IDENTIFYING AND SELECTING PROSPECTS FOR DOWNSTREAM MARKET...

IDENTIFYING AND SELECTING PROSPECTS

FOR DOWNSTREAM MARKET DEVELOPMENT

Marketing Seminars at APIC 2018

Kuala Lumpur, 20 August 2018

Peter Huang

CEO

CNCIC CONSULTING

⚫ After ~60 years of development, CNCIC has

become a world-renowned chemical

consulting, research and information service

provider. Being customer-centric, it provides

superior value-added information services for

customers

⚫ CNCIC is mainly engaged in chemical

industry Consulting, HSE, Information

technology, E-commerce, Competitive

intelligence, Convention & exhibition and

Publishing businesses

COMPANY INTRODUCTION – CNCIC

China National Chemical Information Center (CNCIC)

Unique Resources

Create, Win &

Grow Together

Professional

Research Team

Increase Value

for Customers

Customized

Services

Established the Institute of Scientific & Technological Intelligence (ISTI) of the Ministry of Chemical Industry (MCI)

Established the Economic Information Center (EIC) of the MCI

ISTI and EIC were merged to form CNCIC

Bureau of Chemical Standardization was merged into CNCIC

19591984

1992

2008

2011

China Chemical Condition Center was merged into CNCIC

2© 2018 CNCIC Consulting. All rights reserved

Beyond data, we provide our insights

from 250+ professionals

Strategy

Planning

Enterprise strategy planning

Industrial park

planning

Marketing

strategy

Industrial

Market

Research

Industrial chain optimization

Deep market research

Competitiveness /Competitor Intelligence

Customer Survey

Investment opportunity analysis

Investment & financing consulting

IPO

supporting

report

Due

diligence

Dumping &

Anti-dumping

report

Engineering

Consulting

Feasibility study report

Fund application

report

Post-evaluation

report

M&A

analysis

COMPANY INTRODUCTION – CNCIC CONSULTING

© 2018 CNCIC Consulting. All rights reserved 3

The petrochemical and chemical industry as a whole presents a layout that

weakens from east to west. And the macro distribution situation of the Chinese

chemical industry has also changed constantly

Northwest National share

Oil and gas

exploitation

28.4%

Refining 13.4%

North China National

share

Oil and gas

exploitation

18.9%

Equipment 14.3%

Chemical

materials

13.1%

Refining 11.6%

Northeast National

share

Oil and gas

exploitation

24.2%

Equipment 22.4%

Refining 18.4%

Chemical materials 11.9%

Fertilizer 11.2%

East China National

share

Pesticide 68.3%

Synthetic material 66.8%

Specialty

chemicals

67.0%

Rubber products 63.4%

Coating dyes, etc. 51.5%

Chemical

materials

49.6%

Refining 34.9%

Equipment 34.6%

Fertilizer 32.5%

Central South National

share

Central South National

share

Chemical mine 38.1% Coating dyes, etc. 29.5%

Fertilizer 24.8% Refining 20.5%

Specialty

chemicals

17.7% Rubber products 16.6%

Pesticide 16.3% Chemical materials 15.4%

Synthetic

material

14.3%

Southwest National share

Chemical mine 38.5%

Fertilizer 17.0%

• Shandong, Jiangsu,

Guangdong, Zhejiang and

Liaoning, has accounted for

more than half of the

national total for a long term

• The central and western

Chinese regions rely on their

advantages in coal, natural

gas and other resources to

enter the chemical industry

in a large scale.

• Compared to other Chinese

regions, the chemical

industry in the northeastern

and northern Chinese

regions grows at a slow rate.

• Affected by resources, the

environment and market

changes, the trend of the

industry transferring

westwards is obvious.

