Flame Retardants-Changes in the supply and demand relationship-Aluminum Diethyl Phosphinate
1. Demand for flame retardants is rigid, and stricter regulations are driving consumption growth
Flame retardant is a plastic additive that prevents materials from being ignited and inhibits flame propagation. It is mainly used in electronic appliances, construction and other industries. With the increase in the use of downstream rubber and plastic materials, the increase in safety awareness, and the stricter global requirements for flame retardant performance, the demand for flame retardants continues to grow rapidly, and it has become the second largest additive after plasticizers. In 2018, the global flame retardant market reached 3.05 million tons, and it is expected to maintain a growth rate of more than 5% in the future. Aluminum Diethyl Phosphinate
2. The process of halogen-free substitution is accelerated, and phosphorus-based flame retardants are developing rapidly
According to different flame retardant elements, flame retardants can be divided into three categories: organic halogen, organic phosphorous and inorganic. Inorganic flame retardant has low efficiency and is mainly used in low-end products. Organic halogen-based flame retardants have potential safety hazards. Many halogen-based flame retardants have been banned. The same efficient but safer phosphorus-based flame retardants continue to replace their market share. From the perspective of resource endowment, the global shortage of bromine resources and the increase in bromine prices have led to the loss of cost advantages of brominated flame retardants.
3. PC capacity expansion + new energy vehicle promotion, driving demand for engineering plastic flame retardants
The increase in demand for engineering plastic flame retardants comes from: 1) The new EU regulations will be implemented in March 2021, and the process of halogen-free replacement is accelerated; 2) PC production capacity is expanding rapidly, and the cost of PC/ABS+ phosphorus flame retardants is significantly reduced to help phosphorus The demand for flame retardants is growing; 3) New energy vehicles have entered a period of rapid development, and the compound growth rate in the next year is expected to reach more than 30%, which will drive the demand for flame retardants for engineering plastics. 4) 5G base stations and terminal equipment will drive the consumption of engineering plastics. It is estimated that the demand for engineering plastic flame retardant BDP will increase from 120,000 tons/year to 180,000 tons/year in the next three years. BDP has high production barriers, difficult processes, strict approvals, and high customer certification barriers. The supply-side pattern is stable, CR3>90%, and no effective new capacity is expected in the next 2-3 years. As demand accelerates, prices are expected to continue to rise.
4. The demand increases and the supply shrinks sharply, and the price of polyurethane flame retardant is expected to rise.
Environmental protection has become more stringent, and small production capacity has gradually withdrawn, and the supply gap in the polyurethane flame retardant industry has continued to expand. It is expected that by the end of 2020, the exit capacity will reach 30% of the current global production capacity. Polyurethane flame retardants have high entry barriers. From planning to passing the energy assessment, environmental assessment, and safety assessment, it will take at least 3 years for the final stable production to be carried out. It is difficult for the supply side to expand significantly in the short term. The impact of the epidemic has gradually subsided, and demand has recovered. Supply and demand have increased. After cyclopentane foaming agent replaced 141B foaming agent, demand for flame retardants increased, and the price of raw material propylene oxide increased. TCPP price increased from RMB 1.0-1.1 million in the first half of the year. The ton rose to 1.5-1.6 million yuan/ton. In the future, the supply side will continue to shrink, and the situation of tight supply and demand may intensify, and TCPP prices are expected to rise further
1.1 Flame retardant: an indispensable additive for rubber and plastic materials
Flame retardant is a kind of rubber and plastic additives that prevent materials from being ignited and inhibit the spread of flames. It is also a modified additive of materials. With the widespread application of synthetic materials and the gradual improvement of fire protection standards, flame retardants are widely used in plastics, rubber and coatings and have become the second largest rubber and plastic additives after plasticizers. According to the main flame retardant chemical elements in flame retardants, they are divided into three categories: organic halogen, organic phosphorus and inorganic.
The performance of organic halogen and organic phosphorus flame retardants is better than inorganic flame retardants. The three types of flame retardants have different chemical compositions and different flame retardant mechanisms, which also leads to greater differences in their performance. Inorganic flame retardants are physically flame-retardant, with low flame-retardant efficiency and a large amount of addition, which will have a certain impact on the performance of the material. However, due to the low cost of inorganic flame retardants, they are still the most used type. Compared with inorganic flame retardants, organic halogen flame retardants have high flame retardant efficiency, require less addition, and have good compatibility with polymer materials, and are widely used in various materials. However, with the strengthening of the awareness of safety and environmental protection in recent years, the safety issues of organic halogen flame retardants have gradually been realized by people. Some halogen flame retardants have been banned, and safer phosphorus flame retardants have become more and more popular. Use more.
