Significant increase in production capacity, intensified structural contradictions in the PC industry

In mid-May, Henan Pingmei Shenma Polycarbonate Materials Co.
, Ltd.
's polycarbonate (PC) products entered the market.
So far, China's PC production capacity has jumped to 2.
8 million tons per year, and the industry has entered an era of total excess
.
Even so, imported PC products are still maintained at more than 100,000 tons per month, and structural contradictions continue to hinder the healthy and orderly development of the PC industry
.

Significant increase in production capacity

According to statistics, in 2015, China's PC production capacity was only 610,000 tons, and only a few enterprises had production capacity
.
After 2018, the industry entered a rapid development track, and the production capacity increased significantly
.
With the commissioning of Henan Pingmei Shenma Company, China's total PC production capacity has reached 2.
83 million tons per year, an increase of more than 360% over 2015
.

Especially in the past six months, the production of new PC devices has been relatively concentrated
.
In addition to the new PC unit of Pingmei Shenma, the 260,000-ton/year PC unit of Hainan Huasheng New Material Technology Co.
, Ltd.
was put into operation in early March, and the 260,000-ton/year PC unit of Zhongsha Petrochemical was successfully commissioned in December 2021.
Production capacity increased by 620,000 tons
.
Judging from the current situation, the PC production capacity is saturated, the industry has entered a surplus stage, and the operating rate is around 55%
.

The substantial increase in production capacity has also changed the circulation pattern of the PC industry
.
Previously, there was a dominant company in East China.
In recent years, as new devices of PC production enterprises in North China, Central China, and Southwest China have been put into operation one after another, the industrial focus of East China has dropped significantly, driving the spread of PC production focus to all regions of the country
.

In the future, there are still many companies in the industry planning new production capacity, such as Guangxi Huayi New Materials Co.
, Ltd.
200,000 tons/year, Jilin Xingyun Chemical Co.
, Ltd.
Phase I 240,000 tons/year, Longjiang Chemical 260,000 tons/year and other devices
.
If these projects can be put into production on schedule, the overcapacity in the PC industry will intensify and the market competition will become more intense
.

Imports remain high

In 2021, China's PC self-sufficiency rate will increase significantly, and PC imports will also decline for the first time
.
Data show that in 2021, China's PC imports will be 1.
5011 million tons, a decrease of 128,700 tons from 2020 and a decrease of 97,900 tons from 2019
.

But China is still the world's largest net importer of PCs
.
In the first quarter of this year, the domestic PC import volume reached 372,300 tons, the highest level in the same period in history.
After excluding the export of 71,100 tons, the net import volume was still as high as 301,200 tons
.
In April, PC imports were also 116,000 tons
.
On the one hand, domestic production capacity is released, and on the other hand, nearly half of it needs to rely on imports.
The fundamental reason is that the structural contradictions of China's PC industry are prominent.
Most of the production capacity is seriously homogenized, and most of them are concentrated in the low-end market.
Therefore, there is a large gap in high-end products.
China needs Import in bulk
.

With the release of China's PC production capacity, the export volume has gradually increased
.
In 2021, the monthly export volume of PC in China will be 25,000-31,000 tons, and the cumulative export volume will be 339,900 tons, an increase of 88,700 tons or 35.
31% compared with 2020, and an increase of 83,300 tons compared with 2019, a year-on-year increase of 32.
46%
.
However, due to the structural contradictions in the industry, it is difficult to quickly open the international market, and it is difficult for the export volume to increase significantly
.

Requirements are out of sync

Asian PC demand has grown strongly in recent years
.
The main consumption areas of PC are concentrated in Northeast Asia, North America and Western Europe.
In 2020, the consumption in the three places will account for 81% of the total global consumption
.
Among them, the consumption in Northeast Asia accounts for half of the world's total consumption
.
As the PC market in developed countries in Europe and the United States is basically saturated and the growth rate of demand has slowed down significantly, the growth of global PC consumption in the future will mainly depend on the Asian market led by China
.

Therefore, China has become a battleground for international PC giants.
Covestro has accelerated the promotion of domestic projects, and domestic enterprises have also joined the PC industry one after another
.
However, the growth rate of domestic downstream industries such as electronics, automobiles, and construction is difficult to catch up with the expansion rate of PC production capacity, resulting in an oversupply of the market
.

Especially affected by factors such as the new crown pneumonia epidemic and the slowdown of macroeconomic growth, the apparent domestic PC consumption in 2021 broke the momentum of growth
.
The data shows that the apparent domestic PC consumption in 2021 will only be 2,218,500 tons, a decrease of 199,500 tons from 2020, a year-on-year decrease of 8.
25%, and a decrease of 112,800 tons from 2019, a year-on-year decrease of 4.
84%
.

In view of the current situation of the PC industry, experts suggest that manufacturers should speed up the pace of technological innovation, focus on high-end products, vigorously implement differentiated development strategies, and at the same time make a fuss about improving product quality and reducing production costs, actively increase product certification to replace import demand, and improve The core competitiveness of enterprises and effectively reduce external dependence
.
In addition, we must vigorously develop the international market, reduce the pressure on production and sales in the domestic market, and promote the healthy and orderly development of the industry
.