CHINA CHEMICAL INDUSTRY STATUS AND DEVELOPMENT TRENDS


1. Net import volume and value are2017 data

2. Bubble size: net import volume ofthe product in 2017

3. Only products with >US$500million import value or whose self-sufficiency rate is below 70% arelisted

Structural overcapacity of bulk chemicals in midstream

• Serious overcapacity: fertilizers, dyes, caustic soda, PVC, organosilicone monomers, methanol,

acetic acid

- high resource dependence and low technology

• Foreign producers may find some opportunities in products which are hard for local producers to

produce due to

- lack of technology

- cost too high

Local producers short of technology

Other reasons

Production cost too high for local

producers

6

5

5

Acrylonitrile

Toluene

MethanolEthylene

Propylene

PolypropylenePolycarbonate

EVA

ABS ResinLLDPE

HDPE

LDPE

Poly Formaldehyde

Acetone

Styrene

Fatty Alcohol

Bisphenol A

p-Xylene

Glycol

Nitrile RubberButyl Rubber

Ethylene Propylene Rubber

656055504540353025201510

Imp

ort v

alu

e/b

illion

$

3

2

1

0

Self-sufficiency rate/%

9590

4

807570

10

9

8

7

85

© 2018 CNCIC Consulting. All rights reserved


5

6

MNCs are more active in the downstream fine chemicals and

specialty chemicals market

Barriers

for slow growth

Drivers

for high growth

• In industrial and institutional detergents, personal care cosmetics, electronic chemicals, specialty

polymers , nutritional agents, surfactants and flavors and fragrances, etc.

• Downstream sectors

face strong pressure in

environmental

compliance

• Constrained by

downstream sectors’

development

• Alternative

technologies and

products

• Downstream

sectors maintain

high growth

• Industrial

upgrading30

105

20

115

10

125

0 CAGR

131211109

15

Market size

5

120

110

25

876543210

Specialty Paper Chemicals

Imaging Chemicals and Materials

Printing Inks

Mining Chemicals

Feed additives

Rubber Processing ChemicalsFlame Retardants

Specialty Coatings

Construction Chemicals

100

Adhesive and Sealants

Plastics Additives

Food Additives

Pesticide

Electroplating Chemicals

Synthetic Lubricating Oil

Water-Soluble Polymers

Catalysts

Water Management Chemicals

Specialty Polymers

Oil Field Chemicals

Lubricating Oil Additives

Surfactants

Electronics Chemicals

Nutraceutical Ingredients

Cosmetic Chemicals

Industial and Institutional Cleaners

35

45

50

55

40

95

Flavors and Fragrances

Billion RMB

2017

2017-2021

Average CAGR



New material industry is a technology intensive industry, including

high-end chemical products, traditional chemicals and chemicals

produced by secondary processing

7

Category of New Materials

New application development Specialties in traditional fields Products by secondary processing

