The upstream of the petrochemical and plastic rubber industry chain is crude oil, light oil, gasoline, diesel, kerosene, fuel oil, lubricating oil, and related mining and drilling equipment; the middle stream is the basic petrochemical raw material produced by the cracking of upstream raw materials such as ethylene, propylene, butadiene, benzene, phenol, etc., as well as plastics, rubber, rayon and other chemical raw materials made from the above raw materials after polymerization, esterification, alkylation, and other chemical reactions; downstream are plastics, rubber, rayon, etc. All kinds of daily necessities used in food, clothing, housing, and transportation made of chemical raw materials, such as plastic products, rubber products, detergents, man-made fibers, dyes, adhesives, plasticizers, pesticides, and cosmetics, etc., with a wide range of applications The output value of China's petrochemical industry accounts for about 40-50% of the output value of the chemical industry. However, the output value of a large number of petrochemical products used as raw materials in the chemical industry exceeds 90%. In recent years, the main three factors affecting the development of the global petrochemical industry are oil prices and American shale. China's coal chemical industry; the US-China trade war in 2019 affected market confidence, coupled with frequent international political conflicts affecting the supply and demand of crude oil, and the violent fluctuations in oil prices made it difficult for the price of petrochemical products to rise. Therefore, the output value of China's petrochemical industry in 2019 was NTD $1.54 trillion, a decline of 18.4% compared to 2018.
At present, China is still the largest manufacturing and exporting country in Asia. If the manufacturing industry is down, it will affect the demand performance of raw materials in Asia. At the beginning of 2020, due to the impact of the new crown pneumonia epidemic, the sharp decline in oil prices and the delay in the start of processing plants in China, the decline in market demand caused a decrease in shipments. According to statistics, the output value of the petrochemical industry in the first quarter of 2020 was NTD $322.9 billion, a decline of 20.8% from the same period in 2019.
The upstream raw material of the petrochemical and plastic rubber industry is crude oil, so crude oil supply and demand is an important indicator of the long-term supply and demand relationship of plasticized products. The main source of Taiwan’s crude oil is Saudi Arabia and other Middle Eastern countries. After cracking, light oil (also known as naphtha) is extracted and reproduced into ethylene, propylene, butadiene, benzene, toluene, xylene, and other smaller molecular weights. A series of basic petrochemical raw materials for downstream industries to manufacture synthetic fibers, plastics, rubber, and other chemicals. At present, the domestic petrochemical and plastic rubber upstream manufacturers are CNPC and Formosa Petrochemical, and Formosa Petrochemical is the only private petroleum refining company in China. It ranks among the top ten single refineries in the world. It is also the largest domestic petrochemical basic raw material manufacturer. Production capacity is the leader in Asia.
The middle reaches of the petrochemical and plastic rubber industry are the basic petrochemical raw materials produced by the cracking of upstream raw materials, such as ethylene, propylene, butadiene, benzene, phenol, etc., and the above-mentioned raw materials are made after polymerization, esterification, alkylation, and other chemical reactions. Chemical materials such as plastics, rubber, man-made fibers, etc. There are many types of chemical products, and they are roughly divided into general-purpose chemicals and special-purpose chemicals in use. General-purpose chemicals have simple ingredients, few types, and a high proportion of the cost of selling prices. They are often the basic raw materials of chemical products and account for the total chemical industry. The output value is about 70%; while specialty chemicals are produced for specific purposes and are intermediate products in the chemical industry chain. They have the characteristics of high manufacturing technology, complex ingredients, and special purposes. The raw materials account for low production costs and account for about About 30%, but it has high added value. Under the intensified competition of bulk petrochemicals, specialty chemicals are estimated to be one of the high-value projects in the future and are affected by the sustainable development of upstream raw materials and downstream end consumer products. In the future, specialty chemicals will also develop towards green innovation, with promising prospects.
