I. Overview of PVA Industry Development
(1) History of PVA Development
PVA, also known as polyvinyl alcohol, was first discovered by a German chemist in 1924. Until 1938, Kurashiki Co., Ltd. (now Kuraray) and Kanebo Co., Ltd. in Japan developed synthetic fibers using calcium carbide as a raw material. In 1950, the world's first industrial-scale PVA plant officially went into operation at Kurashiki Co., Ltd. in Japan. PVA production in my country began in the early 1960s. In 1965, a thousand-ton-level production unit was built at the Siping United Chemical Plant in Jilin. Subsequently, a ten-thousand-ton-level production unit was built at the Beijing Organic Chemical Plant. In the 1970s, nine ten-thousand-ton-level production units were built in various locations, all using the calcium carbide method. In 1976, PVA production units using ethylene and natural gas routes were built at the Shanghai Jinshan Petrochemical Plant (annual production of 33,000 tons) and in 1980 at the Sichuan Vinylon Plant (annual production of 45,000 tons), respectively. Since 1996, my country's output has surpassed Japan's, ranking first in the world.
(2) PVA Production Processes
Currently, there are two main PVA production processes: the ethylene process and the acetylene process.
The acetylene process involves the reaction of acetylene and acetic acid vapor in a reactor at atmospheric pressure and 170–230°C using a zinc acetate catalyst supported on activated carbon. The reaction product mixture is then condensed, separated, and purified to obtain VAC.
The ethylene process involves the reaction of ethylene, oxygen, and acetic acid vapor in a fixed-bed reactor at 100–200°C and 0.6–0.8 MPa using a Pd-Au(Pt) catalyst and potassium acetate co-catalyst. The reaction product is separated and distilled to obtain VAC.
II. Current Status of the PVA Industry
(1) International PVA Growth Primarily in Germany and China
Currently, global PVA production is mainly concentrated in a few countries and regions, including China, the United States, and Japan, with a total installed capacity of approximately 1.95 million tons and an actual output of about 1.39 million tons in 2018. The Asia-Pacific region is the main production area, accounting for more than 85% of the world's total output. Representative global PVA companies include Kuraray Co., Ltd. (Japan), Nippon Waimizu Chemical Industry Co., Ltd., Nippon Synthetic Chemical Industry Co., Ltd., Anhui Wanwei High-Tech Materials Co., Ltd., China Petroleum & Chemical Corporation, Taiwan Chang Chun Group, and Inner Mongolia Shuangxing Resources Group Co., Ltd.
Currently, the top four countries in terms of global PVA production capacity are China, Japan, the United States, and North Korea, accounting for 85%-90% of global production capacity. The growth of global PVA production facilities in recent years has mainly occurred in Germany in Western Europe and mainland China.
(2) Increased Concentration in China's PVA Industry, with Leading Companies Holding Advantages
In 2018, my country (including Taiwan) had a PVA production capacity of 1.206 million tons, with an output of 746,000 tons, making it the world's largest PVA producer.
In recent years, domestic PVA production capacity has slightly decreased. After years of industry consolidation, weaker companies have continuously exited the market. The PVA industry is now increasingly concentrating on leading companies with high market share, strong R&D capabilities, advanced technology, long industrial chains, low costs, and high efficiency. Distribution of Nominal PVA Production Capacity in China in 2018
In recent years, the nominal production capacity of my country's PVA industry has been around 1.2 million tons, with an actual effective capacity of around 800,000 tons. Domestic apparent consumption has increased to some extent in recent years, indicating growing demand.
Currently, the main PVA producers in China are, in order, Anhui Weixin High-Tech, Sinopec, Inner Mongolia Shuangxin, and Ningxia Dadi. Companies using the calcium carbide acetylene method to produce PVA account for approximately 77% of the total domestic production capacity.
