Synthetic Rubber Listing Special: Synthetic Rubber Industry Landscape Analysis

01

Overview of the Synthetic Rubber Industry Chain

Synthetic rubber is an artificially synthesized highly elastic polymer, also known as synthetic elastomer. Broadly speaking, it refers to rubber manufactured by chemical synthesis to distinguish it from natural rubber produced from rubber trees. Synthetic rubber properties vary depending on the monomer, different monomers in the role of the initiator, by polymerization to form a variety of polymer compounds. The monomers are butadiene, styrene, acrylonitrile, isobutylene, chloroprene, etc. The polymerization process has four types of emulsion polymerization, solution polymerization, suspension polymerization, and propriety polymerization.

There are more ways to classify synthetic rubber, according to the performance and use can be divided into two categories of general-purpose rubber and special rubber. General-purpose rubber refers to the use of natural rubber can be partially or completely replaced by the type of rubber, generally refers to polymers consisting of hydrocarbons only, including styrene butadiene rubber, butadiene rubber, isoprene rubber, ethylene propylene rubber, chloroprene rubber, SBC rubber and so on.

General rubber is the main varieties of synthetic rubber, the market demand is large, mainly used in tires and industrial rubber products; special rubber refers to special properties and special purposes and can adapt to the use of synthetic rubber under harsh conditions, mainly including silicone rubber, a variety of fluoroelastomers, polysulfide rubber, chlorohydric rubbers, nitrile rubbers, polyacrylate rubbers, urethane rubbers and butyl rubbers, etc.. Special rubber usually have high temperature resistance, oil resistance, ozone resistance, aging resistance and high air tightness and other characteristics, mainly used in special occasions requiring certain characteristics, such as the petrochemical industry, etc. In 2021, China's synthetic rubber production capacity structure, more than 80% of the general-purpose rubber.

The synthetic rubber industry chain can be divided into upstream chemical raw material suppliers and monomer intermediate suppliers, midstream synthetic rubber producers and downstream application end users.

1.1, the upstream link of the industry chain?

China's synthetic rubber industry chain upstream for the chemical raw materials and monomer intermediates suppliers, mainly including petroleum, natural gas and other chemical raw materials and butadiene, ethylene and other olefin monomer intermediates. Butadiene is the main raw material for the production of synthetic rubber, synthetic rubber of the two mainstream rubber, butadiene and styrene-butadiene rubber are made of butadiene or butadiene and other substances polymerization. Butadiene and synthetic rubber price correlation is high, in the case of butadiene rubber, for example, from the historical data, most of the time the two spread maintained at 3000-5000 yuan / ton.

Currently there are two main sources of global butadiene, one is the extraction distillation method, that is, from the ethylene cracking unit by-production of mixed carbon four fractions extracted from this method is inexpensive, economically advantageous, is the main source of butadiene, the production capacity of the proportion of more than 95%; the other is from the refinery carbon four fractions dehydrogenation to get, but the oxidative dehydrogenation process of the operating costs of the process is relatively high, the economy of the The other is obtained from the dehydrogenation of carbon tetrachloride fraction in oil refineries, but the oxidative dehydrogenation process has higher operation cost and poorer economy, so the global capacity of this production process is always small.

Compared with synthetic rubber, the price of raw material butadiene is more volatile, on the one hand, because of its storage and transportation characteristics, on the other hand, because butadiene is mainly extracted from the by-product of cracking ethylene mixed carbon tetrofraction, so butadiene production capacity and output is largely subject to the capacity of the cracking unit of the ethylene, start-up situation and production process, etc.. The resulting problem is that if the market for ethylene, propylene and other products is not good, the overall efficiency of the petrochemical plant is poor, even if the market demand for butadiene at this time is good, the enterprise may still reduce the load of the plant, thus exacerbating the pattern of butadiene supply and demand tightness; and vice versa.

Since 2014, the global butadiene production capacity has not changed much. In terms of regional distribution, global butadiene production capacity is mainly distributed in China, the EU, the United States, Japan and South Korea, which is highly overlapped with the regional distribution of global synthetic rubber production capacity.

