Analysis of ethylene downstream industry and introduction of new materials

ethylene industrial chain: polyethylene is one of the main downstream

The ethylene production process can be divided into three categories: CTO/MTO, naphtha steam cracking and ethane cracking. (1) Coal-to-olefin refers to a chemical technology that uses methanol synthesized from coal as raw material (CTO) to produce low-carbon olefins with the help of fluidized bed reaction similar to catalytic cracking. (2) Naphtha steam cracking is a process of decomposing hydrocarbon molecules in naphtha with naphtha as raw material at high temperature. Its main product is ethylene and a small amount of propylene is by-product. (3) Ethylene production by ethane cracking refers to the process that ethane obtained by direct distillation of crude oil finally obtains ethylene through dehydrogenation, chain scission, diene synthesis and other reactions.

the output of ethylene has increased steadily, and downstream products are widely used. In 22, China's ethylene output was 21.6 million tons, up 5.25% year-on-year. Domestic downstream products of ethylene include polyethylene (PE), ethylene glycol, epoxy ethylene, styrene, polyvinyl chloride (PVC), etc. The main downstream products of these derivatives include synthetic materials such as plastics, fibers, rubber, surfactants, adhesives, coatings, etc., which are finally used in packaging, agriculture, construction, electronic appliances, machinery and automobiles. Among them, polyethylene (PE) is the largest downstream consumption field of ethylene in China, and 61% of ethylene will be used to produce PE in 22.

PE and ethylene glycol are highly dependent on imports. Ethylene monomer is not easy to store and transport, so it is usually processed into downstream products for transportation and sales. Among the main downstream products of ethylene, PE and ethylene glycol are highly dependent on imports, accounting for 48.% and 54.7% respectively in 22.

the new downstream material of ethylene

film is the largest downstream consumption field of PE in China at present. The downstream applications of PE include film, hollow container, pipe profile, injection molding, wire and cable, wire drawing, etc. Among them, the consumption of film accounts for 53.5% (in 22), which is mostly used in the production and manufacture of agricultural film and packaging film. In terms of new materials downstream of ethylene, we believe that photovoltaic EVA, POE (film for photovoltaic cell packaging), metallocene polyethylene (mPE) and lithium battery separator (wet process) are expected to usher in development opportunities.

China's PE downstream high-end brand products are highly dependent on imports. Domestic polyethylene downstream products are mainly low-end general materials, and the market competition is fierce, while high-end brand products rely heavily on imports. Among them, the import dependence of octene * * * polyethylene is over 9%.

2.1

EVA: the demand for photovoltaic grade is increasing rapidly

EVA is a polymer of ethylene vinyl acetate, which can be used to produce photovoltaic films, foams, wires and cables, hot melt adhesives and other products. Different contents of vinyl acetate (VA) can be made into different downstream products. When the VA content of EVA is higher than 28%, it can be used to make photovoltaic films. When the VA content of EVA is 5%-1%, it can be used to make foam.

_ supply side: the output grows steadily, and the dependence on imports decreases gradually. From 217 to 22, the domestic EVA production capacity will be maintained at 972, tons; In 22, the output will be 741, tons, with a compound annual growth rate of 15% from 216 to 22. China's EVA import dependence is relatively high. In 22, the import of EVA was 1.177 million tons, and the import dependence was 63%, which was lower than 72% in 216.

photovoltaic grade EVA is highly dependent on imports. In 221, the production capacity of Yurenghua, Yangzi Petrochemical and Sinochem Quanzhou was gradually put into production. By August 221, the domestic EVA production capacity was 1.472 million tons, and the total production capacity of the top four enterprises (Silbon, Yanchang Coal Yurenghua, Yanshan Petrochemical and Yangzi BASF) accounted for 72.%. Among them, photovoltaic grade EVA has higher requirements for vinyl acetate content. At present, only three enterprises in China can produce it: Sibang, Lianhong Xinke and Ningbo Formosa Plastics. According to the prospectus of Lianhong Xinke, in 219, the output of photovoltaic grade EVA in China was only 134, tons, the consumption was 531,9 tons, and the dependence on imports was 75%.

the newly added photovoltaic EVA has a long period of stable production, and the tight supply is expected to support the high prosperity. According to our statistics, the new capacity of EVA currently under construction and planned exceeds 2 million tons, and EVA has entered a new round of capacity expansion. However, according to Lianhong Xinke's Record of Investor Relations Activities on April 8, 221, it usually takes a long period of installation, debugging and exploration to produce photovoltaic film materials with brand-new EVA, and it accounts for a limited proportion in the total production capacity. Therefore, we expect that although there is a new EVA installation and production plan in the future, the photovoltaic grade EVA will achieve a long period of stable production, and the tight supply is expected to support the high prosperity in the next 1-2 years.