1.2 The flame retardant market continues to grow, and phosphorus flame retardants take the lead
The steady growth of plastic consumption drives the demand for flame retardants. Flame retardants are mainly used in plastics, accounting for 80%. Other application areas include rubber, textiles, coatings, etc. The application of plastics has gradually penetrated into all aspects of the national economy, and has important applications in agriculture, packaging, building decoration, transportation, electronic appliances and other fields. In recent years, global plastic consumption has grown steadily, with the growth rate remaining at about 4%, which has driven the demand for flame retardants to continue to increase.
Fire and flame retardant requirements have become stricter, and the flame retardant market has developed rapidly.
The flame retardant industry is driven by fire and flame retardant regulations. At present, the most stringent implementation of flame retardant regulations worldwide is the electronics and construction industries, which is one of the largest markets for flame retardants. Developed countries such as Europe and the United States have stricter flame-retardant regulations for industries such as automobiles, electronic appliances, network communication equipment, construction, and furniture, while the regulatory system and industry standards for flame retardants in my country are still being improved. With the improvement of life quality requirements and the strengthening of fire safety awareness, fire protection regulations will receive more attention, which is expected to promote the rapid development of the flame retardant market.
In terms of breakdown, the demand for phosphorus-based engineering plastic flame retardants and phosphorus-based polyurethane flame retardants will usher in growth. Thanks to EU halogen-free regulations, phosphorus-based engineering plastic flame retardants will accelerate the replacement of brominated flame retardants. At the same time, the construction of downstream new energy vehicles and 5G will accelerate, and the amount of engineering plastics will increase significantly, driving the demand for engineering plastic flame retardants Rapid growth. In the field of polyurethane flame retardants, cyclopentane has gradually replaced HCFC-141b in the application of polyurethane foaming agents. As cyclopentane is more flammable, the demand for polyurethane flame retardants has accelerated. In the long run, polyurethane consumption continues to grow, downstream applications continue to expand, and the demand for polyurethane flame retardants is also growing.
1.3 With the general trend of halogen-free substitution, the demand for phosphorus-based flame retardants is growing rapidly
Safety and environmental protection are becoming stricter, and halogen-free substitution is the general trend. In the past, organic halogen-based flame retardants have become the mainstream choice due to their price advantages, but they will generate a large amount of smoke and harmful gases during use, and most of the organic halogen-based flame retardants are difficult to decompose, and are harmful to the environment and organisms. Compared with organic halogen flame retardants, organic phosphorus flame retardants have the characteristics of low toxicity, less smoke, and low corrosion, and have significant environmental protection advantages. In addition, they can improve the processing fluidity of the alloy and provide plasticizing functions. Excellent. In recent years, countries such as Europe and the United States have successively promulgated regulations to gradually restrict and ban brominated flame retardants. Representative environmental protection laws mainly include "RoHS" and "Stockholm Convention." With the continuous improvement of environmental protection requirements, phosphorous flame retardants are accelerating the replacement of brominated flame retardants.
2.1 Engineering plastic flame retardants: PC expansion + new energy vehicle promotion, the demand for engineering plastic flame retardants has increased significantly
Engineering plastics include five categories: polycarbonate (PC), polyamide (PA), polyoxymethylene (POM), thermoplastic polyester, and polyphenylene ether (PPO). They have good mechanical properties, heat resistance, and electrical insulation. Such excellent properties, and can be used as engineering materials and replacement of metal manufacturing machine parts, etc., and is called engineering plastics. In the application fields of engineering plastics, such as automobiles, electronic appliances, etc., flame retardancy is one of the essential properties, and engineering plastics flame retardants play an important role.
The new EU regulations increase halogen-free substitution, and phosphorus-based engineering plastic flame retardants usher in opportunities for substitution in the stock market. Because BDP, RDP and other halogen-free organic phosphorus flame retardants have good compatibility with engineering plastics such as PC/ABS, and have the advantages of good environmental performance, high thermal stability, and small impact on material performance, they are used in mobile phones and laptops. It is widely used in electronic and electrical equipment such as televisions and televisions. Developed markets such as the European Union have banned the use of halogen-based flame retardants such as polybrominated biphenyls and polybrominated diphenyl ethers in the manufacture of electronic equipment. In December 2019, the European Union announced the new ecological design requirements for electronic displays. From March 1, 2021, the use of halogenated flame retardants in the chassis and bases of all electronic displays, monitors and TVs is prohibited.
