China's PTFE Production Ranks First, With Defects in the High-End Market

Fluoropolymer is the product of the chemical industry after it has developed to a higher level. With the development of various new application scenarios, PTFE has become the fluoropolymer with the largest output and the fastest consumption growth. PTFE has the characteristics of good mechanical properties, corrosion resistance, self-lubricating, low friction coefficient, and good biological stability due to the special structure of its molecular chain, used in automobile transportation, chemical equipment, electronic communications, aerospace, and food processing.

From a global perspective, the four major industries of chemicals, electronics, automotive transportation, and kitchenware account for more than 80% of the market demand for PTFE. Due to the excellent dielectric properties of PTFE, the copper-clad laminate made from it is called high-frequency copper clad laminate, which is suitable for high-frequency communication fields such as 5G, aerospace, and military industries.

The rise of the global 5G market has driven the development of the PTFE industry. High-frequency transmission technology is one of the key technologies of 5G wireless communication. High-frequency transmission technology can effectively increase the availability of frequency band resources and enhance the technical requirements of 5G wireless communication technology for network development. To achieve high-frequency transmission, materials with low dielectric constant and low dielectric loss must be used. As one of the current organic materials with the lowest dielectric constant, PTFE will be widely used in base station filters, high-speed PCB, 5G chip manufacturing, high-frequency connectors, cables, and other fields in the field of 5G communications.

Traditional lithium battery manufacturing uses solvents with binder materials. For example, NMP is one of the common solvents. After mixing the solvent with the binder and the negative electrode or positive electrode powder, the slurry is coated on the electrode current collector and dried. Because the solvent is poisonous, it is necessary to use an expensive electrode coating machine for recovery, purification, and reuse, and the production cost is high. At present, dry electrode technology has been widely used in supercapacitors, and the technology migration from supercapacitors to lithium batteries is underway, but there are certain process thresholds. If the dry electrode technology is successfully implemented in the field of lithium batteries, it will replace the traditional electrode production process and open up new market demand for PTFE.

As China has moved towards the world's leading level in the field of 5G and lithium batteries, Chinese companies have also broadened the market space in the development and application of advanced materials. At the same time, closely related to these two main lines is the PTFE.

The Global PTFE Market Is Steadily Increasing

In 2018, the global PTFE market reached US$4.5 billion, and the domestic PTFE market showed an upward trend from 2016 to 2018. In 2019, the domestic PTFE demand decreased, and the market size dropped to US$676 million. On the one hand, the decline in demand is due to environmental protection inspection of domestic-related companies the operating rate is at a low level. On the other hand, the Sino-US trade war has affected domestic product exports. In 2020, affected by the epidemic, the consumption of PTFE has dropped significantly. From January to October 2020, the apparent domestic consumption of PTFE was 45,200 tons, a year-on-year decrease of 23.7%.

The Global Industry Competition Pattern Is Stable, And Production Capacity Shifts to China

After years of development and several mergers and reorganizations in the global PTFE industry, the current competitive landscape of the industry is stable. Overseas production capacity is concentrated in the hands of DuPont, Arkema, Daikin, Asahi Glass, and Kureha Chemical. In the past two decades, with the breakthrough of domestic fluorine chemical technology, as well as the advantages of abundant fluorite resources and terminal market, PTFE production capacity has gradually shifted from overseas to China. In 2019, the domestic PTFE production capacity is approximately 140,000 tons, accounting for more than 40% of the global production capacity.

China started late in the development and production of PTFE. In 1995, the production capacity of PTFE was only about 1,000 tons, accounting for 8% of the global production capacity. Later, China made breakthroughs in low-end PTFE production technology. High-end, specialization transformation, some of its low-end PTFE production capacity has migrated to China, and China's PTFE production capacity has been increasing year by year. The current domestic production capacity of 140,000 tons of PTFE is still dominated by injection-grade low- and medium-end products, most of which are general-purpose, medium and low-quality products, with low industry barriers. The industry has experienced a stage of blind expansion, with severe overcapacity, and the overall operating rate of the industry has been maintained at around 50% for three consecutive years. In 2019, affected by the environmental protection improvement and the domestic economic situation, the domestic PTFE operating rate continued to decline. The domestic PTFE operating rate for the whole year of 2020 will remain at about 60%. It is expected that the domestic PTFE operating rate is expected to be accompanied by the recovery of industry demand in the fourth quarter and 2021. Keep going up.

China's PTFE has formed a situation of low-end overcapacity exports and high-end products relying on imports. Every year, China exports more than 20,000 tons of low-end PTFE, while the import volume is stable at 5000~6000 tons, of which 70%~80% of imported PTFE are high-performance modified products. In the past three years, the price difference between imported and exported PTFE products has been around US$2,500, reflecting the difference in grade between exported products and imported products.

In the past five years, a number of domestic provinces and cities have issued relevant plans to clarify the ideas for high-end transformation of fluorine chemicals and strengthening of fluoropolymer construction. Domestically, it is clearly pointed out in the new material application demonstration guide catalog that high-end PTFE is the key development direction of new materials.

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