1.1. Development of International Polyvinyl Alcohol
The global production of polyvinyl alcohol (PVA) is mainly concentrated in a few countries and regions such as China, Japan, and the United States, with a total production capacity of about 1.85 million tons. The Asia Pacific region is the main production area, accounting for more than 80% of the world's total production. Representative global enterprises mainly include Japan Keli Co., Ltd., Japan Shuishui Chemical Industry Co., Ltd., Japan Synthetic Chemical Industry Co., Ltd., Anhui Wanwei High tech Materials Co., Ltd., China Petrochemical Group Co., Ltd., Taiwan Changchun Group, Inner Mongolia Shuangxin Environmental Protection Materials Co., Ltd., and Ningxia Dadi Circular Development Co., Ltd.
1.2 Development of polyvinyl alcohol in China
During the reporting period, the total production capacity of polyvinyl alcohol (PVA) in mainland China was 1.096 million tons (excluding Taiwan), making China the world's largest producer of PVA.
After years of competition, the concentration of the domestic polyvinyl alcohol industry has further increased, and the PVA product market has gradually shifted towards advantageous enterprises with large production scale, high market share, strong research and development capabilities, advanced technology, long industrial chain, low costs, and good benefits. The leading enterprises in the PVA industry represented by our company have increasingly obvious advantages in the current and future competitive landscape, gradually becoming a leading indicator of industry development.
The global consumption structure of polyvinyl alcohol (PVA) is: polymerization additives account for about 24%, polyvinyl butyral (PVB) accounts for about 15%, adhesives account for about 14%, textile pulp accounts for about 14%, and paper pulp and coating account for about 10%. The consumption structure in China is as follows: polymer additives account for about 38%, fabric slurries account for about 20%, adhesives account for about 12%, vinylon fibers account for about 11%, papermaking slurries and coatings account for about 8%, building coatings account for about 5%, and others account for about 6%. Polymer additives, fabric slurries, and adhesives are the main downstream consumer markets for polyvinyl alcohol. During the reporting period, the supply and demand of ordinary PVA products in China were basically balanced, with prices steadily increasing. Through technological innovation, the development of high-end polyvinyl alcohol products created good economic benefits and made a significant contribution to the company's profit growth.
With the introduction of new technologies, new processes, and new products, the continuous expansion of new application fields, and the gradual replacement of imported products, new development opportunities have been brought to the domestic polyvinyl alcohol and vinylon industry. However, due to the increased export efforts of various enterprises, adopting a low-end and fierce competition approach, and with the adjustment of China's industrial structure, rising wages and other costs, and high environmental requirements, some downstream industries, such as labor-intensive textile industry, have relocated to Southeast Asia, resulting in a slowdown in domestic demand growth, an increase in foreign consumption, and an increase in export volume. After more than a decade of competitive integration and optimization, the industry is presenting a new pattern of production capacity optimization, concentration improvement, stable market varieties, slow growth of market demand, high technological barriers, few new entrants, moderate competition, and innovative technological development, achieving a new supply-demand balance and developing into a benign new business model.
With the rapid development of downstream PVA industries such as PVA optical films, PVB films, polymerization additives, soil improvement, paper adhesives, ceramic adhesives, environmental protection, and pharmaceuticals and cosmetics, there is a strong demand for special PVA products. The special PVA products of industry leading enterprises represented by our company are developing rapidly, and we have increased our research and development efforts in PVA fibers, PVB resins, PVA optical films, redispersible adhesive powders, and other products, The production technology of PVA special varieties and extended products is becoming increasingly mature, filling multiple gaps in China. New PVA products are gradually being launched in the market, and market share is also constantly increasing. Ordinary varieties are basically being replaced by imports, and the downstream consumption structure of the domestic PVA industry is further expanding.
2. The uses of polyvinyl alcohol
(1) Polyvinyl alcohol (PVA)
Polyvinyl alcohol (PVA) is a high molecular weight polymer made from vinyl acetate (VAC) through polymerization and alcoholysis. It has good adhesion, film-forming properties, oil resistance, colloid protection, and also has some pollution-free and degradable properties in polymer materials. Compared with other chemical products, PVA and its derivatives have a vast development space, and new applications and varieties are still being developed. In the traditional application fields of PVA products, besides being used as raw materials for synthesizing vinylon fibers, they are mainly used in adhesives, textile pulp, papermaking, and other fields. With the continuous application and exploration of new technologies, new processes, and new uses, they also have broad application prospects in industries such as film, soil amendments, food packaging, building materials, medicine, leather making, papermaking, electronics, and environmental protection. Polyvinyl alcohol is mainly used in the production of polymerization additives, fabric slurries, polyvinyl alcohol fibers, and adhesives in China. With the development of China's economy, the domestic demand and export of high count, high-density, and high-end textiles have increased. The development speed of high-end paper making and oil extraction industries has accelerated, and the automotive industry has flourished. The demand for safety glass in automobiles and construction has rapidly increased. These industries provide broad development space for the development of new polyvinyl alcohol products. At the same time, a large amount of infrastructure construction in China provides development opportunities for the adhesive market, and the steady development of the electronics, papermaking, pharmaceutical, and fine chemical industries further drives the increase in demand for polyvinyl alcohol.
