Issue Date: July 25, 2011
China Draws Catalyst Suppliers
For companies that supply plastics manufacturing technologies and catalysts, no market is more attractive than China’s. The country’s polyolefins industry is growing fast, and Chinese customers are receptive to trying new technologies. And competition is intensifying among global technology suppliers to sign up customers in this critical market.
“In the next 10 years, 60% of the growth in the petrochemical industry will happen in Asia, and half of that will be in China,” Dirk J. Michiels, Asia technology manager at ExxonMobil Asia-Pacific R&D, noted at a plastics conference organized by consultants Chemical Market Resources (CMR) last month in Shanghai. “Customers in this region are very open to new approaches that can provide new value.”
Many companies, including polymer manufacturers, are eager to license their technology and sell their catalysts to Chinese firms, said J. N. Swamy, CMR’s director of client services. “Global polyolefins producers cannot be present with their own production facilities in every part of the world, and that is why companies like LyondellBasell license in China,” he said.
At the same time, Chinese producers of basic plastics seek to upgrade their facilities to produce more specialized polymers, according to Chris Wai, BASF’s vice president of production and sales for process catalysts and technologies in Asia. “We provide technology support to our customers to address a trend,” he told C&EN, of “moving from commodity to more specialty grades of polymers.”
In China, BASF mostly supplies its Lynx line of Ziegler-Natta polyolefin catalysts. One of the main advantages of the Lynx catalysts, Wai said, is that they enable companies to shift among different grades of polymers without shutting down the plant and changing the catalyst.
The Chinese polypropylene market holds particular promise for catalyst makers. Whereas global polypropylene demand is expanding 5.5% annually, the growth rate exceeds 8% in China, said Tracy Cleckler, commercial director of Dow Chemical’s basic plastics licensing and catalysts business.
Moreover, China needs more plants if it is to be self-sufficient in polypropylene. The country consumes 30% of the polypropylene produced globally but has only 19% of the installed capacity for the polymer.
Technology licensees are long-term customers who develop lasting ties with their suppliers, Cleckler pointed out to C&EN. The business of selling polymerization technology and the associated catalysts has a lot in common with the printer-and-cartridge business, he explained. At first, the seller gets paid for licensing the technology and getting the licensee’s plant up and running.
“That is nice cash,” he said. But selling the catalysts is more financially rewarding. “Over the 30-year life of a plant, we are probably going to find that more than 80% of the value comes from retaining that catalyst business,” Cleckler added.
A plant operator can use catalysts from another supplier, he acknowledged, but in the past 10 years no new licensee of Dow’s Unipol polypropylene process has done that. Much of this success originates from Unipol’s Advanced Donor Technology (ADT), which, according to Cleckler, includes a self-extinguishing feature that automatically stops the polymerization of propylene whenever a reactor’s temperature gets too high.
When temperature unexpectedly rises in a reactor that doesn’t use ADT, Cleckler said, the walls of the reactor typically become coated with polypropylene. In the worst-case scenario, “it’s going to form a giant pellet that fills the inside of the reactor.” Cleaning a reactor in that state takes four weeks and costs about $500,000, he said.
From 2006 to 2010, Dow won 34% of the polypropylene plant licenses awarded in China, Cleckler said. One reason is that the Unipol process costs comparatively little to install and operate and has a long track record, he claimed. “The Chinese care about that a lot, like all other licensees around the world.”
But beyond costs, Cleckler said, customers in China are eager for technology that differentiates them from competitors. “They want to make sure they will be able to produce high-end plastics, like impact copolymers used in making bumpers in the car industry,” he said.
That eagerness for new products extends to firms that convert plastics into finished parts, CMR’s Swamy said at the conference. “Chinese plastics converters are installing new lines every year; therefore, they are open to installing lines with the newest technology.” In Europe and North America, converters are less interested in adding plastics-processing lines because it would involve replacing old equipment that still works fine, he noted.
Despite the appeal of the Chinese catalyst market, success will be difficult for newcomers. Companies that have already licensed their processes to Chinese clients have established themselves as favored suppliers, making it tough for others to enter the market, Dow’s Cleckler pointed out.
Dow itself, for instance, has sold three licenses to the oil and petrochemical conglomerate PetroChina in recent years. “When we bid for the next PetroChina project, we will be competing against others, but we will have a solid basis of preexisting licenses,” he said. “When the customer has used your technology and successfully operated it, that certainly gives an advantage for the next plant they build.”
Meanwhile, Chinese organizations are developing their own polyolefin catalysts. At the CMR conference, Jinliang Qiao, a vice president at Sinopec Beijing Research Institute of Chemical Industry, talked about the latest polypropylene catalyst from his institute. It’s already in place at two plants and will soon be implemented at nine other facilities in China and abroad. The catalyst, Sinopec’s third generation of polypropylene catalyst, enables the production of low-cost polymers with high heat resistance, Qiao said.
Sinopec has no choice but to raise the quality of its plastics because of fierce competition among global polyolefins companies in China, Qiao said. That’s a lesson for catalyst providers. Whereas China has so far been a land of opportunity, it’s becoming an increasingly difficult place in which to carve out market share.
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