capacity of high value-added new material products.

Hualu Hengsheng

At present, Hualu Hengsheng has 50,000 tons/year DMC production capacity, and the 300,000 tons/year DMC production plant built on the basis of ethylene glycol plant has been successfully started on October 3 at one time, and the quality directly reached the standard of superior products. The high-end solvent project planned by the company will not only further expand the DMC production capacity, but also expand the solvent varieties to methyl ethyl carbonate and diethyl carbonate, forming a more complete solvent product matrix. With the rapid increase in the consumption of lithium batteries, the demand for solvents such as dimethyl carbonate and ethyl carbonate as solvents for lithium battery electrolytes has increased greatly. It is believed that with the production of high-end solvent projects and further development of battery-grade solvent products, Hualu Hensheng will be able to fully enjoy the dividends brought by the rapid development of the new energy industry.

Aoke

Oak is a leading enterprise of ethylene oxide derivatives (EOD) in China, with significant upstream integration advantages, and is now extending from traditional building materials to high value-added electrolyte materials. The company has 20,000 tons of electrolyte solvent EC/DMC production capacity, while further laying out high-barrier, high value-added VC and FEC materials through its equity participation in Suzhou Huayi, a leading electrolyte additive. In May 2021, Suzhou Huayi plans to invest 1 billion yuan to build 116,500 tons of new energy lithium battery electrolyte and additives project, the project plans to land a variety of high-barrier additive categories, product layout in the forefront of the industry.

Lianchuang

Lianchuang's traditional business is Internet digital products, this section of the business was divested in 2020, the company is now mainly engaged in fluorine-containing refrigerants, polyurethane new materials business. The company has passed the scientific and technological achievement appraisal organized by the China Petroleum and Chemical Industry Federation and has independent intellectual property rights. It adopts the complete set of process technology developed for the new environmentally friendly refrigerant tetrafluoropropene. The company has a production capacity of 20,000 tonnes/year of R142b and has the largest export quota of 12,650 tonnes of R142b among domestic listed companies. The company has put into production PVDF capacity of 3,000 tons/year in August, and the projects to be put into production in 2022 include: 5,000 tons/year PVDF project; 6,000 tons/year technical reform PVDF project.

Dongyue Group

As the largest supplier of R142b and lithium-grade PVDF in China, Dongyue Group is mainly engaged in the research, development and production of new environmentally friendly refrigerants, fluorine-containing polymer materials, organosilicon materials, chlor-alkali ionic membranes and hydrogen fuel proton exchange membranes. The Company has a vertically integrated industrial chain layout and its business covers four industries, namely fluorine, silicon, membrane and hydrogen. It produces hydrofluoric acid by outsourcing fluorspar and extends downstream to fluorine-containing polymer materials. As of 2021 interim report, the company has PVDF production capacity of 10,000 tons and R142b production capacity of 33,000 tons. Meanwhile, the company has lithium-grade PVDF production capacity, the company's PVDF new production capacity of 10,000 tons is expected to start construction in the second half of this year. (Content republished/sourced from: China Plastics Online/Olefins and high-end downstream)

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