As smoggy days raise the public’s voice for environmental protection, contributing to continuous tightening of our policies on environmental protection, the importance of environment governance is raised to an unprecedentedly high level. As a major type of chemicals, the rubber chemical industry has remained a hot topic and under high pressure while being an industry to which close attention is paid for its emission of “three forms of wastes”, which makes it bear the brunt of the impact. What are the direct feelings and changes that the high-pressure policies on environmental protection have brought to the rubber chemical industry over more than a year’s time? And where is the industry going? With these confusions, relevant people were interviewed.

Slight Decrease in the Output and Sales of Rubber Chemicals

It is learned from the Professional Rubber Chemical Committee of China Rubber Industry Association, the output value of 47 key enterprises from January to April of this year dropped by 1.43% on a year-on-year basis (the same below), the sales revenue dropped by 3.05%, and the total output of rubber chemicals dropped by 2.26%. In terms of two major products, the output of accelerants slightly grew by 3.76% and that of antioxidants dropped by 4.82%.

Fig. 1: Growth comparison of major indexes for rubber chemicals 

But in the same period of 2016, all of the three above-mentioned major economic indexes saw an increase by 14.61%, 12.00% and 21.37% respectively, as shown in Fig. 1. The growth trends from January to April in 2017 are respectively shown in Fig. 2 ~ Fig. 4.

Fig. 2: Growth trend of the industrial output value of rubber chemicals at the current price in 2017 

Fig. 3: Growth trend of the sales revenue of rubber chemicals in 2017 

Fig. 4: Growth trend of the output of rubber chemicals in 2017 

Nevertheless, exciting data also appeared in the first four months—export growth is larger than that of the same period of last year. Export delivery value rose by 9.62% with an export rate (value) of 35.40%, up by 4.09 %; the export volume rose by 7.13% with an export rate (value) of 32.18%, up by 2.82 %.

The three above-mentioned major economic indexes saw sharp falls. Particularly, the growth has been fluctuating up and down the benchmark line since this year, which has something to do with halt of production of middle and small-sized enterprises and partial limitation on production of middle and large-sized enterprises. 

Halt and Limitation of Production Caused Shortage of Goods Supply

As our new law on environmental protection began to be implemented in 2015 and the routine inspection on environmental protection began to be conducted in 2016, chemical enterprises have been promoted to “enter zones and industrial parks” and asked to shift from burning coal to burning natural gas nationwide. Among the “26+2” cities are Heze, Liaocheng, Hebi, Anyang, Puyang, etc. These regions are the areas that are most severely afflicted by smog and also the “prolific zones” of rubber chemicals. A series of environment-protecting measures and hard hits of the state have not only impacted small enterprises in the rubber chemical industry, but also brought many new problems to large enterprises to consider, such as obnoxious odors from waste gas and dangerous solid wastes.

In order to conform to requirements of the national environmental protection law and save the enterprises’ lifeline of secure living at the same time, leading enterprises practically increased their input on environmental protection. Kemai Chemical Co., Ltd. conducted an improvement and transformation project of MVR waste water treatment. It invested RMB 39 Million Yuan in installing three MVR evaporative crystallization facilities that could separate water, salt and organic matters in waste water from each other before 

recycling them, which turned wastes into resources and reduced the consumption of water resources. Compared with multiple-effect evaporation, this technique is more energy-conserving and efficient. In November 2016, the MVR waste water treatment and transformation project passed on-site inspection and acceptance. Putting it into operation not only added workers on the post but also increased energy consumption for production, including a growth of electricity consumption of 30.95%.

“It costs over RMB 10 Million Yuan to install a set of MVR waste water treatment system. Small factories like us can’t afford it at all,” a boss of a small business said helplessly.

By means of multiple cleaning techniques like the solvent method, Shandong Yanggu Huatai Chemical Co., Ltd. significantly reduced the discharge amount of waste water and other wastes during production. As the producing technique cannot be copied in a short period of time and the new producing technique is gradually being applied, the market share is constantly rising.

Whereas Jiangsu Sinorgchem Technology Co., Ltd. has long since adopted the technology of clean production that contributes to no discharge of “three kinds of wastes”, making it enjoy the advantage brought by environment-friendly products without worrying about limitation on production.