• Organic fluorine material

• Organic silicon material

• Engineering plastic

• Functional polymer material

• Specialty rubber

• Specialty fiber

• Polyurethane

• Biomass based material

• Other new material

• Modified plastic

• Composite material

• Nano material

• Functional membrane materials

• High performance polyolefin

• Specialty coating

• Specialty adhesive agent


NEW MATERIAL MARKET OUTLOOK

Global output value of new material industry, 2012~2020

Unit: billion$

541 574 604 638 669 690

840

2012 2013 2014 2015 2016 2017 2020E

CAGR 5.0%

Composite materials, coatings and new materials are

the most promising products in transportation sector

8

1. The growth rate refers to the CAGR during 2017-2020

2. Industry attractiveness depends on the comprehensive

scores

3. Bubble size: product market size in 2020, 100 million yuan

24

23

22

21

20

19

18

17

16

15

Growth rate

19.018.017.016.015.014.013.012.011.010.09.08.07.06.05.04.0

Aramid paperGraphene

Modified silicone adhesive

Polyurethane

adhesive

Ind

ustry

attra

ctiv

en

ess

Polyurea elastomer coating

Waterborne

polyurethane resin

Waterborne acrylate resinHDI

Carbon nanotube

EPDM Epoxy / polyester powder coating resinLFT

Hydrogenated nitrile rubberCarbon fiber reinforced epoxy

resin composite

Adiponitrile

25

NBR

Structure Function Adhesive Coating

Kevlar fiber reinforced

epoxy resin composite


NEW MATERIAL MARKET OUTLOOK – TRANSPORTATION

Rigid PU foam is the most attractive sector in construction

industry

9

0 2 4 6 8 10 12 14 16 18 20

Ind

ustry

attra

ctiv

en

ess

30

28

26

24

22

20

18

16

14

0

Growth rate

EPDM waterproofing membrane

Rigid polyurethane foam

IIR

Polysulfide sealant

Silicone sealant

Acrylate coating

Reflective heat insulation coatingVAE coating

Waterborne epoxy resin coating

1. The growth rate refers to the CAGR during 2017-2020

2. Industry attractiveness depends on the comprehensive scores

3. Bubble size: product market size in 2020, 100 million yuanAdhesive Coating Function

Construction industry will see 7.0% CAGR in 2017~2020


NEW MATERIAL MARKET OUTLOOK – CONSTRUCTION

10

Electronic chemicals are the fine chemical materials for electronic

information products manufacturing, which are also the main supported

materials in the manufacturing of IC, FPD

Major Product of Electronic Chemicals

IC

(integrated circuit)

FPD

(flat panel display)New energy

PCB

(printed-circuit board)

Silicon chip Liquid crystal materials, PI

orientation agent

Silicon materials in solar cell, EVA

film, backplane film, wafer cutting

fluid, adhesive, silver paste

Board chemicals (epoxy resin, phenolic

resin, polyimide)

Polishing material Polarizer, Color filter,

Optical film

Cathode and anode material for

lithium battery, battery separator,

electrolyte

Screen printing ink

Photoresist Photoresist Photoresist

Wet electronic chemicals Wet electronic chemicals Wet electronic chemicals PCB chemical reagent

Electronic specialty gas Electronic specialty gas

Encapsulation material (resin,

curing agent, accelerant,

padding, etc.)

Encapsulation material

(adhesive, conductive

adhesive)


NEW MATERIAL MARKET OUTLOOK – ELECTRICITY & ELECTRONICS

11

Output Value of Global Electronic Chemicals

(2010-2020)

141 156 169 185 193 201 222

184206 228

248 260 271295

517

2018E

472

2017

453

2016

433

2014

397

2012

362

2010

324

+4.5%

+4.9%

2020E

Unit: 100 million USD

• In 2017, output value of global electronic chemicals was 108.5

billion USD, including

– IC chemicals: 26 billion USD

– PCB & Semiconductor packaging chemicals: 19.3 billion

USD

– FPD chemicals: 34.5 billion USD

– NEB chemicals: 28.7 billion USD

• In 2017, output value of electronic chemicals in China was 213.6

billion yuan, including

– IC chemicals: 48.1 billion yuan, CAGR(’18-’20): 9.2%

– PCB chemicals: 33.3 billion yuan, CAGR(’18-’20): 6%

– FPD chemicals: 27.5 billion yuan, CAGR(’18-’20): 13%

– NEB chemicals: 97.8 billion yuan, CAGR(’18-’20): 12%

+10.5%

+13.5%

2020E

2881

2018E

2360

2017

2136

2016

1933

2014

1581

2012

1280

2010

881

OthersNEBPCBFPDIC

Unit: 100 million yuan

Output value of global electronic chemicals in 2017 was about 108.5

billion USD, which of China was about 213.6 billion yuan with 10.5% of

CAGR during 2018-2020

IC PCB & semiconductor packaging

Output Value of Electronic Chemicals in China

(2010-2020)


NEW MATERIAL MARKET OUTLOOK – E&E

1. 1. The growth rate refers to the CAGR during 2017-2020

2. Bubble size: product market size in 2020, 100 million yuan

Demand for new chemical materials from E&E industry will grow

at >9% CAGR in the future

0

5

10

15

20

25

30

35

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Photoresist and reagent in

semiconductor industry

Growth rate

PPS

PBTPCB material

Polyimide orientation agentSapphire

( touch screen)