The consumption of downstream engineering plastics is growing rapidly, and there is huge market space for the increase of engineering plastic flame retardants. The future growth in the demand for engineering plastics flame retardants will mainly come from three aspects: ①The continuous expansion of PC production capacity and the significant reduction in costs help increase the demand for phosphorus-based flame retardants; ②The endogenous growth of the new energy vehicle market is strong, and the demand for engineering plastic flame retardants is increasing; ③ The number of 5G base stations has grown substantially, and smart terminals have ushered in plastic replacement.
The development of new energy vehicles will drive a substantial increase in the demand for engineering plastic flame retardants.
Due to the short charging process time, high current intensity, and high frequency of use of electric vehicles, the material is required to have certain high temperature resistance, aging resistance, and halogen-free flame retardancy and low smoke when burning Therefore, engineering plastics are widely used in the field of new energy vehicles. New energy vehicle parts, charging pile housings, power battery brackets, etc. all use engineering plastics. The demand for engineering plastics for new energy vehicles comes from two aspects: ①The sales of new energy vehicles are growing rapidly, and the lightweight process is accelerated, which greatly increases the amount of engineering plastics; ②The current gap in charging piles is large, and future construction will accelerate. According to estimates, the amount of engineering plastic used for each new energy vehicle is about 30 kg, and the amount of engineering plastic used for each charging pile is about 6 kg.
The new energy vehicle market ushered in a period of rapid development.
New energy vehicles are of far-reaching significance for improving industrial competitiveness, improving future energy structure, and developing low-carbon transportation. Major developed countries and regions in the world have adopted new energy vehicles as an important strategic direction for future development and speeding up industrial layout. According to the "Global EV Outlook 2019" report released by the IEA, under the New Policy Scenario (NPS), global electric vehicle sales may reach 475, 1238, and 22.53 million in 2020, 2025, and 2030, and 2018-2030 The annual compound growth rate may reach 35%; in 2020, 2025, and 2030, the global electric vehicle ownership is expected to reach 1440, 5510, and 13.4.1 million, respectively, and the compound growth rate from 2018 to 2030 is expected to reach 30%. In 2019, the global sales of pure electric vehicles and plug-in hybrid vehicles were 2.21 million units.
Timetables for the ban on the sale of fuel vehicles in countries around the world have been finalized, and traditional car companies have transformed their deployment of new energy vehicles. At present, many countries have established a timetable for the ban on the sale of fuel vehicles. Norway will take the lead in banning the sale of fuel vehicles in 2025. The Netherlands and Germany will implement the ban on sales in 2030. France and the United Kingdom will ban the sales in 2040. With the increasingly clear policy orientation, major car companies have transformed their deployment of new energy vehicles. Volvo, Fiat, etc. have begun to stop selling fuel vehicles in 2019, and leading car companies such as Honda and Volkswagen will also stop in 2025 and 2030 respectively. Sales of fuel vehicles, new energy vehicles will usher in rapid growth in the future.
New energy vehicles accelerate the lightweight process, and the application of engineering plastics has increased significantly. The cruising range is currently a major problem that restricts the development of new energy vehicles, and the lightweight approach can effectively reduce vehicle energy consumption and increase the cruising range. Studies have shown that for every 100kg weight reduction of new energy vehicles, the cruising range can be increased by 10%-11%, and it can also reduce the battery cost by 20% and the daily loss cost by 20%. The promotion of new energy vehicles in the future is expected to accelerate the process of vehicle lightweighting. Compared with metal, engineering plastics usually have a density of only 1/9~1/4 of that of steel, which can greatly reduce the weight of cars. After modification (such as glass fiber reinforcement), the mechanical strength can also be comparable to metal. In addition, engineering plastics also have some advantages that metals do not possess, such as chemical stability, electrical insulation, wear resistance, impact resistance, and processing performance. Developed countries have taken the amount of plastic used in automobiles as an important indicator to measure the level of automobile design and manufacturing. At present, the average amount of plastic used in bicycles in foreign countries is about 150kg, while that in my country is only about 100kg. There is still a lot of room for growth. New energy vehicles will drive a significant increase in the application of engineering plastics.
