Recently, Wanhua Chemical announced the Environmental Impact Assessment (EIA) for the HDI and its derivatives expansion project, indicating a continuous increase in HDI production capacity.
Wanhua Chemical is the only Chinese enterprise with the capability to produce HDI. It began researching HDI production processes in the 1990s and, after more than a decade of development, the company completed the construction of a 15 ktpa HDI monomer facility and a 7 ktpa curing agent facility in May 2012. In recent years, Wanhua has made remarkable achievements in the field of HDI. With several capacity expansions, its HDI monomer capacity has reached 160 ktpa. As the only HDI producer in China, Wanhua’s capacity expansion project holds significant importance in broadening domestic supply, reducing reliance on imported products, and meeting the rapid development needs of the Chinese high-end coatings industry.
In recent years, China has been advancing HDI localization. In addition to Wanhua Chemical, Miracll Chemicals’ integrated polyurethane project, Shandong NHU’s new energy material and eco-friendly material project are all progressing smoothly. Among them, the first phase of Miracll Chemicals’ project is planning for a 100 ktpa HDI capacity, and the total HDI capacity in the second phase will reach 200 ktpa. NHU is planning to build a 3 ktpa HDI capacity in the first phase and a 103 ktpa HDI capacity in the second phase. Currently, Miracll Chemicals’ first-phase project is expected to be completed and put into operation by the end of 2023, and the products will officially enter the market in early 2024. Assuming that all the planned HDI projects are completed and put into production by 2026, China’s total HDI capacity will reach 603 ktpa, more than triple the capacity in 2022.
Table 1: Forecasts of HDI Capacity in China (ktpa)
|
2023 |
2024 |
2025 |
2026 |
|
|
Wanhua Chemical |
160 |
160 |
200 |
200 |
|
Covestro Shanghai |
100 |
100 |
100 |
100 |
|
Miracll Chemicals |
0 |
100 |
100 |
200 |
|
NHU |
0 |
3 |
103 |
103 |
|
Total |
260 |
363 |
503 |
603 |
Due to the long-term oligopoly situation in the global market for the major raw material of HDI, adiponitrile (ADN), and frequent occurrences of force majeure events, the supply of HDI has been highly volatile. In 2021, under extreme supply-demand mismatch, the secondary market price of HDI surged to over CNY 100,000/tonne. With significant breakthroughs in China’s ADN localization, the tight supply situation for HDI has gradually eased, marking the beginning of a long downward trend for HDI prices.
However, HDI prices have stabilized around CNY 35,000/tonne for over two months since May. With the approaching peak season in downstream industries and the support of stockpiling needs, there are faint signs of an uptrend. Currently, HDI prices are at historically low levels, and the price of ADN is close to the cost line, providing some support for the HDI market.
HDI Trimer Prices in 2023 (CNY/tonne)
Owing to the past unstable supply and high price fluctuations of HDI, the demand has been predominantly driven by downstream industries with rigid demand, such as automotive OEM coatings and repair paints. As the supply and prices gradually stabilize, the potential demand for HDI is gradually increasing, especially in the field of new energy. HDI is continuously increasing its share in industries such as coatings for offshore wind turbine blades and solar panel adhesives, leading to significant growth in its consumption. Based on predictions of future installations in the PV and wind power sectors, the emerging demand for HDI in the field of new energy is expected to maintain double-digit growth in the long term.
Looking ahead, although HDI capacity will continue to grow substantially, the demand both domestically and internationally remains robust. In 2022, China’s HDI exports exceeded 70,000 tonnes, recording a significant year-on-year increase and reaching a historical high. HDI exports from China are expected to continue growing in 2023, according to Pudaily’s forecast. Besides, with the decommissioning and clearance of outdated HDI facilities overseas, as well as the stable growth of global HDI demand, China’s HDI exports are expected to maintain a long-term upward trend, which will lend a long-term support to the HDI market.