_ demand side: photovoltaic film is the largest downstream consumption field of EVA. In 22, the domestic EVA consumption is 1.864 million tons, of which the demand for photovoltaic film accounts for 33.5%; Secondly, foaming is also an important downstream consumption field of EVA, accounting for 3% in 22, and it is used in the soles of middle and high-grade travel shoes, hiking shoes, slippers and sandals and interior materials. In addition, EVA can also be used in the fields of wires and cables.

according to the CPIA forecast quoted in the 22 annual report of Haiyou New Materials, the global installed photovoltaic capacity will maintain a compound annual growth rate of 15%-2% in the next five years, and the global installed photovoltaic capacity is expected to reach 27-33GW in 225. According to this calculation, the demand for photovoltaic grade EVA will increase by about 2, tons annually from 221 to 225, and the global demand for photovoltaic grade EVA will be 1.62-1.98 million tons by 225.

price difference: the price of EVA has risen sharply since the second half of 22. From 213 to 219, the price of EVA was basically stable at 1,-15, yuan/ton, and the price difference was 3,-8,2 yuan/ton. Since the second half of 22, driven by the demand for photovoltaic installed capacity, the price of EVA has increased by 124%. As of August 26th, 221, the price of EVA was 21,5 yuan/ton, and the price difference was 14,287 yuan/ton.

2.2

POE: Double-glass components bring about an increase in demand, expecting a breakthrough in domestic technology

Polyolefin elastomer (POE) is a random * * * polymer elastomer polymerized from ethylene and high-carbon α -olefins (1- butene, 1- hexene, 1- octene, etc.). Due to its special molecular structure, POE has good rheological properties, mechanical properties and ultraviolet resistance.

_ supply: POE products are completely dependent on imports, and the industry concentration is high. Foreign petrochemical companies with POE production technology have patented the catalysts needed for production, and tightly blocked the production technology of high-carbon α -olefin as an important raw material of POE, restricting its transfer. At present, the production technology is only mastered by six large foreign enterprises (Dow, ExxonMobil, Mitsui Chemical, LG Chemical, SK Group and Schabik Company), and the industry concentration is high. Among them, Dow is the world's largest producer of POE, accounting for 42%.

domestic enterprises accelerate the research and development of POE and raw material octene. As a purely imported product, POE has a high production profit and import price at present. Domestic enterprises such as yantai wanhua, Huisheng Engineering, Jingbo Petrochemical, Maoming Petrochemical and Tianjin Petrochemical are all accelerating the deployment of POE R&D, and the overall situation is still in the pilot stage, and industrialization needs further breakthrough. In addition, in terms of POE raw materials, octene is all imported at present. In the future, the domestic construction of Daqing Petrochemical with .5 million tons, Wanhua Chemical with 7, tons and Maoming Petrochemical will make up for the gap in the industrial chain.

_ demand: the largest consumption field of POE in China is the automobile industry. According to Longzhong Information, the domestic POE consumption in 219 was 45, tons, of which 68% was used in the automobile industry. Longzhong Information predicts that the average annual growth rate of domestic POE consumption will be more than 1% in the future.

the increase in the market share of double-glass components drives the growth in the demand for POE film. At present, the packaging film mainly includes EVA film and POE film. EVA has the advantages of low melting point, good fluidity, high transparency and mature lamination process, but its strength is low, water vapor permeability and water absorption are high, and its weather resistance is poor. The greatest advantages of POE film are low water vapor permeability and high volume resistivity, which ensures the safety and long-term aging resistance of the module in high temperature and high humidity environment and enables the module to be used for a long time. For the double-glass module with double-sided batteries, the use of multi-layer * * * extruded POE film has strong competitiveness in the production efficiency and comprehensive performance of the module.

In 22, EVA film is still the main packaging material for components, especially transparent EVA film, but its proportion has declined. In 22, the market share of transparent EVA film is 56.7%, down 12.9 percentage points year-on-year; The proportion of POE film and * * * extruded POE film increased, accounting for 25.5% in 22, up 13.5 percentage points year-on-year. We believe that the increase in the market share of POE film is caused by the increase in the market share of double-glass components and the price increase of EVA particles. We expect that with the large-scale application of double-glass components and double-sided batteries, high-quality films including multi-layer extruded POE films are expected to further enhance the market scale.

the price of POE will rise in p>221. From 22 to 221, the price of POE increased step by step, especially since 221, with the gradual recovery of demand in the automobile industry, the price of POE rose sharply. As of August 27, 221, the price of POE was 23, yuan/ton, up 31% from the beginning of the year.

2.3

Lithium battery separator: large market space for wet process

_ Industrial chain: composition structure and industrial chain of lithium batteries. The separator, anode material, cathode material and electrolyte of lithium ion battery are the most important materials. Lithium-ion battery adopts spiral winding structure, which needs to be separated between the positive electrode and the negative electrode by very fine and permeable thin film isolation materials. According to Xingyuan Material Prospectus and consulting information, the cost of separator accounts for about 11% of the cost of lithium-ion battery, and the gross profit margin can reach 5%-6%, which is the highest among the four major materials.

