Capacity Growth Trends in Hydrocarbon Resin Production
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Capacity Growth Trends in Hydrocarbon Resin Production
2020 Pine Chemicals Association International Virtual Conference
Steve Williams
VP, C5 Monomers and Polymers
1 October 2020
Market Reporting
Consulting
Events
2
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3
Agenda
• About Argus
• Monomer Supply Fundamentals
• HCR Production Capacities/Dynamics
◦ C5/C9/HHCR capacities
◦ HHCR Capacity Growth
• Market Structure
• Summary Points
Copyright © 2020 Argus Media group. All rights reserved.
4
A view of Argus
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Copyright © 2020 Argus Media group. All rights reserved.Monomer Supply Fundamentals
Market Reporting
Consulting
EventsFeed supply chain and tackifier resins & polymers
Ethylene Crude Unsaturated Polyester Resin
Cracker C5’s DCPD Hydrogenated Waterwhite Tackifers
(Liquids) (CC5) Ink Resins
Piperylenes C5 Tackifier Resins
C9 Aromatic
Resin Oil • Tackifier resin
feeds come
primarily from
naphtha and SIS
gas oil Isoprene
• Isoprene is
Polyisoprene Rubber
Ink Resins
the key driver
C9 Resins for recovery of
Hydrogenated Crude C5
Resins stream Isoprene Extractive
Distillation Unit (IED)
Copyright © 2020 Argus Media group. All rights reserved.Natural rubber vs isoprene
New tree
plantings
Longest
“quiet” period
in recent
history
IED
expansions
-Argus.
Price of isoprene is expected to remain depressed as demand is
slack due to continued slow demand for natural rubber
Copyright © 2020 Argus Media group. All rights reserved.Naphtha Cracker Capacity by Region
- Argus
NEA dominates in terms of naphtha cracking capacity, with only WE and
SEA with significant other capacity
Copyright © 2020 Argus Media group. All rights reserved.Global feedstock and polymer balance
Growing
monomer
Short on monomers to extraction
supply existing and future and
polymer
demand capacity
and
capability
Americas and European monomer consumers and polymer producers
will continue to rely on Asian manufacturers to supply monomers and
to balance polymer demand with products made in Asia. European
crack slates are moving a little lighter, exacerbating this issue.
Copyright © 2020 Argus Media group. All rights reserved.HCR Production Capacities/Dynamics
Market Reporting
Consulting
EventsResin end-use matrix
Rosin
Inks Tapes
Hydrocarbon
Resins
Roadmarking Labels
Hydrogenated
Hydrocarbon
Resins
Hot Melt
Tires
Rosin/HCR Adhesives
Hybrids
• Some applications very flexible, others much less so
• Some markets have significantly higher affordability
• HHCR has increased market share in Label and Adhesives markets at the expense
of non-hydrogenated hydrocarbon resins and rosin ester resins
Copyright © 2020 Argus Media group. All rights reserved.Global HCR Picture
-Argus
- Argus
We are seeing capacity expansions well in excess of demand growth, hence
global operating rates are expected to decrease. Most growth is seen in
HHCR capacity.
Copyright © 2020 Argus Media group. All rights reserved.Global C5 HCR Capacity
- Argus
Nearly all growth in C5 resin capacity has come from Asia-Pacific over the
last five years. 2018 saw new Yikesi Huizhou facility, 2019 Xinjiang Tianli,
2021 will see HengHe and Jinhai Chenguang expansions.
Copyright © 2020 Argus Media group. All rights reserved.Global C9 HCR Capacity
- Argus
Some C9 capacity has been converted to HHCR production and several
facilities shutdown due to stricter regulations, with little capacity growth
on the horizon. HengHe planning 2021 expansion.
Copyright © 2020 Argus Media group. All rights reserved.Global HHCR Capacity
Most (but not all) capacity growth for HHCR has taken place in Asia-
Pacific, with most of this occurring within China.
