Russian epoxy resin downturn without losing business opportunities

March 1, 2006: Russia's epoxy resin market is in a recession, its current production capacity is 62,000 tons / year, and the production load in the past five years is only 20 ~ 26%, the actual output of 2004 14,000 tons, 2005 15500 Tonnes, respectively, increased by 9% and 11% compared to 2002, although the growth is still considerable, but it is significantly behind the scale. However, looking at Russia's raw material resources, we can find that the development of epoxy resin industry in Russia has a good business opportunity. For China, which is an important producer and largest consumer of the world's epoxy resin industry, it is a “going out” development with investment opportunities. area.
The suspension of production of the largest epoxy resin production plant in the Russian Federation at the end of 2004 caused the main reason for the rapid shrinkage of this product. The closure of the plant is closely related to the stagnation of economic development throughout Russia, but the Russian economy has begun to recover. According to the Russian Nitol Group, the market capacity of the Russian epoxy resin industry is growing at a rate of about 4%, which is higher than the average level of the whole ring. It is expected that the demand for liquid products in 2007 will reach more than 12,000 tons, in order to fill the maximum epoxy. The gap caused by the shutdown of the resin production plant has seen a large increase in imports, and the price is 3 US dollars/kg higher than that of Western Europe. From the perspective of its domestic market, it is economical to invest in epoxy resins.
From the perspective of resources, the advantages are more obvious. At present, the annual output of epoxy resin in China has reached 330,000 tons. The contradiction between epichlorohydrin (the main raw material of epoxy resin) is still unresolved, and Russia is an important epichlorohydrin in the Far East. In the supplier country, China's epichlorohydrin gap is mainly compensated by Russia. Russia's production capacity of epichlorohydrin and epoxy resin is mainly concentrated in the Kutzlke region. Wusuli, the largest foreign supplier of epichlorohydrin in China, Built in the area, it is the most cost-competitive, supplying electrolytic chemicals, especially chlor-alkali and its downstream products, including epichlorohydrin, epoxy resin, alkyl cellulose and so on. The Irkutsk region is located in Siberia, bordering China, with smooth trade channels; the region spans the Siberian Railway, between Moscow, Beijing and Vladivostok, with an area of ​​767,900 square meters (accounting for 5% of the total area of ​​the Russian Federation), industrial production Ranked 14th in 89 regions of Russia, the main industries include chemicals, gold, non-ferrous metals, energy, logging, fuel, machinery, food; the Irkutsk region as a traditional salt extraction center, but also The main production base for chlorine and its downstream products.
Bisphenol A is another major raw material for the production of epoxy resins. According to the China Epoxy Resin Industry Association, Russia's main production base is located in Ural. It produces bisphenol A according to the TOTC12138-86 standard, with a capacity of over 40,000 tons/year, and another plant with a capacity of over 15,000 tons/year. In addition, Russia's largest oil processing plant and leading Japanese companies are building bisphenol A units (capacity of more than 60,000 tons/year) and polycarbonate plants (capacity of 60,000 tons/year, of which 10,000 tons/year of polycarbonate) in the Ural region. It was put into production in 2007. The users of Russian bisphenol A are mainly epoxy resin production plants, and most of the polycarbonate bisphenol A is used for export. (The total annual production capacity of bisphenol A is more than 2.8 million tons. The price of bisphenol A can be compared with the price of petroleum. Therefore, considering the trend of crude oil prices in recent years, the price of bisphenol A has also increased.
According to the data of the 2005 International Caustic Conference, the production and consumption of chlorine in the world showed a downward trend before 2002, and the demand for chlorine from non-PVC producers increased from 2002 to 2004. This means that the production of chlorine must be increased, so the production of this product is moving towards a virtuous cycle. Russia’s 2004 chlorine production increased by 5% compared to 2003 production. After analyzing the market conditions of the world's chlorine, it was found that chlorine production would occur in the near future. This fact, as well as the fact that the product is not likely to be kept for long periods of time, may force chlorine producers to cut prices later and even reduce the production of chlorine-containing products. But considering that many producers of epichlorohydrin are chlorine producers, not propylene producers (especially Chinese and Russian manufacturers involved in epichlorohydrin), it should be able to predict that the decline in chlorine prices will ultimately not It should affect the overall condition of the epichlorohydrin market. After the closure of the Russian epoxy resin manufacturer at the end of 2004, Russia has no large-scale modern epoxy resin manufacturers, so the internal demand for Russian epichlorohydrin is limited, and the current capacity is expected to not exceed 8,000 tons per year. Market participants from the China Epoxy Resin Industry Association () said that the main users of Russian epichlorohydrin have become the coatings industry, but these manufacturers have very low consumption of epichlorohydrin. Russia's reduction in epoxy resin production has led to oversupply of epichlorohydrin. Russia has become an exporter of epichlorohydrin and an importer of epoxy resin. At present, the proportion of Russian epichlorohydrin exports is about 90% in China and 10% in Europe. %.
With the rapid development of China's economy, the development of epoxy resin, which is widely used in the national economy, is further increasing. It is expected that China will become the champion of epoxy resin production and consumption in 2008. Although domestic epichlorohydrin capacity will increase significantly, it is far less than the demand for epoxy chloropropane for epoxy resin. As a liquid flammable and explosive chemical, epichlorohydrin has strict requirements in all aspects of transportation and storage. Among the imported epichlorohydrin resources in China, Russian products are dominant because they have geographical advantages and use rail transportation. Bisphenol A is different. It is convenient for storage and transportation as a solid product. Regardless of the large domestic demand gap, imported resources can be continuously supplied to the market. Therefore, the supply of epichlorohydrin will greatly affect the development of the epoxy resin industry. At present, due to anti-dumping and other measures, the import cost of epichlorohydrin increases and the price continues to rise, which has caused the epoxy resin enterprises to bear huge cost pressure. Before and after the Spring Festival in 2006, China's epoxy resin production and sales were booming. The gold production season that was only seen in April and May of the year came ahead of schedule. However, due to the tight price of epichlorohydrin, some small and medium-sized enterprises were forced to stop production and lost the good opportunity for production. . This situation is difficult to change in a short period of time. Therefore, the domestic epoxy resin enterprises have changed their development ideas, and they have changed their resources at home to turn around to set up factories for “going out” and establish an industrial chain at the Russian raw material supply base. The timing is right and the conditions are ripe. In addition to the raw material market factors, from the economic point of view, it also has the overall advantages of the entire resource. The lowest global energy and other energy prices in the Irkutsk region indicate that there is a sufficient basis for organizing the production of epoxy resin here. .

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