The upstream of lithium battery industry chain includes cobalt, manganese, nickel ore, lithium ore, graphite ore, polypropylene, polyethylene and so on. In the industrial chain of lithium battery manufacturing, the core part of battery pack manufacturing is the battery core. After the battery core is packaged, the battery module is composed of wiring harness and PVC film, and then the power battery product is composed of wiring harness connector and BMS circuit board.

the downstream applications of lithium batteries are extensive, including energy storage, transportation, consumer electronics and industrial equipment industries. According to the Institute of Lithium Battery Research, the demand for lithium batteries in new energy vehicles continues to increase. In 22, the shipment of power batteries for vehicles in China was 8GWh, up 12.7% year-on-year, accounting for 56% of the lithium battery market in China, far exceeding other application terminals; The growth of the 3C digital market tends to be flat. It is expected that with the popularization of 5G technology, the demand for smart phone terminals, the rise of civil drones, smart wearable devices and other products will drive the growth of consumer batteries.

_ performance and function of lithium battery separator. The separator of lithium-ion battery has good mechanical properties, chemical stability and high-temperature self-closing performance, which can improve the comprehensive performance of lithium-ion battery from the aspects of isolating the positive and negative electrodes of the battery, allowing lithium ions to pass through and preventing battery explosion caused by high temperature, and makes lithium-ion battery have obvious advantages over traditional lead-acid and nickel-cadmium batteries in energy density, cycle life, environmental protection and safety.

The separator of lithium-ion battery has a large number of zigzag micro-holes, which can ensure electrolyte ions to pass freely to form a charge-discharge circuit; However, when the battery is overcharged or the temperature rises, the diaphragm separates the anode and cathode of the battery through the obturator function to prevent direct contact and short circuit, so as to block current conduction and prevent the battery from overheating or even explosion.

_ Main production technology of lithium battery separator. Many characteristics of lithium ion battery separator require special requirements for its production process, which includes raw material formula and rapid formula adjustment, micropore preparation technology, independent design of complete sets of equipment and other processes. Among them, micropore preparation technology is the core of lithium ion battery separator preparation process, which is divided into wet bidirectional stretching process and dry process. Among them, the wet diaphragm is a polyethylene monolayer film, and the main raw material of the dry process is a polypropylene monolayer film.

From the downstream subdivision and downstream field of the two production processes, the dry process with polypropylene as the main raw material is used for Ferrous lithium phosphate power battery (hereinafter referred to as LFP battery); The wet process mainly flows to ternary material power batteries and 3C consumer electronics.

_ supply: the domestic lithium battery separator market has a large space. According to the data quoted by Prospective Industry Research Institute, the shipment of lithium batteries in China in 22 was 3.72 billion square meters, up by 35.8% year-on-year. We think that the domestic COVID-19 epidemic in 22H2 was controlled, and the shipments in the fields of small power, 3C digital and energy storage lithium batteries were greatly improved, and domestic enterprises had the competitive advantage of low cost and high performance.

shipments of wet-process diaphragms increased steadily, and the proportion remained stable. According to the data of Lithium Battery Research Institute of Hi-Tech, from the perspective of diaphragm product structure, the shipment of wet diaphragm in 22 was 2.6 billion square meters, up 3% year-on-year, accounting for 7% of the total diaphragm shipment. In 22, the proportion of wet diaphragm is 7.4%, which is close to that in 219.

Compared with dry hair technology, wet separator has the advantages of thin thickness, high strength and uniform hole making, so it can better meet the requirements of lithium ion battery separator. However, the disadvantage of wet diaphragm is its high cost, which is mainly used in high-end digital and ternary power lithium battery products.

the capacity of lithium battery separator is expanding, and the high-end capacity is insufficient. According to WeChat official account, a new chemical material, citing ICC information, the domestic lithium battery separator capacity has expanded rapidly since 215. By the end of 22, the domestic wet separator capacity has reached 7 billion square meters/year and the dry separator capacity is close to 3 billion square meters/year. The scale effect of enterprise's production capacity is improved, and the diaphragm cost is further reduced, resulting in the decrease of diaphragm price and market scale. At the same time of large-scale expansion of production capacity, the contradiction between high-end production capacity of domestic diaphragm and overcapacity of low-end is becoming more and more prominent. At present, domestic high-end wet process relies heavily on imports.

the lack of research and development ability of matrix raw materials has troubled product autonomy. The lack of research and development ability of matrix raw materials is the main problem in the production of wet diaphragm in China. The matrix material is mainly high molecular weight polyethylene. According to Xinsijie Industry Research Center, the demand for HDPE in China was about 14.59 million tons in 219, but the domestic output was only about 7 million tons, of which the import dependence was about 48%.

in terms of domestic market share distribution, among the wet process manufacturers in 22, Shanghai Enjie accounts for 44.9%, and the other major manufacturers are Xingyuan Materials (19.6%) and Sinoma Technology (18%); In terms of dry process, Xingyuan material is the industry leader, accounting for 23.5% of the total market share. In August 219, the company disclosed the project plan of "Super Coating Factory", with a total construction period of 36 months, which will be built in two phases. In the first phase, it is planned to build 8 dry separator production lines and 3 coated separator production lines, with an annual production capacity of 4 million square meters. According to the company's 22 annual report, the construction of the "super coating factory" project has progressed smoothly and has been supplied to customers.

in addition, according to the semi-annual report of Hengli Petrochemical in 221, the company made deep excavation.