1.2, the midstream link of the industrial chain

China's synthetic rubber in the middle of the synthetic rubber producers, with high technical barriers. Midstream manufacturers use different monomers in the initiator and catalyst under the action of polymerization reaction to generate polymers, polymerization reaction of the material, by removing unreacted monomers, coagulation, dehydration, drying and other steps before the finished synthetic rubber can be made. In the long run, in the context of tightening environmental regulations, downstream applications end customers tend to choose to meet the special purpose or meet the specific quality and environmental requirements of synthetic rubber products, higher value-added synthetic rubber products manufacturers will have a higher level of profits and stronger bargaining power.

The global synthetic rubber industry is highly concentrated due to the high technical barriers in the industry. Take the two mainstream rubber types of cis and styrene butadiene rubber as an example, in 2020 the global cis rubber production capacity of 5.437 million tons, of which the combined capacity of the world's top ten cis rubber producers accounted for about 57%. For SBR, the global capacity of the world's top ten emulsion polymerized styrene butadiene rubber producers accounted for about 65% of the global capacity.

1.3, the industry chain downstream link

Synthetic rubber because of its variety, so the downstream application is extremely wide, can be roughly divided into civil field and industrial field two parts. Civilian field includes daily necessities, building decoration adhesive, footwear and other industries, industrial field includes automotive, aerospace, agriculture and other industries.

02

Supply: structural surplus is still a serious problem

Since 2000, the global production of synthetic rubber only from 11 million tons or so to more than 14 million tons, while during the same period of China's production of synthetic rubber has experienced a significant jump. In 2000, China's annual output of synthetic rubber less than 1 million tons, in 2004, China's synthetic rubber industry has entered a period of rapid development, 2021 China's synthetic rubber production has exceeded 8 million tons. At present, China is the world's largest producer of synthetic rubber, production accounted for more than 20%.

Currently the world's major producing areas of synthetic rubber, the Asia-Pacific region accounted for the largest proportion, more than 50%. The main reason for this distribution pattern is the past of the Asia-Pacific region's rapid economic development, promoting the growth of synthetic rubber consumption, driven by the synthetic rubber market supply and demand for the continuous expansion of the synthetic rubber industry, thereby increasing the production scale of the synthetic rubber industry. And Europe, the Middle East and the Americas have a relatively large and perfect petroleum, chemical industry, its synthetic rubber production value is more stable.

Currently, China's synthetic rubber industry production capacity is mainly concentrated in Jiangsu, Zhejiang, Shandong and other eastern provinces, in addition to Yunnan, Guangdong and other places also have more capacity distribution. In addition to the steady growth of production capacity, driven by both technological progress and market demand, the capacity structure of China's synthetic rubber is also being continuously optimized. As the two main types of synthetic rubber, styrene-butadiene rubber and butadiene rubber, the combined capacity of the two accounted for more than 50%. In recent years, the proportion has been on a downward trend. 2011, the combined capacity of styrene butadiene and butyl rubber accounted for about 66%, and the proportion fell to 58% in 2016, and will further drop to 52% in 2021. butyl rubber and ethylene propylene rubber's capacity grew rapidly during 2011-2016, and the capacity proportion increased by 3.5 and 5 percentage points respectively.

In addition, since isoprene rubber was first localized in 2011, it has experienced two peaks of rapid capacity growth and shutdown and transformation during the decade, and its share in the capacity structure increased from 1.3% to 4.9% and then dropped to 3%. It is worth noting that the construction of SBC rubber during 2016-2021 is more concentrated, and its share in the total production capacity reached about 27% in 2021, surpassing that of SBR and becoming the second largest variety. As synthetic rubber in the production process will produce a large number of volatile organic compounds, greater environmental pollution, in the context of increasingly stringent environmental regulation, in recent years, China's mainstream synthetic rubber products are also in the development of environmentally friendly varieties, the future of environmentally friendly synthetic rubber varieties will be the inevitable trend of the development of the synthetic rubber industry.

