China's Sinopec sees research as key

 
SHANGHAI (June 30, 1:45 p.m. ET) -- Even with China’s expanding market, research on new polyolefins will be vital to future competitiveness for China’s state-owned plastics giant Sinopec, a senior executive from the company’s plastics research division told a conference in China.

Sinopec, which is China’s largest plastics maker and the world’s second-biggest maker of polyolefins, is facing serious cost challenges from cheaper feedstocks in the Middle East and overcapacity in Asia resulting from new production growing faster than consumption, said Jinliang Qiao, vice president of Sinopec’s Beijing Research Institute of the Chemical Industry.

“We have to produce polyolefins with higher performance and lower cost,” said Qiao, speaking at the Flexpo conference, held June 15-17 in Shanghai. “It will be difficult for us to survive from this challenge.”

For example, he said about 44 percent of the 20 million metric tons of polyethylene capacity to be added globally by 2015 will be in Asia, with another 40 percent coming to the Middle East.

Both that new Middle Eastern resin and expected new supplies of PO from new shale gas feedstocks in North America will be cheaper than other sources in the world, including Sinopec, he said.

To compete against the new materials, Sinopec has been researching many new grades of materials and catalysts, and has enjoyed some success in markets such as bi-axially oriented polypropylene film, PP pipe and the PE-100 pipe grade of polyethylene, he said.

Some of the Sinopec research is a world first, and is designed to take advantage of opportunities in China’s market, Qiao said.

For example, the company has produced several new grades of BOPP film grade resin using patented technology that allows for high-speed production with a high-tensile strength by controlling the isotacticity distribution to be greater than 98 percent, he said.

“Previously this was not thought possible,” Qiao said.

Sinopec produces about one million metric tons of BOPP resin a year, with the country’s BOPP film makers having capacity for about 3 million tons of production, he said.

Since the China market is relatively new, China’s BOPP film companies tend to use modern equipment that supports faster throughputs and wider, thinner film lines, requiring better grades of material, Qiao said.

“China’s situation is quite different from other parts of world, our film facilities are quite new, with very modern equipment,” he said. “The film is getting thinner and thinner and they still want uniform film.”

The BOPP film market in China is expected to keep growing because the country’s per-capita consumption remains low, he said.

Some of the R&D has been as part of the Chinese-government funded “973” project in basic research, including in polyolefins, he said.

The government has invested more than US$10 million in polyolefin research over a ten-year period, with Sinopec kicking in its own money as well, Qiao said.

The company has also developed several grades of PP catalysts, and developed a new process for making PP, called the asymmetric donor adding process, which it claims produces high-performance PP at low cost, he said.

The Flexpo conference is organized by Houston-based consulting firm Chemical Market Resources Inc. and the Beijing-based China National Chemical Information Center.