(3) Large-Scale Growth in China's PVA Exports
In the past four years, both my country's PVA imports and exports have achieved positive growth, with exports exceeding imports, making my country a net exporter of PVA. In 2018, China's exports of primary form polyvinyl alcohol reached 1.459 billion tons, a year-on-year increase of 10%. The compound annual growth rate of China's primary form polyvinyl alcohol exports from 2014 to 2018 was 16.69%. In 2018, the export value of primary form polyvinyl alcohol in China increased to US$240 million, a 19.4% increase compared to 2017. In 2018, China's imports of primary form polyvinyl alcohol (PVA) declined slightly, reaching 396 million tons, a 3.64% decrease year-on-year. The import value decreased from US$111 million in 2017 to US$109 million in 2018.
(4) Domestic supply and demand for ordinary PVA products were basically balanced, and prices rebounded. PVA products can be classified according to different degrees of polymerization: low degree of polymerization (DP<1000), medium degree of polymerization (1000<DP<2000), and high degree of polymerization (DP>2000). They can also be classified according to different degrees of alcoholysis: low degree of alcoholysis (below 80%), partial alcoholysis (79~89%), moderate alcoholysis (91~98%), and complete alcoholysis (98~99%). Therefore, the four-digit product codes on the market combine both methods. For example, the DP of the 1799 type product is approximately 1700, and the degree of alcoholysis is approximately 99%. Different degrees of alcoholysis and polymerization of PVA have different applications. High-degree-of-hydrolysis PVA products are suitable for paper strengthening agents, fillers, adhesives, and coatings; medium-degree-of-hydrolysis PVA products are suitable for textile sizing and coatings; partially-of-hydrolysis PVA products are suitable for adhesives in the label industry, water-soluble adhesives, and water-soluble vinylon; low-degree-of-hydrolysis PVA is used as a dispersant and emulsifier in suspension polymerization.
Currently, the mainstream products on the market are ordinary PVA products with medium and high degrees of polymerization, mainly in the 1799-2699 range, accounting for approximately 80% of total market demand; the remaining 20% consists of specialty PVA with low degrees of alcoholysis and high viscosity. Domestically produced high-degree-of-polymerization, low-degree-of-polymerization, and low-degree-of-hydrolysis products with independent intellectual property rights are still relatively few, and imports account for a large proportion of high-value-added products. Therefore, there is considerable room for import substitution.
Due to the continuous growth in domestic PVA demand in recent years, apparent consumption has increased year by year, while small and medium-sized production capacity has exited the market. Therefore, the supply and demand of PVA in China has gradually reached equilibrium in recent years, leading to a gradual recovery in PVA prices and a relative improvement in profitability.
III. PVA Consumption Trends in China Currently, the global downstream consumption structure of PVA mainly includes polymerization auxiliaries (29%), fabric sizing agents (15%), adhesives (14%), pulp and coatings (9.6%), etc., indicating a relatively dispersed downstream demand structure. my country is a major PVA producer and also the world's largest consumer of PVA. In terms of consumption structure, in the 1970s and 1980s, PVA was mainly used to produce vinylon fiber to solve people's clothing needs; at that time, the consumption of PVA for vinylon accounted for as much as 73%. In the mid-1980s, due to the continuous development of PVA's applications in pulp, coatings, and other fields, coupled with the large-scale production of other synthetic fibers such as polyester and acrylic fibers, the proportion of PVA consumption in vinylon fibers gradually decreased, while consumption in other fields continued to increase. Currently, the use of PVA in vinylon fibers in my country has dropped to about 10%, and the consumption structure has undergone a significant change.
Domestic PVA Downstream Consumption Structure
However, compared with the global consumption structure, my country's consumption structure is higher than the world average in general application areas such as polymerization auxiliaries, but lower than the world average in high-end areas such as PVB and PVA films. This is mainly because core technologies are controlled by developed countries in Europe, America, and Japan. Currently, leading domestic enterprises are conducting technological research to achieve breakthroughs in related high-end products. It is expected that as these production capacities are gradually released, the growth rate of domestic PVA demand will further increase, and import substitution of high-end products will be achieved.
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