Midstream industrial products can be divided into four categories, including terephthalic acid catalysts (PTA), surfactants, industrial synthetic resins, and rubber and plastic additives. PTA is a downstream product of petroleum. More than 90% of PTA in the world is used to produce polyester. According to the difference in intrinsic viscosity, polyester can be divided into textile polyester, bottle polyester, and optical grade polyester; There are three main types of polyester: PET, PTT, and PBT; polyester fiber is widely used in yarn, cloth, garments, PET bottles, media audio-visual equipment, medical X-ray film, chemical fiber, light industry, electronics, construction, etc., PTA touch in industrial applications, most media use cobalt acetate and manganese acetate as catalysts, hydrogen bromide as a promoter, and acetic acid as a solvent to catalyze the oxidation reaction of p-xylene to produce terephthalic acid. The process of PTA is to oxidize the mixture of para-xylene PX (Para-Xylene), acetic acid, and catalyst solvent at high temperature and appropriate pressure, and then react with hydrogen using pure water and catalyst, and undergo a series of crystallization. The separation process is purified and refined. China is a major consumer of the world, accounting for about 50% of global consumption. Except for local China manufacturers, they rely on suppliers from South Korea, Japan, Taiwan, and other places. Surfactants can significantly reduce the surface tension of the target solution, as well as reduce the surface tension between the two liquids. It can be used with different fragrances, additives, and fillers for cleaning products and water treatment industries; synthetic interface active agents The application level is very wide. It is used in textiles, metals, coatings, plastics, food, paper, and leather. Its uses are penetration, emulsification, dispersion, foaming, defoaming, lubrication, washing, anti-static, leveling, rust prevention, sterilization, etc. Surfactants are mainly divided into two categories: polyoxyethylene type and polyol type. Polyoxyethylene type can be used as a detergent and emulsifier. Polyol type is mainly used as emulsifier, foam stabilizer, fiber oil agent for food and cosmetics softener.
Industrial synthetic resins are downstream of the petrochemical industry and refer to resin products obtained by chemical synthesis of simple organic matter or chemical reactions of certain natural products. Synthetic resins are a type of synthetic polymer that can be formed under the action of external force. Plastic flow state, some properties are similar to the natural resin. Synthetic resins can be widely used in the fields of coatings, inks, adhesives, caulking agents and special chemicals, etc., and can be widely used in synthetic leather, construction, transportation, electronic and electrical industries. The most important application is the manufacture of plastics for easy processing and to improve performance, additives are often added, and sometimes directly used for processing and forming. Synthetic resin is one of the most widely produced products in the petrochemical industry with the largest output and the widest application range. At present, there are tens of thousands of types of plastics reported in the world. Among them, there are more than 300 kinds of plastics that have been industrially produced and more than 60 kinds of commonly used ones. The various products produced from this kind of plastic are countless, covering national defense, industrial and agricultural production. In various fields such as solvent-based coating resins, textile resins, unsaturated polyester resins, casting resins, ultraviolet light curable resins, etc. are common. The main function of the plastic rubber additive is in the production process. To make the produced plastic meet the required characteristics of the product, additives are added to meet the requirements, such as polyethylene or polypropylene to prevent its color from becoming light when exposed to sunlight, so UV absorption is added. An antistatic agent can be added to the plastic which is easily stained with dust. The molding of phenol resin is generally mixed with wood; other resins can be mixed with glass fiber to increase strength. There are many kinds of plastic additives, such as lubricants, oxidation inhibitors, heat stabilizers, and strengthening agents.
The downstream of the petrochemical and plastics and rubber industries are plastic products, cleaning products, dyes, pesticides, rubber products, man-made fibers, adhesives (synthetic resins), cosmetics, and other chemical raw materials processed into daily necessities. Plastic products include plastic leather, plastic cloth, various packaging films, and packaging bags, battery cover switches, earphone protective covers, and other plastic and rubber composite products. PE hot glue film and heat sealing film, flexible packaging materials, ABS, HIPS, and other materials can be applied in 3C electronics, optoelectronics, automobiles, and other fields; polyethylene geomembrane is used in related construction sites; PLA is a new kind of uses: Compostable high molecular polymers, made of natural plants such as corn, sugar beet or rice, etc., without relying on limited petroleum resources, so it has the characteristics of sustainable development and can be processed into suitcases/bags, plastic composite materials, and high-value chemical composite materials, plastic-wood composite materials, etc., automotive plastic parts, are versatile and widely used. Cleaning supplies and sanitary materials are also downstream applications of petrochemical products, such as household cleaning supplies, industrial water treatment chemicals, surgical gowns/towels, ointment cloths, wet wipes, diapers, sanitary napkins, etc. The pigments and dyes are mostly organic products. The raw materials come from China, India, and other countries. Among them, disperse dyes have small molecules and low solubility in water. With the help of dispersing agents, they become uniform aqueous dispersions. Disperse dyes are widely used in printing and dyeing chemical fibers. Textile, to achieve the advantages of bright color and high washing fastness, the downstream textile industry is currently the largest application market for dyes. Pigments are mainly used for coloring plastic products. Optoelectronics and printed circuit boards are emerging demands. Azo pigments are used in printing inks, coatings, stationery, printing, and various synthetic resins; PVC and PU processed pigments are used in furniture, toys, and synthetic leather; organic pigments and modified pigments are used in PVC, PU, PE, and PP resin products Coloring; photoinitiators and new adhesion promoters and dispersants are used in UV/EB (energy curing ink) inks and coatings.
