Market Structure of Graphite Equipment

Graphite heat exchangers are currently the primary graphite equipment.

According to a report by the international research firm QYR, the global graphite heat exchanger market is currently valued at approximately US$473.9 million, or about RMB 3.3 billion. The market is projected to reach RMB 5.1 billion by 2026, with a compound annual growth rate of 5.6%. According to data from the China Industry Information Network, China's heat exchanger market continues to grow, reaching a market size of roughly RMB 129.6 billion in 2020, representing an 11% year-on-year increase. Given graphite heat exchangers' excellent corrosion resistance, their market presence is expected to expand gradually in sectors such as chemical engineering and pharmaceuticals. In 2019, China's graphite heat exchanger market was valued at only RMB 1.39 billion, leaving substantial room for future growth. The global graphite heat exchanger market is segmented into shell-and-tube, plate, and block types. Among these, the shell-and-tube graphite heat exchanger is the most widely used type globally. The market for graphite synthesis furnaces is relatively small; taking the graphite hydrogen chloride synthesis furnace as an example, the domestic leader, Xingqiu Graphite, generated revenue of RMB 102 million in 2020, capturing a market share as high as 72%. Based on this, it can be estimated that China's current market for graphite hydrogen chloride synthesis furnaces amounts to only RMB 140 million.

Graphite tower equipment has tremendous growth potential.

Graphite tower equipment comes in a variety of types and can be used as tail gas purification units, hydrogen chloride synthesis units, hydrochloric acid regeneration units, and more. It demonstrates excellent performance in areas such as waste acid treatment and hazardous waste management, making it an important piece of environmental protection equipment. Taking waste acid treatment as an example, processing every 100,000 tons of waste acid requires graphite equipment worth over 5 million yuan. Although China's waste acid production has been on a downward trend in recent years, it still reached 94.79 million tons in 2019. If all of this waste acid were to undergo environmentally sound treatment, it would require approximately 4.7 billion yuan worth of graphite equipment. According to data from the China Industry Information Network, China’s waste acid recovery volume in 2019 was 36.58 million tons, with a recovery rate of 38.6%, corresponding to a market potential for graphite equipment of roughly 1.8 billion yuan. As national environmental regulatory policies become increasingly stringent, the waste acid recovery rate is expected to continue rising. Moreover, demand for downstream hazardous waste treatment—such as coal chemical wastewater and exhaust gases—will also keep growing. Consequently, graphite equipment holds tremendous growth potential.

France and Germany dominate the graphite equipment industry, while Chinese companies are beginning to take shape.

France and Germany are both countries that place great emphasis on the R&D and production of graphite equipment. Among them, France’s Mersen and Germany’s SGL Group are widely recognized in the industry as two of the oldest, most technologically advanced, highest-quality, and strongest companies. Domestic graphite equipment enterprises include Nantong Sansheng, Nantong Yangtze River Graphite Equipment, Nantong Shanjian Graphite, Nantong Xingqiu Graphite, and others. Although the performance gap between domestic and foreign graphite equipment is relatively small, there is still a noticeable difference in terms of graphite material wear and tear. From the perspective of graphite performance, leading and representative overseas companies outperform their domestic counterparts in properties such as tensile strength, flexural strength, and compressive strength.

Global leaders possess extensive expertise in the application of graphite materials.

According to SGL’s 2020 annual report, the company’s total revenue reached €919 million, approximately RMB 7 billion. The company is divided into four major business segments: Carbon Fibers (CF), Composite Solutions (CS), Graphite Solutions (GS), and Process Technologies (PT). Among these, the Graphite Solutions segment primarily focuses on graphite component-related businesses, while the Process Technologies segment is responsible for large-scale equipment used in industrial applications, including heat exchangers, towers, quenching units, and pumps. Thus, SGL is not merely a manufacturer of graphite equipment; rather, it is a comprehensive enterprise that masters graphite materials, carbon fiber materials, and application technologies. The Process Technologies segment generated revenue of €100 million, roughly RMB 770 million, accounting for only about 12% of the company’s total revenue. Graphite equipment contributes relatively little to the company’s overall revenue, with graphite heat exchangers being the primary product in this category. Similarly, Mersen, as reported on its official website, achieved revenues of €770 million in 2015, equivalent to approximately RMB 5.9 billion. Of this total, revenues from the chemical and process industries amounted to about RMB 650 million, representing 11% of total revenue—again, with graphite heat exchangers forming the core of its business. Other revenue streams for the company come from sectors such as energy, power, and transportation. Looking at leading international companies, graphite equipment accounts for a relatively small share of their total revenues, while the application of other materials and sales of graphite accessories carry greater weight. Planet Graphite is the only publicly listed company in China specializing in graphite equipment. In 2020, the company’s revenue reached RMB 560 million. Although its overall revenue scale still lags significantly behind that of international industry leaders, from the perspective of graphite equipment sales, Planet Graphite has already established a certain scale and competitiveness.

Graphite equipment has a wide range of downstream applications.

