Recently, Asahi Kasei and Trinseo announced the closure of their factories.
On November 15th, Asahi Chemical announced that the company's shareholders' meeting had decided to terminate the operation of its subsidiary PTT Asahi Chemical Co, Ltd (PTTAC) and dismantle its factory facilities. The plan is to end production on October 31, 2024, sales on December 31, 2024, and dismantle factory facilities from 2025 to 2028.
According to the data, PTTAC was established in 2006 as a joint venture between Asahi Kasei and PTT Global Chemical Public Company Limited (PTTGC), each holding 50% equity in Thailand. It mainly produces and sells acrylonitrile (AN) produced by propane process, methyl methacrylate (MMA) and ammonium sulfate produced by ACH process, and mainly supplies Southeast Asian customers.
The main reason for the closure is that, starting around 2022, with the sustained economic downturn and rising raw material costs, the company's competitiveness has declined. In addition, due to the increase in production capacity in China and the deterioration of supply and demand balance, the profitability situation is unfavorable, and the two companies believe that PTTAC's good operation is difficult to continue to develop.
Acrylonitrile is mainly synthesized to produce products such as polyacrylonitrile fiber (acrylic), ABS resin, nitrile rubber, adiponitrile, and acrylamide. By the first half of 2024, the global production capacity of acrylonitrile has reached 8.791 million tons/year, of which the total production capacity in Chinese Mainland is 4.399 million tons/year, accounting for about half of the global production capacity. The overall supply exceeds demand. The representative enterprises are: Silbang, Shanghai SECCO, Zhejiang Petrochemical, Anqing Petrochemical, Jilin Petrochemical, Lihuayi, Liaoning Jinfa, Keruer, CNOOC, etc.
Methyl methacrylate is mainly used in the production of organic glass (PMMA), methyl methacrylate styrene butadiene copolymer (MBS), polyvinyl chloride additive (ACR), etc. Third party data shows that in recent years, China's industry has rapidly increased, with a production capacity of 1.992 million tons per year in 2023. Key enterprises include Chongqing Yixiang Chemical, Silbang, Jilin Petrochemical, Qixiang Tengda, Zhejiang Petrochemical, Jiangsu Jiankun Chemical, Wanhua Chemical, etc.
Coincidentally, on September 11th of this year, another giant Sumitomo Chemical announced on its official website that it would close two of its three wholly-owned MMA and PMMA production lines in Singapore by the end of September 2024, resulting in a reduction of approximately 80% in MMA monomer production capacity and 70% in PMMA production capacity at the factory.
The reason given by Sumitomo Chemical is that it expects the production capacity of MMA monomers and PMMA, especially in Asia, to continue expanding in the future. In the medium to long term, it is difficult to ensure stable sales volume and profit margins, especially in the field of general grade products. In the future, the company will focus on specialty and high value-added PMMA products.
On November 13th, Trinseo has agreed to provide a polycarbonate (PC) technology license and all proprietary PC production equipment from its factory in Stade, Germany to Deepak Nitrite's wholly-owned subsidiary for use in India. The total value of this agreement is 52.5 million US dollars.
Shengxiao has a PC production capacity of 160000 tons per year at the factory, making it the second largest PC manufacturer after Covestro. Its global production capacity accounts for about 5% of the total global production capacity. Shengxiao was spun off from Dow Chemical in 2010 and went public in 2014. Its main products are polymer products, latex, and specialty materials.
Shengxiao announced in October that it plans to permanently shut down its PC production in Stade, Germany by January 2025 and rely on external suppliers to meet its PC needs. As early as 2019, Shengxiao evaluated the factory due to weak demand and fierce competition, but chose to retain the factory due to considerations for downstream composite business PC supply.
It is reported that the global PC production capacity exceeds 5.4 million tons per year, of which China's production capacity (including foreign-funded installations in China) exceeds 3.3 million tons per year, accounting for about 62% of the global total production capacity and is the largest PC producing country. In the past few years, China's PC production capacity has shown rapid growth, with an average annual growth rate of over 23%, and has fully participated in the market competition environment. This may also be another factor for Shengxiao to give up the PC market.
Deepak Nitrite announced in February 2024 that its subsidiary Deepak Chem Tech Ltd. had signed a memorandum of understanding with the Indian state of Gujarat to invest INR 90 billion (USD 1 billion) in various projects, including PC resin and composite materials, as well as production plants for methyl methacrylate (MMA) and aniline, in Dah, India, with plans to commence operations by the end of 2027.
In May 2024, Deepak Nitrite acquired PC composite material manufacturer OXOC Chemicals Ltd. (India) and is building a PC composite material factory with an annual output of 30000 tons.