Pesticides are also downstream in the petrochemical and plastic rubber industries, such as pesticides, fungicides, plant growth regulators, and algaecides are all plant protection agents. Rubber is a flexible polymer, which can be obtained from the sap of plants or man-made. There is a wide range of rubber products, such as tires, gaskets, rubber keyboards, self-adhesive rubber, earphone covers, microphone covers, etc. Man-made fibers refer to textile products such as nylon and polyester. PVC soft leather, flocking fabric, wet PU synthetic leather, dry PU synthetic leather, etc. can be made into fabrics for various clothing, furnishings, or industrial purposes. The industrial chain of the adhesive is upstream chemical raw materials, which have a wide range of uses, including hot melt adhesives, pressure-sensitive adhesives, UV glues, instant glues, release agents, light hardening glues, wood glues, three-second glues, water glues, glues, etc. Belong to it. Cosmetics belong to the downstream application industry of the petrochemical and plastics and rubber industries. Among specialty chemicals, packaging and marketing are the most important industry. Because of their high gross profit and low-risk characteristics, many biotech companies and pharmaceutical companies have successively invested in the research and development of cosmetics in recent years. Using e-commerce platforms to sell, potential business opportunities are huge. Derivatives of the plasticization industry are widely used in daily life and can be regarded as a related industry of the civilian production industry. It is a business cycle industry. The overall industry performance is deeply affected by the economic boom and also affected by international oil prices.
In 2019, affected by the U.S.-China trade war, oil prices fell from high-end levels, and protectionism in various countries caused a slowdown in the global economy and trade. Then in 2020, they suffered from the new crown pneumonia pandemic. The epidemic affected the world. The situation in Europe and the United States was hardly spared. Then the city was closed, homes and work were closed, shops were closed, and people were unable to consume. The entire economic activity was frozen. The performance of petrochemical companies was closely related to oil prices. Oil prices also caused a price war after the break of oil-producing countries’ production reduction agreements, which caused international oil prices to plummet. Because of the rapid and severe short-term decline in oil prices, it will be directly reflected in the prices of oil products and olefins. The inventory of domestic upstream manufacturers will suffer tremendous pressure from inventory declines, which will erode profitability and become the biggest victim in the petrochemical industry. . Although oil prices have fallen and olefin product raw materials have fallen, which has also led to lower feed costs, downstream customers will also require petrochemicals to reduce prices when oil prices fall, and the impact of the epidemic has also weakened downstream demand, which once again dragged down product spreads. space. In particular, the plasticization industry has become the hardest hit area under this wave of epidemics, from the petrochemical industry in the uppermost stream to the downstream plastic rubber industry chain.
The prosperity of the past few years has been very good. After nearly a decade of expansion in the global economy, countries have set up factories in developing countries and expanded their production desperately, focusing on many upstream raw materials such as rubber and petrochemicals. Today, the economy is declining and there is an oversupply phenomenon, causing petrochemicals. Product prices have collapsed and interest margins have shrunk. With the low entry barriers for standardized bulk commodities and the huge China market, once mainland manufacturers step in and the scale of expansion is staggering, it will be difficult for Taiwanese manufacturers to win by volume. In terms of petrochemicals, China’s new production capacity in recent years has recently been added to the market, including Zhejiang Petrochemical and Hengli Petrochemical’s PE, PP, MEG, SM plants, etc., have been put into production at the beginning of 2020, in the weakening of demand and increasing market supply Under the circumstances, the overall operating performance is affected.