2.2 Polyurethane flame retardants: supply shrinks sharply and demand accelerates, prices are expected to rise strongly
Polyurethane is a heat-resistant and flammable polymer material, and will generate toxic gas when heated, so it must be used with polyurethane flame retardant. The current polyurethane flame retardant market is dominated by low-halogen phosphorus-based tris (2-chloroethyl) phosphate (TCPP) and tris (2-chloropropyl) (TCEP), because the molecule contains both phosphorus and chlorine. Elements, TCEP and TCPP have very high flame retardant efficiency. In recent years, with the rise of halogen-free, new halogen-free flame retardants such as dimethyl methyl phosphate (DMMP) and diethyl ethyl phosphate (DEEP) have also been used more and more.
TCEP is the earliest and cheapest additive flame retardant. It can be used in PU soft foam and PU rigid foam. It has good hydrolysis resistance and flame retardant efficiency. TCPP is similar in structure to TCEP, but TCPP is not potentially carcinogenic, so it is gradually replacing the use of TCEP. In addition to flame retardant, TCPP also has a plasticizing effect. It is mainly used in PU hard foam and PIR hard foam, and it also has some applications in PU soft foam. DMMP and DEEP are new halogen-free flame retardants, which have the special advantages of high phosphorus content, excellent flame retardancy, low addition, and compatibility with water and various organic solvents. They are currently in the market promotion stage. It can be used in both foam and hard foam, while DEEP is mainly used in hard foam.
Environmental protection policies have become stricter and production capacity has withdrawn, and the supply of polyurethane flame retardants has shrunk significantly. The global market size of polyurethane phosphorus flame retardants is about 300,000 tons, and China's production capacity accounts for 80%. Affected by the tightening of domestic environmental protection and the policy of retreating from the city to the park, some small production capacity such as Shandong Taixing New Materials will be shut down and exited in 2020. The industry supply and demand continue to be tight, and the TCPP price has risen from 10,000-11,000 yuan/ton to 1.5- 16,000 yuan/ton. By the end of 2020, Futong Chemical, Ruishite and other units are expected to be shut down, and the total shut down capacity will reach more than 30% of the global production capacity, and the industry supply side is facing a significant contraction. Polyurethane flame retardants have high entry barriers. From planning to passing the energy assessment, environmental assessment, and safety assessment, it will take at least 2-3 years for the final stable production to be carried out. It is difficult for the supply side to expand significantly in the short term. In the future, the supply side will continue to shrink, and the situation of tight supply and demand is likely to intensify, and TCPP prices are expected to rise further.
As supply shrinks and demand accelerates, TCPP price spreads are expected to continue to rise. At the end of July 2020, the raw material PO entered the inventory replenishment cycle, and the price skyrocketed. At the same time, the TCPP supply and demand were tight, and the TCPP price and the spread rose sharply. The price rose from 10,000 yuan/ton to 14,000 yuan/ton, and some manufacturers' quotations reached 1.5-1.6 RMB 10,000/ton, the price difference increased from RMB 2,500/ton to more than RMB 4,300/ton. Recently, due to the continuous increase in PO prices and the commissioning of Chenhua’s new equipment, the TCPP spread has dropped to about 2,200 yuan/ton, but it is expected to rebound in the future. From the perspective of raw materials, the price of propylene was relatively high in the first half of the year, the profit of PO was under pressure, and most of the equipment fell negative. Therefore, PO started the replenishment cycle at the end of July, which led to a strong price rebound. In recent years, the HPPO and PO/SM processes have risen, and a large number of new production capacity will be released in the next two years. However, it will take time for the traditional chlorohydrin process to exit. In the future, there will be overcapacity in PO, and prices will fall to low levels. .
For the TCPP industry, after the exit of small production capacity in the future, the supply will shrink significantly. On the demand side, the polyurethane foaming agent is gradually changing from the non-flammable HCFC-141b to the flammable cyclopentane, and the demand for polyurethane flame retardant The growth has led to the continuous enlargement of the TCPP market supply gap, and the industry's supply and demand will become extremely tight. The bargaining power of TCPP manufacturers will be greatly improved, which is expected to promote the continued increase in prices and further widen spreads. In addition, TCPP has a small proportion of downstream costs and high price elasticity, which also constitutes the basis for price increases. Calculated based on the 8% addition amount, if the TCPP price increases by 1,000 yuan/ton, the overall cost of the polyurethane system will only increase by 80 yuan/ton, which has little impact, and downstream manufacturers are less sensitive to TCPP prices.