Despite the continuous optimization of China's synthetic rubber production capacity structure, but the problem of structural overcapacity is still serious. According to the statistics of China Synthetic Rubber Industry Association, in 2021, China's total production capacity of synthetic rubber is 1.15 times the apparent consumption, while some types of rubber such as ethylene propylene rubber, nitrile rubber production capacity is lower than the apparent consumption. The total capacity utilization rate of synthetic rubber is 73.6%, and the capacity utilization rate of some rubber species is even less than 30%. In addition, imports of synthetic rubber accounted for about 20% of the total domestic consumption, of which the proportion of imports of some rubber species more than 40%, a high degree of dependence on imports.

From the competitive landscape of China's synthetic rubber industry, China's synthetic rubber market is composed of Sinopec, PetroChina, some private enterprises and a small number of foreign enterprises. Synthetic rubber is a downstream product of the petroleum industry chain, and domestic oil products are mainly priced uniformly by Sinopec and PetroChina, and the pricing power of domestic private oil manufacturers is relatively weak. In addition, Sinopec and PetroChina have set up a number of subsidiaries in various regions, such as Qilu Petrochemical, Baling Petrochemical, Yanshan Petrochemical, Lanzhou Petrochemical, Jilin Petrochemical and so on under Sinopec Group; Daqing Petrochemical, Dushanzi Petrochemical, Jilin Petrochemical, Jinzhou Petrochemical and so on are all under PetroChina Group, and SINOPEC and PetroChina dominate in the domestic production capacity of synthetic rubber with a ratio of more than 50% of the capacity and production.

Because the synthetic rubber industry is a capital- and technology-intensive industry, in the context of the industry's de-capacitation and optimization of industrial structure, the industry has formed a certain capital and technical barriers, resulting in private enterprises in the industrial transformation period is difficult to compete with Sinopec and PetroChina, the two major groups. Overall, private enterprises only provide services for small and medium-sized enterprises in some areas, medium and large enterprises and military enterprises are occupied by the two enterprises of Sinopec and PetroChina, and the market share of private enterprises in the domestic synthetic rubber industry is low. In addition, in recent years, some foreign chemical enterprises have entered the Chinese market through corporate mergers or investment, gradually expanding their chemical business in China, and establishing plants in some areas to produce and manufacture synthetic rubber. But compared to the synthetic rubber state-owned enterprises, foreign chemical companies in the country does not have a strong competitive advantage for the time being.

03

Demand: the main downstream applications for tire production

The downstream applications of synthetic rubber is extremely wide, the overall downstream demand is affected by the macro-economic impact. since 2009, the global consumption of synthetic rubber continues to maintain positive growth. After 2019 with the global economic growth rate decline, synthetic rubber consumption also began to show negative growth.

There are differences in the downstream demand for different rubber types of synthetic rubber, and the main application areas of the two mainstream rubber types, styrene butadiene and butyl rubber, are tire production. In the case of male rubber, for example, the global male rubber is mainly used in the production of tires, high impact polystyrene and ABS resin, etc., 2020 for the production of tires in the consumption of total consumption accounted for as high as 78.1%. China's main use of cis-butadiene rubber tires, shoes, high impact polystyrene and ABS resin modification, etc., of which the demand for tire manufacturing industry accounted for about 70% of the total demand, is the largest domestic consumption of cis-butadiene rubber; followed by the shoe industry, the demand accounted for about 10%.

Currently China is the world's largest consumer of synthetic rubber, consumption accounted for more than 30%. In addition, the European Union, the United States, Japan and India are also major consumers of synthetic rubber countries and regions. Domestic synthetic rubber consumption structure, the current SBC rubber is the largest apparent consumption of varieties, accounting for about 26% of the total apparent consumption of domestic synthetic rubber in 2021.SBC belongs to the elastomer material between rubber and plastic, because of the processing characteristics of plastics and rubber physical and mechanical properties, has become a typical rubber and plastic substances; consumption accounted for the second largest proportion of Styrene-Butadiene Rubber, accounting for about 25%; Consumption accounted for the third largest is the male rubber, accounting for about 21%.

With the study of natural rubber demand side focus on the all-steel tire market is different, the study of synthetic rubber demand side need to focus on the semi-steel tire market. At present, the rate of radialization of tires has been increased to more than 90%, of which, radial tires can be divided into semi-steel tires and all-steel tires, in the number of proportion, semi-steel tire production accounted for about 70%, all-steel tires about 10%, bias rubber tires about 10%. Semi-steel tire size is small, light weight, single quality of about 7-10 kg / article, mainly used for passenger cars; full steel tire size is larger, single tire quality of 50-70 kg, mainly used for trucks, large buses, especially heavy trucks.