In addition to the threats to the petrochemical and plastic industries, the rubber industry chain also cannot escape the fate of shocks. As the new crown pneumonia epidemic continues to heat up in Europe and the United States, upstream manufacturers in the domestic rubber industry have temporarily closed their factories in response to European and American tire customers, and have successively suspended production. Also, the Indian factory has suspended production; although the China factory has started construction, the overall production capacity has been affected. It can be said to have worsened the situation. The higher the degree of globalization, the more serious the damage.
Fortunately, the epidemic has been gradually unblocked from May 2020. Although Asian petrochemical raw materials manufacturers are affected by the epidemic due to high inventories and pressure to reduce production, as China resumes work one after another, if the epidemic can be controlled, the demand for petrochemical products is expected to increase. Besides, the traditional second quarter is the peak season for petrochemical product demand. At present, the operating rate of petrochemical plants has increased to 90%. Also, in the second half of 2020, there are an estimated 18 cracking plants in Asia to arrange annual repairs, which will benefit the sales of Taiwan plants; but downstream Whether processing plants continue to be affected by the epidemic, due to lack of labor and insufficient orders, reducing operating rates and reducing demand will continue to be observed; the current global epidemic control and the ability of enterprises to prevent epidemics after the resumption of work will affect whether the economy can quickly recover In particular, China, Japan, South Korea, and other countries account for about a quarter of global GDP, and their industrial supply chains are highly integrated. The development of the epidemic in these three countries has a great impact on the global economic situation and will be an important observation indicator. But it is conceivable that the second half of 2020 will be better than the first half.
Moreover, although the overall plasticization industry has been greatly affected, some products have greatly benefited the market due to the epidemic. The epidemic-related masks can be said to be difficult to find; and the medical masks to prevent virus invasion have three layers of structure and all raw materials. It is a non-woven fabric, and the upstream raw material is PP; Taiwan is a chemical fiber kingdom, and there is no shortage of materials; looking at a mask, the outermost layer is a water-repellent spun bonded nonwoven fabric, the middle is a melt-blown nonwoven fabric, and the inner layer is water needled nonwoven fabric. The auxiliary materials, nose bridge strips, ear straps, etc., are all produced in Taiwan. At the beginning of the epidemic, Taiwanese manufacturers cooperated with the government to set up a national mask team, and the national army joined in actively cooperating with production, and the real-name system was introduced. All citizens can cope with this epidemic. With the stable control of the Taiwan epidemic, it has also become famous internationally. With the good quality of mask manufacturers, the orders of mask supply chain manufacturers are overwhelming.
Looking forward to the second half of 2020, once the new crown pneumonia epidemic slows down and oil prices return to stability, it will be beneficial to economic recovery, and the start of upstream and downstream petrochemical plants will gradually increase, and ethylene supply is expected to be relatively stable.
At present, China’s petrochemical industry players can only actively transform and upgrade and move towards product differentiation, and switch to high value-added products; despite Taiwan’s lack of electricity, water, land, raw materials, and inefficient EIA, it’s not easy for Taiwanese companies to return. , But Taiwanese factories can only continue to innovate, go international, and move toward a “green process” that reduces carbon emissions with “green environmental protection” and “high added value” as the main axis, and introduces a “circular economy” of recycling and reuse. Producing more diverse and higher-value green chemical products, turning the petrochemical industry into a green and environmentally friendly industry, and moving towards niche high-margin products, can avoid being caught up by the rising China, and move towards more diversification and more applications New developments and innovations.
Looking to the future, this wave of COVID-19 can just test the emergency response capabilities of Taiwanese factories for supply chain scheduling. Petrochemical plants can only strictly control the expansion of refining, PX and ethylene capacity, avoid overcapacity, and actively adjust operating strategies; they must also cooperate. Relevant customer relocation strategies, and active expansion of markets outside of China such as South Asia, Southeast Asia, the Middle East, Europe, Africa, New Zealand and Australia, and strengthening the development and marketing of differentiated products can alleviate the pressure of oversupply of petrochemical products, and seize business opportunities in a competitive environment.