(2) High strength and high modulus PVA fiber
High strength and high modulus PVA fiber is a high-performance fiber product with good mechanical properties, biocompatibility, and non-toxic properties. Due to its good affinity with water and good dispersibility in alkaline cement slurry, especially its unique surface structure, it has good mechanical bonding, and its strength can reach more than 2.5 times that of asbestos reinforced cement. Therefore, it can be used for the reinforcement of cement and ceramic building materials;
At the same time, its excellent corrosion resistance can also be used in cable and aquaculture industries; In addition, due to its low elongation and good adhesion with polymer materials such as rubber and plastic, it can be used for bonding rubber products, coating layers, woven hoses, etc; It is also applied in the fields of artificial intestines and medical sutures. In terms of fiber length, high-strength and high modulus PVA fiber is not easy to enter people's respiratory system. As a substitute material for asbestos, it is harmless to human body and is known as "green environmental protection product". With its advantages of high modulus, high strength, ACID and alkali resistance, aging resistance, pollution-free, etc., it has a wide range of applications in building materials, construction, leather making, rubber, medical devices and other fields.
At present, the global enterprises that produce high-strength and high modulus PVA fibers mainly include Japan's Keli, Japan's Unichka, Malaysia's JTC, Wanwei High tech, Sichuan Chuanwei, Inner Mongolia Shuangxin, Ningxia Dadi, etc., with a total production capacity of about 120000 tons. In 2021, the global demand for high-strength and high modulus PVA fibers is about 80000 tons, of which about 70000 tons are used in the building materials field, mainly to replace asbestos, and a small amount is used in the concrete industry. It is expected that by 2025, the global demand for high-strength and high modulus PVA fibers can reach 100000 tons/year, with a compound annual growth rate of about 5%.
(3) Pvb Resin
PVB Resin is mainly used in the automotive and construction industries to manufacture laminated safety glass. PVB resin is first pressed into a thin film and then embedded between glass panels to make laminated glass panels. The interlayer material in safety glass can absorb a certain amount of impact energy, and this material has good sound insulation and UV resistance. From the perspective of downstream consumption structure, about 89% of PVB resin is used in the production of safety glass in the construction and automotive industries, 14% is used in photovoltaic materials, and the remaining 7% is used in materials such as paint, glue, and dyes. 80% of the global market share of PVB resin is occupied by four companies: Suno from the United States, Shuishui Chemical from Japan, DuPont from the United States, and Keli from Japan. Among them, Shounuo's products are mainly used in the automotive and construction industries. The products with accumulated water are mainly used in the automotive industry, while Coca Cola and DuPont occupy important positions in emerging photovoltaic material applications. Due to the technological complexity of producing PVB resin, these four companies monopolize the demand for PVB resin in automotive, building safety glass membranes, and cutting-edge products such as aviation and electronics. The high selling price has enabled these multinational companies to gain extremely lucrative profits. In the Chinese market, the selling price of PVB resin has reached over 80000 yuan/ton. At present, the production scale of PVB resin in China is relatively small. More than ten PVB resin producing enterprises in the country produce about 72000 tons of physical PVB resin annually, with average quality and mostly used in the construction field. According to industry insiders, China requires over 100000 tons of PVB resin annually for safety glass. With the development of the high-rise building industry, the demand for PVB resin for curtain wall glass will show a significant growth trend. The usage of PVB resin in other industries is also constantly increasing, and its application areas are expanding. It is expected that the total demand for PVB resin in China will reach 150000 tons in 2022, corresponding to a market size of about 2.2 billion yuan. Among them, the demand for PVB resin for membrane use will exceed 130000 tons, and the demand for PVB resin in other industries will reach 20000 tons.