Copyright © 2020 Argus Media group. All rights reserved.Hydrogenated resin volume expansion
,000t
- Argus
With readily available hydrogenation technology and the Made in China 2025 mandate,
producers in China are both installing new facilities and upgrading current facilities to produce
more hydrogenated resins. Based on all expansions already in place and planned, by 2021,
producers in China are expected to make 130% of the entire global capacity of 2012. Between
2015 and 2021, 712kT of capacity will have been added, most in China
Copyright © 2020 Argus Media group. All rights reserved.Hydrogenated resin volume expansions
Producer 2018 2019 2020E 2021E
Arakawa 20 ,000t
Braskem 9
Eastman 4
ExxonMobil 90
Hanwha 50
Henghe 50 20 100
Huizhou Wanbangde 50
Idemitsu 25
Jinhai Chenguang 20
Kolon 3
Luhua 30 20
Neville 15
Rain Carbon 50
Shandong Qilong 20
Taixing Tianma 20
Xiamen Zhongyi 20
Xinjiang Liming Xintong 40
Xinjiang Tianli 15
Zeon 18
Zhejiang Derong 50
Totals 188 163 153 235
- Argus
Copyright © 2020 Argus Media group. All rights reserved.Hydrogenated resin capacity footprint
- Argus
Half of all HHCR manufacturing sites in the world are expected to
be located in China by 2021 producing 43% of the total volume
Copyright © 2020 Argus Media group. All rights reserved.Effect of higher HHCR volume
HHCR dynamic C5, C9 and RE resin dynamic
Price
Demand
Supply Demand
• Through 2019, over 350kT of capacity has been added globally since 2015, There is a further
358 kT of capacity being added to the market during 2020-21, and 596kt during 2020-23
◦ Most, but not all of the new facilities going forward are in Asia-Pacific
• The price gap between HHCR and C5, C9 and Rosin Ester resins has narrowed/almost flat in
some cases and HHCR resins have taken increased market share
◦ This market share shift is expected to be irreversible in most cases
• It is expected HHCR resin manufacturers will experience higher volume growth but at lower
margins
◦ Rapid HHCR volume growth has lead to margin compression, and during 2020, reduced pricing for all
HCR’s. Going forward we expect HHCR growth at organic levels of 2X GDP
Copyright © 2020 Argus Media group. All rights reserved.HCR Market Structure
Market Reporting
Consulting
EventsMarket Structure
HCR Market Number of Top Five Pc of Producers
Producers Producers as pc for 80pc of
of Capacity Capacity
Overall 60 41 47
C5 25 53 56
C9 37 34 59
Hydrogenated 20 67 40
-Argus
• Industry continues to consolidate with newer, larger facilities and more integrated
producers. Quality of resins from new production meets adhesives standards
• Hydrogenated market seeing consolidation faster with newest facilities, C9 remains the
most fragmented with a number of smaller facilities still operating in China
Copyright © 2020 Argus Media group. All rights reserved.Summary
Market Reporting
Consulting
EventsKey Summary Points
• Ethylene crackers continue to crack lighter in North America and to a
lesser extent Europe, as a result NA and Europe continue to import
both C5 monomer feeds and hydrocarbon resins
• C5 monomer market will continue to be dependent on price and
availability of natural rubber and global tire demand. At the moment,
NR and in turn isoprene are in a sustained period of lower pricing
• HHCR are taking market share from C5, C9 and rosin esters. This has
been going on for several years and HHCR should return to organic
growth (2X GDP) going forward
• HCR capacity has been increasing, with most expansion coming from
hydrogenated resin capacity expansions. Most, but not all of the
capacity increases are coming from Asia-Pacific
• HCR production is consolidating to fewer, larger players led by the
hydrogenated HCR market
Copyright © 2020 Argus Media group. All rights reserved.Global reach, local expertise
Argus has offices around the world’s key energy and commodity producing, trading and consuming centres
Copyright © 2020 Argus Media group. All rights reserved.Steve Williams VP, C5 Monomer and Polymers Steven.Williams@argusmedia.com +1 (713) 968-0000 Houston, Texas www.argusmedia.com
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