IDENTIFYING AND SELECTING PROSPECTS FOR DOWNSTREAM MARKET DEVELOPMENT Marketing Seminars at APIC 2018 Kuala Lumpur, 20 August 2018 Peter Huang CEO CNCIC CONSULTING
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
© 2018 CNCIC Consulting. All rights reserved 4
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
CHINA CHEMICAL INDUSTRY STATUS AND DEVELOPMENT TRENDS
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
© 2018 CNCIC Consulting. All rights reserved
CHINA CHEMICAL INDUSTRY STATUS AND DEVELOPMENT TRENDS
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
© 2018 CNCIC Consulting. All rights reserved
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
© 2018 CNCIC Consulting. All rights reserved
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
© 2018 CNCIC Consulting. All rights reserved
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)
© 2018 CNCIC Consulting. All rights reserved
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)
© 2018 CNCIC Consulting. All rights reserved
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
© 2018 CNCIC Consulting. All rights reserved 12
NEW MATERIAL MARKET OUTLOOK – E&E
Coal Crude oil Natural gas Nuclear energy Others
© 2018 CNCIC Consulting. All rights reserved 13
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
© 2018 CNCIC Consulting. All rights reserved 14
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
NEW MATERIAL MARKET OUTLOOK – NEW 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
© 2018 CNCIC Consulting. All rights reserved
NEW MATERIAL MARKET OUTLOOK – NEW ENERGY
• 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
NEW MATERIAL MARKET OUTLOOK – NEW ENERGY
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
Secondary application
Secondary application
Wind energy
Solar energy
Secondary application
Secondary application
Solar energy
Solar energy/Secondary
Solar energy
Solar energy
Wind/Stored/Secondary
Wind energy
Wind energy
Secondary application
Secondary application
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
© 2018 CNCIC Consulting. All rights reserved
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
© 2018 CNCIC Consulting. All rights reserved
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
NEW MATERIAL MARKET OUTLOOK – NEW ENERGY
黄音国 Peter Huang
China National Chemical Information Centre
Tel: +86 10 6443 6569
Mobile: +86 138 1130 3013
http://www.chemconsulting.com.cn
CNCIC Consulting
© 2018 CNCIC Consulting. All rights reserved