Because of the quality of volume and use of the differences, all-steel tires and semi-steel tires in the natural rubber and synthetic rubber formula ratio there are obvious differences. Semi-steel tires in the proportion of natural rubber and synthetic rubber use is comparable to the weight share of about 25%. While all-steel tires are dominated by natural rubber, the proportion of natural rubber by mass is about 30-40%, and the proportion of synthetic rubber by mass is only about 10%. Overall, from the tire demand on the synthetic rubber consumption side of the influence of the degree of view, semi steel tires have a greater impact, semi steel tire market on the consumption of synthetic rubber is about 2-3 times as much as the all-steel tire market.

04

Trade: imports fluctuate little, exports increased significantly

China's imports of synthetic rubber in 2021 was 4,385,000 tons, it is worth noting that the imports include imports of mixed rubber. Mixed rubber is essentially a mixture of natural rubber and a small amount of synthetic rubber, customs tariff code 40028000, import statistics under the synthetic rubber. Since July 15 compound rubber new standard implementation, compound rubber imports fell significantly, at the same time to replace the imports of mixed rubber. 15 years mixed rubber imports only about 540,000 tons, 21 years imports have been as high as 2.91 million tons, accounting for 66% of the total imports of synthetic rubber. Imported mixed rubber mainly comes from Thailand, Vietnam, Malaysia, Indonesia, the main source of natural rubber.

We will be synthetic rubber imports of mixed rubber to be removed, we can see that since 2009, China's imports of synthetic rubber (excluding mixed rubber) is basically maintained at 1.4-1.5 million tons, the overall fluctuations. Sub rubber, 2021 China's imports of synthetic rubber in general rubber accounted for more than 60%. Styrene-butadiene rubber is the largest imported rubber, accounting for 35% of total imports.

From the source of imports, China's synthetic rubber is mainly imported from neighboring countries.2021 China's synthetic rubber imports from South Korea, Japan, Russia and Taiwan accounted for 56% of China's total synthetic rubber imports.

Export, before 2020, China's annual export volume of synthetic rubber basically did not exceed 300,000 tons.In March 2020, the Ministry of Finance and the State Administration of Taxation jointly issued a bulletin to once again increase the export tax rebate rate of some synthetic rubber products, and most of the synthetic rubber products can enjoy an export tax rebate rate of 13%.In 2020, China's synthetic rubber exports exceeded 500,000 tons, which is higher than that of 2019 In 2021, the export volume of synthetic rubber continued to grow, after a significant increase of nearly 63% in 2021. From the perspective of export destinations, China's synthetic rubber is mainly exported to Southeast Asia, South Korea and other places. It is worth noting that although the export volume of synthetic rubber has increased significantly in recent years, its total volume is still low, currently accounting for only about 8% of the total domestic synthetic rubber production. In the future to meet domestic demand on the basis of the development of overseas markets, expanding exports on the healthy development of the industry is of great significance.

05

Synthetic rubber and natural rubber performance complement each other, each other is difficult to significantly replace

Synthetic rubber, the two main types of rubber styrene-butadiene and butadiene rubber is often used in conjunction with natural rubber and the manufacture of tire treads, the main application areas are also tire production. In terms of technical performance, the overall performance of synthetic rubber at this stage still lags behind that of natural rubber. The current technical conditions do not yet support a significant replacement of synthetic rubber for natural rubber, at the same time, synthetic rubber also has some natural rubber does not have excellent performance, so the current tire production is usually a mixture of the two types of rubber in order to achieve complementary performance. In addition, the ratio of the two types of rubber varies from one type of tire to another, depending on the tire's own performance requirements. In more technically demanding and comprehensive applications, tires use relatively more natural rubber.

