In 2022, China’s ethylene production capacity reached 49.33 million tons, has surpassed the United States, becoming the world’s largest ethylene producer, ethylene has been regarded as a key indicator to determine the production level of the chemical industry. It is expected that by 2025, China’s ethylene production capacity will exceed 70 million tons, which will basically meet domestic demand, or even a surplus.

The ethylene industry is the core of the petrochemical industry, and its products account for more than 75% of petrochemical products and occupy an important position in the national economy.

Ethylene, propylene, butadiene, acetylene, benzene, toluene, xylene, ethylene oxide, ethylene glycol, etc. Produced by ethylene plants, they are the basic raw materials for new energy and new material fields. In addition, the production cost of ethylene produced by large integrated refining and chemical enterprises is relatively low. Compared with refining enterprises of the same scale, the added value of products of integrated refining and chemical enterprises can be increased by 25% and energy consumption can be reduced by about 15%.

Polycarbonate, lithium battery separator, photovoltaic EVA (ethylene – vinyl acetate copolymer) can be made from ethylene, alpha olefin, POE (polyolefin elastomer), carbonate, DMC (dimethyl carbonate), ultra-high molecular weight of polyethylene (UHMWPE) and other new material products. According to statistics, there are 18 kinds of ethylene downstream products related to new energy, new materials and other windy industries. Due to the rapid development of new energy and new industries such as new energy vehicles, photovoltaic and semiconductors, the demand for new material products is increasing.

Ethylene, as the core of the petrochemical industry, may be in surplus, marking the petrochemical industry facing reshuffling and differentiation. Not only the competitive enterprises eliminate the backward enterprises, the advanced capacity eliminates the backward capacity, but also the demise and rebirth of the leading enterprises of ethylene downstream industry chain segment.

Head companies may reshuffle

Ethylene may be in surplus, forcing integrated refining and chemical units to continuously supplement the chain, extend the chain and strengthen the chain to improve the competitiveness of the unit. Starting from crude oil, it is necessary to build the raw material advantage of integration. As long as there are market prospects or products with certain market capacity, a line will be drawn, which also accelerates the elimination of winners and losers in the whole chemical industry. The production and pattern of bulk chemical products and fine chemical products will usher in changes. Production varieties and scale will become more and more concentrated, and the number of enterprises will gradually decrease.

Communication equipment, cell phones, wearable devices and other consumer electronics, automotive intelligence, home appliance intelligence fields are developing rapidly, driving the rapid growth in demand for new chemical materials. These new chemical materials and monomer leading enterprises with growth trend will evolve faster, such as 18 new energy and new material products downstream of ethylene.

Fan Hongwei, chairman of Hengli Petrochemicals, said that how to maintain strong competitive advantages and tap more new profit points in the framework of the whole industrial chain operation is a problem that needs to be focused on. We should give full play to the advantages of the upstream industry chain, broaden and deepen the industry chain around the downstream products to create new competitive advantages, and strive to promote the steady expansion of downstream products to build a fine chemical industry chain.

Kang Hui New Material, a subsidiary of Hengli Petrochemical, can produce 12 micron silicon release laminated lithium battery protection film online, Hengli Petrochemical can mass produce specification 5DFDY products, and its MLCC release base film accounts for more than 65% of domestic production.

Taking refining and chemical integration as a platform to extend horizontally and vertically, we expand and strengthen the niche areas and form integrated development of the niche areas. Once a company enters the market, it may enter the leading enterprises. The 18 leading enterprises of new energy and new material products downstream of ethylene may face change of ownership and leave the market.

In fact, as early as 2017, Shenghong Petrochemicals launched 300,000 tons / year EVA using the advantages of the whole industry chain, the end of 2024 will gradually put into production an additional 750,000 tons of EVA, to be put into production in 2025, by then, Shenghong Petrochemicals will become the world’s largest high-end EVA supply base.

China’s existing chemical concentration, the number of parks and enterprises in major chemical provinces will again gradually reduce, Shandong more than 80 chemical parks will even gradually reduce to half, Zibo, Dongying and other areas of concentrated chemical enterprises will be phased out half. For a company, not you are not good, but your competitors are too strong.

“It is increasingly difficult to “reduce oil and increase chemistry

“Oil reduction and chemical increase” has become the transformation direction of the domestic oil refining and chemical industry. The current transformation plan of refineries mainly produces basic organic chemical raw materials such as ethylene, propylene, butadiene, benzene, toluene and xylene. From the current development trend, ethylene and propylene still have some room for development, while ethylene may be in surplus, and it will be more and more difficult to “reduce oil and increase chemical”.

First of all, it is difficult to choose projects and products. First, market demand and market capacity are increasingly difficult to choose products with mature technology. Second, there are market demand and market capacity, some products are completely dependent on imported products, do not master the production technology, such as high-end synthetic resin materials, high-end synthetic rubber, high-end synthetic fibers and monomers, high-end carbon fiber, engineering plastics, high-purity electronic chemicals, etc.. All of these products are facing the problem of “neck”, and these products are unlikely to introduce complete sets of technology, and can only increase investment in research and development.

The entire industry to reduce oil and increase chemical, and ultimately lead to excess capacity of chemical products. In recent years, the refining and chemical refining integration project basically aims to “reduce oil and increase chemistry”, and the existing refining and chemical enterprises also take “reduce oil and increase chemistry” as the direction of transformation and upgrading. In the past two to three years, China’s new chemical capacity has almost exceeded the sum of the previous decade. The entire refining industry is “reducing oil and increasing chemistry. After the peak of chemical capacity construction, the whole industry may have a phased surplus or oversupply. Many new chemical materials and fine chemical products have small markets, and as long as there is a breakthrough in technology, there will be a rush, leading to overcapacity and profit loss, and even into a thin price war.