I. Background
The concept of ‘new infrastructure’ was first proposed at the Central Economic Work Conference as early as the end of 2018. The ‘new infrastructure’ proposed at that time mainly encompasses 5G telecommunications, artificial intelligence, industrial internet and Internet of things. China's deployment of new infrastructure construction gradually deepened in 2019. In 2020, the central government started to attach more importance to new infrastructure construction due to the outbreak of COVID-19 pandemic. At the meeting of the Standing Committee of the Political Bureau of the CPC Central Committee on March 4, speeding up new infrastructure construction such as 5G network and data center was further stressed as a key move for China to achieve a variety of strategic goals.
The new infrastructure mainly focuses on industrial transformation and upgrading, covering seven key sectors, i.e.5G base station, Ultra High Voltage (UHV) transmission, inter-city railway and urban rail transit, NEV (New Energy Vehicle) charging pile, big data center, artificial intelligence and industrial internet.
II. What chemical materials will benefit from new infrastructure construction?
The construction of new infrastructure is expected to bring great market opportunities for some chemical materials, includingpolytetrafluoroethylene (PTFE), industrial liquid crystal polymer (LCP), modified polyimide (MPI) and polyimide (PI), special gas such as sulfur hexafluoride, etc.
【1】 PTFE - 5G base station
The construction of 5G base stations will increase the demand for PCB, which will drive up the demand for PTFE accordingly
In 2019, more than 130,000 5G base stations were built in China, and the Ministry of Industry and Information Technology estimated that by the end of 2020, the number of 5G base stations will exceed 600,000 nationwide. 5G base station is the core element of 5G network, which provides wireless coverage, that is, wireless signal transmission between wired communication network and wireless terminal.
PCB is one of the core components of 5G base station, its raw materials mainly include copper foil, glass fiber cloth, special resin such as polytetrafluoroethylene resin (PTFE), ceramics and other chemical materials.
Besides PTFE, epoxy resin, bismaleimide triazine resin (BT), thermosetting cyanate resin, thermosetting polyphenylene ether resin (PPE) and polyimide resin (PI) are also materials widely used in this field.
The accelerated construction of 5G base stations will drive the demand for PTFE. According to CNCIC Consulting, China's PTFE consumption in 2019 was about 50,000 metric tons, up 9.3% from 2018. It is estimated that the market size of PTFE for 5G base station construction will reach RMB2-3 billion by 2021. Though China is a major PTFE exporter (exports make up ~30% of total production) but it still needs to import some high-end PTFE each year.
【2】 LCP and MPI - 5G mobile terminal
LCP and low dielectric MPI are key materials used to produce antenna for 5G terminal. The increasing demand will accelerate the industrialization of LCP and low dielectric MPI
According to IDC's forecast, the global 5G mobile phone shipments will reach 400 million by 2023, accounting for 26% of the total smart phone shipments.
5G terminal antenna requires lower dielectric capacity PI materials. LCP and MPI are two major materials which can meet the requirements so far.
MPI’s properties are superior to that of PI, which can basically meet the needs as 5G antenna material. LCP has low loss at high frequency, but its production process is complex. MPI and LCP will share the market at the beginning of 5G era.
The main raw material of MPI antenna is electronic grade PI film. The global PI film production capacity is about 25,000 metric tons per year, nearly half of the capacity is held by Chinese companies. However, the electronic grade PI film market is dominated by DuPont, Kaneka, UBE, SKC KOLON PI, Taimide Technology. Most electronic grade PI films used to produce FPCB in China are imported.
It is estimated that the global market size of LCP for mobile phones will reach US$450 million in 2021. According to CNCIC Consulting, the global LCP capacity is mainly concentrated in Japan and the United States. Japan accounts for 56% of the global capacity. The main players include Celanese, Solvay, Polyplastics, and Sumitomo Chemical. LCP supply in China heavily relies on imports.
【3】 Special gas - UHV transmission
Increasing UHV transmission construction will drive the demand for special gas sulfur hexafluoride
The State Grid Corporation of China has announced that its investment in UHV transmission projects will reach RMB112.8 billion in 2020. This field is expected to attract another RMB223.5 billion investment from private sectors.
UHV transmission industrial chain includes power supply, electrical equipment, energy consumption equipment, raw materials, etc., and core equipment include DC control and protection system, converter transformer, shunt reactor, main transformer, GIS (gas insulated switchgear), etc. Sulfur hexafluoride is one of the special gases needed in this field.
UHV transmission construction will drive up the demand for sulfur hexafluoride, however, as sulfur hexafluoride is a type of greenhouse gas, advanced power enterprises have been quite proactive in developing alternatives in recent years.
【4】 High performance modified nylon for intercity high-speed railway and urban rail transit construction
Increasing construction of intercity high-speed railway and urban rail transit will drive up the demand for high performance modified nylon
It is estimated that China will spend about RMB800 billion on railway construction in 2020, which is the same as that in 2019. Railway construction will focus on high-speed railway and intercity railway sectors. CNCIC Consulting estimates that in 2020, the demand for steel in rail transit construction is expected to reach 25 million metric tons, and the demand for high-performance modified nylon in rail transit fastener production will reach about 2,000 metric tons.
III. New infrastructure construction will help chemical industry to go digital
The construction of new infrastructure will stimulate the digital transformation of the chemical industry and shorten the intelligent manufacturing process of the chemical industry.
The development of big data center, artificial intelligence and industrial internet will bring new development mode to chemical producers. The visualizable panels and smart factories are being promoted now.
On March 20, 2020, the Ministry of Industry and Information Technology released a notice on accelerating the development of industrial internet, which proposed to accelerate the construction of new infrastructure, speed up the construction of national industrial internet big data center, and encourage local governments to build industrial internet big data subcenters. In addition, the industrial internet data resources sharing mechanism shall be established to initially realize the data collection, aggregation and application in key regions and industries, and to improve the industrial internet infrastructure and data resource management capabilities.
The big data value creation model is composed of big data collection, data analysis center, intelligent learning and judgment, feedback information, etc. The global chemical industry is still in the exploration stage in terms of big data value creation model. Chinese chemical enterprises are still in the stage of actively building theoretical framework in intelligent manufacturing, while some chemical enterprises in developed countries have carried out intelligent production and accumulated some experience in visual augmented reality and predictive maintenance.
Artificial intelligence and industrial internet are the downstream sectors of 5G base station construction. With the construction of big data center, the development of artificial intelligence and industrial internet, and the continuous updating of data analysis technology, the problems faced by chemical enterprises such as difficulty in data analysis due to complex production data and poor correlation will be solved, and the efficiency and safety of chemical industry will be improved.
IV. Conclusion
The technology driven new infrastructure construction will lead to the rapid development of high-end chemical materials, especially specific and core new materials. At the same time, the chemical industry will also take advantage of the new infrastructure drive to accelerate the digital transformation and move towards a new era of intelligence.
China National Chemical Information Center Co., Ltd. has the copyright reserved. No unit or individual shall make reproduction for use on its own without prior consent. In case of need for reproduction, please contact:consulting@cncic.cnor+ 86 10-6444 4034.