Optical film in LCD

Liquid silicone rubber

LC

High-purity reagent in semiconductor industry

Electronic specialty gas

PCB electroplating chemical

Conductive ink in PCB

Polyurethane adhesive

Epoxy resin adhesive

PC

Structure Function Adhesive Coating

Ind

ustry

attra

ctiv

en

ess


NEW MATERIAL MARKET OUTLOOK – E&E

Coal Crude oil Natural gas Nuclear energy Others


Global energy consumption structure is mainly constituted by coal,

crude oil and natural gas

Global Energy Consumption Structure

16%

36%29%

9%10%

5%

46%22%1%

26%

16%

31%32%

9%

12%

1%

47%51%

2%

63%18%

8%8%

3%

58%28%

7%1% 6%

27%

42%

23%

0.2%8%

23%

42%

28%

0.6%7%

35%

35%

24%

6%

NA

SA

EUR

ME

Africa

India

China

Japan

Oce

ania

• Global energy consumption is 13.3G toe in 2016

• Clean alternative energy is the global trend of energy supply structure, although conventional fossil energy is the largest section

• Crude oil resource is abundant, proved reserved is much higher than its demand till 2050 and even after

• U.S. is the 2nd largest energy consumption

country

• Water power proportion is large in Canada

• Water power proportion is large

in Central and South America

• Nuclear energy ratio is 41% in

France

• Fossil energy ratio is 79% in

Germany

• Renewable energy is promising

• Consumption in per capita is the least

• 90% is thermal power generation

• Energy structure is simple

• Nuclear energy is highly

reduced

• Thermal energy ratio is

increased

• Renewable energy

develop rapidly

• Fossil energy ratio is

large

• Consumption in per

capita is less

• Coal ratio is very high but

gradually decrease

• Rich new energy resource:

Uranium and black coal

Total: 13G toe

NEW MATERIAL MARKET OUTLOOK – NEW ENERGY


New energy industry develop fast, and it is being largely

substitute conventional fossil energyDevelopment Trend of New Energy Industry in China

• Policy: Strongly promote development

• Technology: Keep applying new tech.

• Cost: will decrease

• Profit: maintain or decrease

• Demand: fast growth and increased ratio

• Competition: competitive to fight for market.

Open and free market

Short-term drivers

Medium and long-term drivers

• Market size is increasing, and some

type become mature, e.g. NEV

• Technology is becoming mature

even in the leading position, e.g.

wind and solar energy

• With larger scale and technical

development, cost will be

significantly decreased

• Consumption ratio will be

increasing

• Technologies about exploration,

mining, manufacturing, application

keep upgrading. New energy will

largely substitute fossil energy

• Policy: Strongly promote development

• Technology: new tech. keep emerging

• Cost: keep decreasing

• Profit: maintain

• Demand: slower growth and increased ratio

• Competition: competitive to fight for market

with conventional energy


Policy

Technology

Cost

Profit

Demand

Competition

Policy

Technology

Cost

Profit

Demand

Competition

Trend

Trend

● The secondary application of new energy is mainly used for transportation power, power storage, mobile communication, new

energy storage and space military industry.

● Transportation: electric bicycles, electric motorcycles, electric cars, electric buses/buses and electric special vehicles.

● Global development of new energy automobile market is in 2017, mainly concentrated in countries with stable subsidies, -total

sales of 1.197 million units,-up 55% from a year earlier, -the global new energy vehicles about 3 million cars

In 2015-2017, China's new energy vehicle sales will grow at an average

annual rate of 53%, and will remain at 22% in 2020 and 2030

15

2030Global Fuel Car Ban Schedules2017

Country Schedule

German 2030

France 2040

England 2040

India 2030

Norway 2025

Netherlands 2025

• Oct 19, 2017, Chang 'an automobile

announced that it will stop selling

traditional fuel oil vehicles by 2025.

• Dec 9, 2017, Beijing automobile

announced that it would stop fuel cars in

Beijing by 2020 and stop by 2025.