Upstream in the graphite equipment industry chain are manufacturers of basic raw materials and components, including graphite raw materials, steel, hardware accessories, and impregnating agents. Downstream applications are quite broad, with key sectors encompassing the alkali production industry, petrochemical industry, metallurgical industry, fiber industry, pharmaceuticals, agriculture, food processing, and other related fields.

(1) Chlor-alkali industry

The chlor-alkali industry produces chlorine gas and caustic soda by electrolyzing saturated brine solutions, using these as raw materials to manufacture a range of chemical products. The main products include caustic soda, liquid chlorine, polyvinyl chloride (PVC), and others. This industry is a vital foundational sector for the national economy. Chlor-alkali production processes involve multiple stages, such as heating, evaporation, and cooling. Graphite equipment boasts excellent properties—including corrosion resistance, high-temperature tolerance, and resistance to high pressure—making it highly suitable for applications in the chlor-alkali industry. Typically, the chlor-alkali industry requires synthesis systems, evaporation systems, and desorption systems, thereby creating demand for graphite equipment such as graphite synthesis furnaces and heat exchangers.

According to statistics from the China Chlor-Alkali Industry Association, domestic polyvinyl chloride (PVC) production totaled 20.11 million tons in 2019, and reached 21.14 million tons in 2020. It is projected that domestic PVC production will further increase to 22.25 million tons in 2021.

(2) Epichlorohydrin Industry

Epichlorohydrin is an important organic chemical feedstock and a chlorine-consuming fine chemical product. During the production of epichlorohydrin, hydrogen chloride is generated. After being absorbed by water, hydrogen chloride forms highly corrosive hydrochloric acid, which can corrode metal heat exchangers. Therefore, graphite heat exchangers can be used as heat exchangers in epichlorohydrin production systems involving hydrogen chloride media.

Epichlorohydrin has a wide range of applications, but its use is highly concentrated, primarily in the epoxy resin industry. According to data from Chemical Online Weekly, in 2019, China’s total output of epichlorohydrin was approximately 700,000 tons. As downstream industries complete their upgrades and resume operations, this will support an upward trend in the market, and epichlorohydrin production is expected to increase further. According to data from Zhongshang Intelligence Network, China’s epichlorohydrin production is forecasted to rise to 780,000 tons by 2021.

(3) Pesticide Industry

Under the implementation of environmental protection policies, the pesticide industry will accelerate the phasing out of traditional pesticide manufacturing processes that are highly toxic and leave high residue levels. Instead, new environmentally friendly pesticides—characterized by high efficiency, low toxicity, and low residue—have become the industry’s R&D focus and mainstream trend. An important step in promoting the green development of the pesticide industry is to properly treat the “three wastes” generated during the production process. It is crucial to vigorously advance the development of green production technologies for key varieties and intermediates, integrate and scale up production equipment, automate process control, and adopt water-based formulation processing technologies—these are all common and critical technologies. Such efforts will facilitate adjustments to both the industrial structure and product mix within the pesticide sector. Graphite equipment, exemplified by graphite towers, will thus enjoy significant growth opportunities.

According to statistics from Phillips McDougall, the global pesticide market size was 68.15 billion yuan in 2020 and is projected to reach 70.17 billion yuan in 2021, representing a year-on-year growth of 2.9%. The market continues to show steady growth amid stability.

(4) Pharmaceutical Industry

In the pharmaceutical industry, if “Cl-” or “SO42-” is present during the production process, the reliability of stainless steel equipment will be severely affected. Graphite equipment, on the other hand, offers superior stability. Meanwhile, in the manufacturing processes of pharmaceuticals and food additives, large volumes of waste liquids and wastewater are generated. Against the backdrop of increasingly stringent environmental regulations, these waste liquids and wastewater must be treated using equipment such as graphite condensers, graphite evaporators, and graphite absorbers, and can only be discharged or reused after meeting established standards. Since 2011, China’s pharmaceutical industry has been experiencing continuous growth. In 2020, the value of finished products manufactured in China reached 2,267.54 billion yuan, representing an 11.4% year-on-year increase. With China’s population aging accelerating and per capita income rising, the Chinese pharmaceutical industry still has considerable room for further market expansion.

(5) Silicone Industry

Silicones are compounds characterized by Si-C (silicon-carbon) bonds, in which at least one organic group is directly bonded to a silicon atom. Polysiloxanes, whose backbone consists of siloxane bonds (-Si-O-Si-), represent the most widely used type of silicone compound. The production process of silicones is relatively complex, involving steps such as synthesis, hydrolysis, and pyrolysis; graphite equipment can effectively leverage its unique properties in this process. Silicone products find extensive applications in sectors including construction, automotive textiles, electronics and electrical engineering, and power generation. Industry demand is closely linked to macroeconomic conditions. According to data from the China Business Industry Research Institute, China's polysiloxane production capacity in 2018 was 1.42 million tons, with an output of 1.13 million tons. It is projected that by 2023, capacity and output will reach 1.96 million tons and 1.70 million tons, respectively. From a consumption perspective, China's polysiloxane consumption in 2018 was 1.04 million tons, and it is expected to rise to 1.56 million tons by 2023. Both China's polysiloxane production and sales have maintained a sustained growth trend over the past several years.