A boom in the construction of coal-based ethylene glycol plants

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A boom in the construction of coal-based ethylene glycol plants Author/Source: China Chemical Industry News Date: April 19, 2017 Clicks: 25 In March 2017, the 240,000-ton ethylene glycol production project of Inner Mongolia Yigao Coal Chemical Industry was about to start operation; Shandong Lihua Yi Group’s 240,000-ton ethylene glycol project also began operations. In April, Xinjiang Shengwo Energy’s 400,000-ton ethylene glycol project commenced production, while Hubei Sanning Chemical’s 600,000-ton project was set to start operating within the same year... As one of the raw materials used in polyester production, ethylene glycol has a significant demand market in China. According to Chemical Online, in 2016 China’s ethylene glycol production capacity was around 9 million tons, accounting for about 27% of the global total. Of this amount, 2.9 million tons were produced from coal, representing 32% of the total production; the actual output was 5.1 million tons, while the apparent consumption reached 12.7 million tons. Over the past decade, consumption has maintained a steady growth rate of around 9%, yet China’s self-sufficiency rate is only around 40%, indicating a significant gap in the market. 　　As a product that relies heavily on imports, the import volume of ethylene glycol has maintained an average annual growth rate of 5% over the past few years. Due to environmental regulations on coal use, there is great potential for coal to be utilized in coal chemical applications. As the technology for producing ethylene glycol from coal becomes more mature, domestic projects for ethylene glycol production are seeing a surge in activity, thanks to the availability of this convenient raw material. 　　In 2016, China added approximately 450,000 tons of production capacity, including 200,000 tons from Yangmei Group’s Shouyang Chemical, 200,000 tons from Yongjin Chemical, and 50,000 tons from Xinjiang Tianye – most of this capacity came from projects for the production of ethylene glycol from coal. Although the low oil prices in 2015 meant that the new production capacity added in 2016 was just over one-fourth of that in 2015, the overall ethylene glycol market saw an upward trend thanks to the rebound in oil prices in 2016. This upward trend continued until February 2017, when prices reached their highest level since September 2013. It is expected that there will still be significant new production capacity added in 2017, with the total production capacity possibly reaching 10 million tons. 　　According to statistics, in recent years China has planned to build projects for producing ethylene glycol in a total capacity of around 22 million tons; most of these are projects for producing ethylene glycol from coal. Of this amount, 1.4 million tons correspond to projects that have been completed and are ready for operation, while the rest are either under construction or in the planning stage. Since 2015, coal-based ethylene glycol projects have sprung up everywhere, and the production capacity of projects that came online in the past two years exceeds 5 million tons. It is conceivable that China’s ethylene glycol production capacity will increase further significantly in 2020. 　　The large-scale development of the ethylene glycol project has its advantages and disadvantages, but currently it seems that the advantages outweigh the disadvantages. In October 2016, the China Securities Regulatory Commission approved the application to launch ethylene glycol futures on the Dalian Commodity Exchange. This news is positive for the ethylene glycol market, but it has drawn doubts from downstream polyester manufacturers regarding production quality. After all, in the current polyester production process, the use of coal-derived ethylene glycol still has its shortcomings. However, as the production capacity of coal-based ethylene glycol is fully utilized, market competition will drive companies to pay more attention to quality and standards, and to establish sound supervision systems; meanwhile, the polyester industry’s acceptance of coal-based ethylene glycol is also increasing gradually. 　　The increase in ethylene glycol production over the past two years is evident from last year’s import figures: in 2016, imports amounted to only 7.57 million tons, a 13.4% decrease compared to the previous year. This represented the first decline in China’s ethylene glycol imports in over a decade, and it is a clear indication of the growth in China’s ethylene glycol production capacity. Ethylene-based ethylene glycol in the Middle East is not only the main source of imports for our country but also the biggest competitor for the future development of ethylene glycol production in our country. 　　In summary, the current high level of production of ethylene glycol from coal is an advantage. Although the actual output of ethylene glycol produced from coal is still low at present, it is increasing steadily, so the prospects remain promising. It is important to be vigilant: after 2020, as China’s ethylene glycol production capacity increases significantly, projects that are still in the planning stage should take into account the issue of overcapacity.