• China's new-energy vehicle sales

accounted for 2.7% of the total sales

volume(1.53 million)

• Pure electric passenger vehicles(48%) and

pure electric commercial vehicles(33%),

and plug-in hybrids(19%).

52.877.4

119.7

33.150.7

77.7

-30

20

70

120

2015 2016 2017

Global and China sales of new energy vehicles

全球新能源乘用车销量(万辆)

中国新能源乘用车销量(万辆)

Global cars in 10k

China cars in 10K

Annual rate 51%

Annual avg increase 53%

• China's new energy vehicle sales will exceed

7%, 15% and 40% of total sales by 2020,

2025 and 2030 respectively.

30003500 3800

210 5001500

01000200030004000

2020 2025 2030

Global cars in 10k China cars in 10K

2002500

60007200

160009000

20000

0

5000

10000

15000

20000

2016 2025 2030

低速发展中速发展高速发展

2016-2030

CAGR27%

2020-2030

CAGR2%

2020-2030

CAGR22%

Low

speedMiddle

speed

High

speed



• Global energy vehicle ownership (unit in

10,000 vehicles) according to International

Energy Agency

● Including 11 chemicals and 19 materials

30 potential products in new energy industry

© 2018 CNCIC Consulting. All rights reserved16


No Product name Field Classification

• 1

• 2

• 3

• 4

• 5

• 6

• 7

• 8

• 9

• 10

• 11

• 12

• 13

• 14

• 15

• 16

• 17

• 18

• 19

• 20

• 21

• 22

• 23

• 24

• 25

• 26

• 27

• 28

• 29

• 30

Lithium carbonate

LiOH-H2O

NCM

Ethylene carbonate

Maxsorb

Epoxy resin

Vinyl esters

Epoxy resin adhesive

PEO

Acrylic ester

Fuel ethanol

Polyolefin separator

Ceramic diaphragm

UHWPE

UPR

TPU

POE

Fluororubber

PVDF

PA6/PA66

LCPA

EVA

PC

Polyimide

EPDM

Carbon fiber

Foamed PP

Polyurea

PBT

POM

Stored energy

Stored energy

Stored energy

Stored energy

Secondary application

Wind energy

Wind energy

Wind energy

Solar energy

Wind energy

Biomass energy

Stored energy

Stored energy

Stored energy

Solar/wind energy

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Chemicals

Materials

Materials

Materials

Materials



Wind energy

Solar energy



Solar energy

Solar energy/Secondary

Solar energy

Solar energy

Wind/Stored/Secondary

Wind energy

Wind energy



Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

Materials

30 products selected from wind energy, solar energy, biomass energy, stored energy and secondary

application of new energy sections

No Product name Field Classification


Products which gross profit rate is above 25% and growth rate is over 15% include

Maxsorb, ceramic diaphragm, separator of Li battery, PVDF, LCPA, foamed PP,

Lithium carbonate and LiOH-H2O

17

-5%

5%

15%

25%

35%

45%

-25% -5% 15% 35% 55% 75% 95%

Gro

wth

rate

du

ring 2

01

7-2

022,%

Gross profit rate in 2017, %

Maxsorb

● If only considering market size, growth rate of market size and gross profit rate

Ceramic

diaphragm


Acrylic

ester

NCMSeparator in Li

Battery

Fluororubber

Carbon fiber

PVDF

Ethylene

carbonate/Fluoro

ethylene

carbonate

Polyurea

EC

Lithium carbonate

VER

LiOH-H2O

LCPA

Foamed PP

EVA EPDM

Epoxy

resin

adhesive

PEOPBT

UPR

PC

Epoxy

resin

PA6

TPU

UHWPE

Fuel ethanol

POE

Polyimide

POM

PA66


黄音国 Peter Huang

China National Chemical Information Centre

Tel: +86 10 6443 6569

Mobile: +86 138 1130 3013

[email protected]

http://www.chemconsulting.com.cn

CNCIC Consulting


IDENTIFYING AND SELECTING PROSPECTS FOR DOWNSTREAM MARKET...

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