The technology is not yet mature; the utilization rate of coal-based ethylene glycol production is less than half

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The technology is not yet mature, resulting in a low operational rate for coal-based ethylene glycol production. As a new method of producing ethylene glycol unique to China, this approach has seen rapid development in the country; by 2016, 20 production facilities were in operation, with a total production capacity of 3.72 million tons. However, while the production capacity figures are impressive, we can also see the underlying challenges: due to immature technical processes, the stability of manufacturers’ facilities in operation is poor. 　　According to the data in the \"Analysis Report on the Development Prospects and Investment Strategy Planning of China’s Coal-based Ethylene Glycol Industry from 2017 to 2022\" released by Forward Industry Research Institute, the current operational rate of coal-based ethylene glycol production facilities in China is extremely low; many projects do not start operating even after being commissioned. The overall operational rate of this industry is around 30%. In 2016, the output of coal-based ethylene glycol was approximately 1.1 million tons, which represents only 20% of the total output of the entire ethylene glycol industry, whose output was over 5 million tons. Meanwhile, in 2016, coal-based ethylene glycol accounted for 40% of the total production capacity in this industry. 　　Taking the 200,000-ton coal-to-ethylene glycol project at Tongliao Jinmei, operated by Danhua Technology, as an example, this project is the only one recognized by the National Development and Reform Commission as a model project for coal-to-ethylene glycol production. Yet this project, which held great expectations, finds itself in the awkward situation of still not being completed after 9 years of construction; the National Development and Reform Commission has yet to conduct an inspection of this model project. The main reason for this is the frequent equipment failures and low operational efficiency of the project. 　　In 2015, the average capacity utilization for producing ethylene glycol from syngas in China was around 25%, down from the average of 35% seen throughout last year. However, due to an increase in production capacity, the output of ethylene glycol produced via syngas in China remained substantial, with the annual production volume increasing by more than 35% compared to the previous year. 　　Chart 1: China’s production volume and operating rate of coal-based ethylene glycol from 2012 to 2016 (units: 10,000 tons, %). The operating rate of coal-based ethylene glycol production is set to increase in the future. Fortunately, thanks to years of efforts, coal-based ethylene glycol products have gradually been accepted by downstream polyester fiber manufacturers. Xinjiang Tianye (600075)’s 50,000 tons per year ethylene glycol production facility is operating stably; its products are performing well in polyester factories, with 100% being used in direct spinning of filaments and 50% being used in blended formulations for bottle preforms. Xinjiang Tianye’s second phase facility with an annual production capacity of 200,000 tons of ethylene glycol also came online in the second half of 2014, and its products are now used in film manufacturing. 　　Looking to the future, China’s leading developers of coal-based ethylene glycol technologies and related demonstration projects will continue to work to increase the operating capacity of these facilities and improve product quality, in order to gain greater recognition within the polyester fiber industry. It is reported that Sinopec’s East China branch has reached out to several factories in the Jiangsu and Zhejiang regions that produce polyester staple fibers, polyester chips, and polyester filaments, with the intention of starting to use Hubei Fertilizer’s ethylene glycol products on a trial basis. 　　With improvements in coal-based ethylene glycol production technology, the issue of low operational rates for this process will be alleviated in the future. It is predicted that by 2020, China’s ethylene glycol production could reach 12 million tons, with coal/syngas-based production accounting for around 60% of that total. 　　Chart 2: Forecast of the proportion of China’s coal-based ethylene glycol production and its operating rate from 2016 to 2022 (Unit: 10,000 tons, %) Source: Compiled by Qianzhan Industry Research Institute