(4) Redispersible latex powder
The redispersible latex powder is mainly used in exterior wall insulation, ceramic tile bonding, interface treatment, bonding gypsum, plastering gypsum, building interior and exterior wall putty, decorative mortar and other construction fields, with an extremely wide range of applications and good market prospects. The promotion and application of redispersible latex powder have greatly improved the performance of traditional building materials, greatly enhancing the adhesion, cohesion, flexural strength, impact resistance, wear resistance, durability, etc. of building materials, thereby ensuring the quality of construction projects with its excellent quality and high technological content. At present, the domestic production capacity of redispersible latex powder has reached 150000 tons, with a demand of about 100000 tons, and is increasing at a rate of about 10% per year. The main suppliers are Germany's Wacker, the United States' Aksu, Taiwan's Dalian Chemical, and Wanwei High tech. According to statistics, China has over 2 billion square meters of newly built buildings and hundreds of billions of square meters of existing buildings that need to be renovated every year. With the implementation of national laws and regulations on building energy conservation, the vigorous promotion of pre mixed dry mixed mortar technology, and the restrictions imposed by various provinces and cities on the mixing of building mortar on construction sites, the application of redispersible latex powder will undoubtedly be greatly developed. It is expected that the domestic demand will reach 200000 tons by 2025.
(5) PVA optical thin film
PVA optical thin film is the core film material of the polarizer, a key material for liquid crystal displays. The polarizer is composed of multiple layers of thin film, and its raw material cost accounts for 80% of the total production cost. The raw materials mainly include TAC film, optical grade PVA film, pressure sensing adhesive, protective film, and release film, with TAC accounting for about 50% of the cost, optical grade PVA film accounting for 12%, adhesive 5-10%, protective film and release film 15%, chemical materials 5%, and other costs accounting for 10%. Due to the high technological content of PVA optical thin films, the global market is mainly monopolized by two Japanese companies, Keli and Synthetic Chemistry. Keli accounts for about 70-80% of the global production capacity and monopolizes the PVA raw material market for films, with the remaining 20% almost controlled by Japanese Synthetic Chemistry. Only Anhui Weixin High tech and Taiwan Changchun Jian have a small amount of narrow film supply to the mid to low-end market in China, with a market share of less than 1%, and there are no other production enterprises in the world. With the continuous transfer of global LCD display production capacity to China, the competition in the domestic polarizer market is becoming increasingly fierce. Major manufacturers have become more strict in cost control, and the demand for upstream raw material localization is becoming increasingly urgent. In 2020, the actual demand for polarizing films in China was about 250 million square meters based on production capacity, which is equivalent to about 150 million square meters of PVA optical film usage. Considering normal consumption in cutting and production, the corresponding demand is about 190 million square meters. Calculated at 25 yuan/m2, the corresponding domestic market size is about 4.8 billion yuan.
(6) VAE lotion
VAE lotion is milky white or yellowish in appearance, and has the advantages of permanent softness, water resistance, weather resistance, low temperature resistance, fast bonding speed, high bonding strength, safe and non-toxic use, etc. The products are widely used in adhesives, external wall insulation, building waterproofing, coatings, composite packaging materials, building cement mortar modification, non-woven fabric manufacturing, paper coating, and general bonding of various polar and non-polar materials, among which adhesives are the most widely used field of VAE lotion, and also the field with the largest market demand. At present, the global enterprises producing VAE lotion mainly include American Air Products, Celanese, Dalian Chemical, Richhold Chemical, Wacker Chemical (South Korea), Beijing Organic Chemical Plant, Wanwei High tech, Sichuan SVW, with a total capacity of 2.14 million tons/year. Another production plant of about 206000 tons/year is under construction, and 155000 tons/year production plant is planned to be built within two years. China is a major user of VAE lotion, and also the fastest growing market. There is a large gap in domestic demand. With the rapid development of the domestic economy, especially the country's attention to building energy conservation and environmental protection, the market demand for VAE lotion will continue to grow in the future.
(7) Polarizing film
Polarizers are mainly used on liquid crystal display panels, accounting for about 10% of the cost of TFT-LCD (thin film transistor liquid crystal display) panels. LCD display imaging must rely on polarized light, and the LCD display module must include two polarizing plates. In the LCD display module, there are two polarizing plates attached to both sides of the glass substrate. The lower polarizing plate is used to convert the light beam generated by the backlight into polarized light, while the upper polarizing plate is used to analyze the polarized light modulated by the LCD, generate contrast between light and dark, and thus produce a display image. Without any polarizer, the LCD display module cannot display images. At present, the world's major manufacturers include Nippon Electric, Sumitomo Chemical, Mitsubishi, PALANOTEC, LG Chemical, Lite, and others. According to statistics, the global polarizer production capacity in 2020 was approximately 727 million square meters, and the overall capacity expansion has stabilized, with a market capacity exceeding 12 billion US dollars. According to IHS forecast data, China's LCD panel under construction and production lines are at full load, requiring a total polarizer area of 438 million square meters. However, in 2020, China's polarizer production capacity was only 285.8 million square meters, with a supply-demand gap of 152 million square meters per year. However, China's polarizer research and development technology is backward, which is not commensurate with its position as a major producer of LCD displays. Most of the domestic production capacity is occupied by Japanese and Korean enterprises, and there is huge room for domestic substitution.