Driven by multiple factors including increasingly stricter inspections on environmental protection, product upgrading and intensifying market competition, some enterprises whose environmental and technological upgrading that are not up to standard and capital strengths that are not strong start to lower their working load and gradually step out of the market. Yet the leading enterprises have increasingly stronger ability to bargain over product prices by virtue of their environment-friendly products and advantages in scale.

As the number of enterprises that participate in the competition decreased, rubber chemicals were in short supply for a while. The most obvious change felt by tire and rubber product manufacturers was fast rise in prices. By tracking the historical data of the magazine China Rubber on “reference prices for raw materials of the rubber industry nationwide”, it was found that the price of Puyang Willing accelerant M sold in markets of Beijing in May 2017 was from RMB 20,000 Yuan to RMB 20,500 Yuan per ton, while the price in September 2016 was RMB 16,500 Yuan per ton. The prices in May and June were even lower at only RMB 14,500 Yuan per ton with an increase rate of 50%.

As is known to all, accelerant M is both a major accelerant type and an important intermediate for accelerates like DM, NS, CZ, etc., which makes it an accelerant type of the largest volume at home. Particularly, accelerant NS is a fine environment-friendly type while being a type of sulfonamide accelerant of the largest volume.

“Last September, accelerant NS was sold at only RMB 20,000 Yuan per ton. Now it’s RMB 30,000 Yuan per ton with a growth of about 50%. This is an unprecedentedly high price in the past ten years or so.” a marketer said, “It’s not about price and money at present. The point is that there are no goods to supply.”

“It used to be that some downstream enterprises would ignore you, making it hard to set up a supply relationship. Now they are looking for us for our goods. When I told them that they got to wait for some time, they said the price was up to me as long as we had enough goods supply,” a deputy general manager on marketing of a chemical enterprise said, “Unexpectedly, it has turned to a sellers’ market for the rubber chemical industry. Good days finally come to us! We’re really fed up with previous years.”

Another of the business staff said, “I don’t feel like good days now. It would be better to ask clients to buy a large portion of our inventory. Instead, the clients pushed us to deliver goods to them. It’s always hard to do business, whether we have enough goods or not.”

Acceleration of Integration Brings Leading Enterprises with Opportunities for Development

According to experts in the industry, the overall rubber chemical industry is in a period of transition and adjustment. On the one hand, as the new environmental law is carried out, the trend becomes obvious that chemical enterprises are moving into chemical industrial parks. Large rubber chemical enterprises are constantly increasing their input in environmental protection. Owing to their considerable strength in capital, advanced environment-protecting facilities and techniques as well as strong R&D ability, the leading enterprises in the industry start to have gradually prominent advantages in competition. On the other hand, middle and small-sized rubber chemical enterprises are undergoing more and more hardships in operation due to undiversified products, lack of talents as well as pressure brought by environmental protection and capital. Considering the two aspects mentioned above, the integration of the rubber chemical industry is going to intensify in the future, and a new pattern of competition is taking shape.

“This has brought leading enterprises in the industry with new opportunities for development. Meanwhile, dually affected by the rise in the costs of waste water treatment and production halt of environmentally substandard enterprises, the supply-demand imbalance is standing out. The market share of leading enterprises has thus further increased.” said an expert in the industry.

It is learned that Shandong Yanggu Huatai Chemical Co., Ltd. plans to seize the opportunities in the market. The Company raised capital of RMB Two Billion Yuan by non-publicly issuing shares, moved from their old factories. At the same time, they adopted cleaner techniques, expand the production scale of the original part of rubber chemical products, and launched a part of new rubber chemical products with an annual capacity of up to 32,000 tons. Meanwhile, it has been working on a project of annually producing 45,000 tons of high-performance rubber chemicals. The products include insoluble sulfur (building in two phases), high-performance accelerant M and accelerant NS in order to increase its market share and competence.

According to this Company, apart from its edge in environmental protection, with increase in the technological level and R&D of new products, its products are expected to gradually enter the high-end market which has been long occupied by foreign manufacturers by virtue of its advantage in costs.