Neither synthetic rubber nor natural rubber can significantly replace each other in the tire manufacturing process due to complementary properties, and the global consumption ratios of the two types of rubber have fluctuated little since 2005. However, due to the different factors affecting the price, from the historical long cycle, the price difference between synthetic rubber and natural rubber is more volatile, and sometimes even more extreme market. From the results of our preliminary grassroots research, although the two types of rubber can not significantly replace each other, but when a certain kind of rubber is relatively cheap, some manufacturers will consider a moderate increase in the amount of this kind of rubber in order to reduce production costs.

It is worth noting that the adjustment ratio of natural rubber and synthetic rubber in the tire formula is very limited, the tire quality requirements of higher enterprises to replace the proportion of only 2-3%, even if the quality of tires do not require a high level of enterprise, the proportion of substitution is generally not more than 5%. This behavior of adjusting the formula mainly occurs in small and medium-sized tire enterprises, large tire companies in order to ensure stable product performance, will not easily modify the formula. In addition, due to adjust the formula to go through a series of processes, more cumbersome, in the two types of rubber price difference is not large in the case of tire companies usually do not make adjustments. Some enterprises in the survey said that if the price difference is maintained for a long time in 3000 yuan / ton or consider modifying the formula, of course, but also on the basis of ensuring product quality and performance stability.

06

Summary

Synthetic rubber is a synthetic highly elastic polymer, which is fundamentally different from natural rubber produced from rubber trees. Synthetic rubber is categorized in a number of ways, according to the performance and use can be divided into two categories of general-purpose rubber and special rubber. General-purpose rubber is the main variety of synthetic rubber, the market demand, mainly used in tires and industrial rubber products. The synthetic rubber industry chain can be divided into upstream chemical raw material suppliers and monomer intermediate suppliers, midstream synthetic rubber manufacturers and downstream application end-users.

Synthetic rubber supply, since 2000 China's synthetic rubber production level has experienced a significant jump, China is currently the world's largest producer of synthetic rubber, production accounted for more than 20%. In recent years, in addition to the steady growth in production capacity, driven by technological advances and market demand, China's synthetic rubber production capacity structure is also continuing to optimize. As synthetic rubber in the production process will produce a large number of volatile organic compounds, greater environmental pollution, in the context of increasingly stringent environmental protection regulation, in recent years, China's mainstream synthetic rubber products are also environmentally friendly varieties of development. In addition, although China's synthetic rubber production capacity structure continues to optimize, but the problem of structural overcapacity is still serious. From the competitive landscape, China's synthetic rubber market to Sinopec, PetroChina, some private enterprises and a small number of foreign enterprises.

Synthetic rubber demand, China is also the world's largest consumer of synthetic rubber, consumption accounted for more than 30%. Synthetic rubber has a wide range of downstream applications because of its variety, and downstream demand as a whole is greatly affected by the macro-economy.After 2019, as the global economic growth rate declines, the global consumption of synthetic rubber has also begun to show negative growth. There are differences in the downstream demand corresponding to different rubber types of synthetic rubber, and the two mainstream rubber types of styrene butadiene and butyl rubber are mainly used in tire production. Unlike the demand side of natural rubber, which needs to focus on the all-steel tire market, the demand side of synthetic rubber needs to focus on the semi-steel tire market. Overall, the semi-steel tire market consumes about two to three times as much synthetic rubber as the all-steel tire.

Trade, excluding mixed rubber, since 2009 China's synthetic rubber imports basically remained at 1.4-1.5 million tons, the overall fluctuations. China's synthetic rubber is mainly imported from neighboring countries. Benefit from the export tax rebate rate increase, since 2020, China's synthetic rubber exports increased significantly. In the future to meet the domestic demand on the basis of developing overseas markets, expanding exports is significant to the healthy development of China's synthetic rubber industry.

Substitution relationship, in terms of technical performance, at this stage, the overall performance of synthetic rubber is still behind the natural rubber. The current technical conditions do not yet support a substantial replacement of synthetic rubber natural rubber, and at the same time, synthetic rubber also has some natural rubber does not have excellent performance, so the current tire production is usually a mixture of the two types of rubber in order to achieve complementary performance. Although the two types of rubber can not significantly replace each other, but when a kind of rubber is relatively cheap, some tire manufacturers will also consider a moderate increase in the amount of this kind of rubber to reduce production costs. But overall, the tire formula of natural rubber and synthetic rubber adjustment ratio is very limited.