Hengli Petrochemical plans to build an ethylene glycol plant with an annual capacity of 1.8 million tons

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Hengli Petrochemical plans to build an ethylene glycol plant with an annual capacity of 1.8 million tons – is coal-based ethylene glycol facing strong competition? Author/Source: Yahuahua Coal Chemical Industry Date: 2018-02-28 Clicks: 23 On February 28, 2018, Hengli Petrochemical Co., Ltd. issued a announcement stating that in order to make full use of the by-products generated by its \"2 million tons per year integrated refining and chemical processing\" project and to maximize the advantages of this integrated approach, its wholly-owned subsidiary, Hengli Petrochemical (Dalian) Chemical Co., Ltd. (hereinafter referred to as \"Hengli Chemical\”), plans to build an ethylene production facility with an annual capacity of 1.5 million tons within the Hengli Petrochemical Industrial Park in Changxing Island, Dalian. Public information indicates that the project’s construction scale includes 1.5 million tons per year of steam cracking capacity, along with a total of 12 units in the upstream and downstream processes. Among these are two ethylene glycol (EG) production units, each with a capacity of 900,000 tons per year; thus, the total capacity for ethylene glycol production is 1.8 million tons per year. Yahua Consulting believes that the following advantages of this project will make it a strong competitor in the rapidly growing coal-based ethylene glycol industry: 1. Large scale per production line, resulting in good economies of scale. Its ethylene glycol (EG) plant has a nominal capacity of 900,000 tons per year of ethylene glycol (EG) per line, with a total of two lines. 2. Integration advantages. The Hengli 20 million tons per year integrated refining and chemical project (including 4.5 million tons per year of PX), which began construction in December 2015, is now in its peak construction phase, with plans to start operations in October 2018. The production capacity of ethylene glycol and that of PX-PTA can be matched locally to reduce transportation costs. Research by Yahuazheng Consulting shows that the coal-based ethylene glycol industry retains strong competitiveness due to the following advantages. 1. The technology for producing ethylene glycol from coal is mature. By 2017, the coal-based ethylene glycol production projects in China were operating at high capacities in a stable manner, and just like the coal-based olefin industry, they were moving toward achieving stable operation at capacities of over 100%. 2. The product quality and cost advantages of coal-based ethylene glycol have been recognized in practice by the polyester fiber industry. In January 2018, Puyang Yongjin successfully signed an annual sales contract with Zhejiang Hengyi Group, establishing a long-term partnership. Since 2017, Puyang Yongjin has signed agreements with leading domestic polyester companies such as Tongkun Group, Xinfengming Group, and Fujian Baihong, establishing long-term strategic partnerships with them. 3. The price of raw materials for coal-based ethylene glycol is not affected by international oil prices, giving it a cost advantage. Compared to integrated refining and downstream projects that require the purchase of crude oil, the raw material prices for coal-based ethylene glycol are relatively stable. Against the backdrop of a strong rebound in international oil prices, coal-based ethylene glycol has a cost advantage over that produced from refining and petrochemical processes. http://img.yf116.cn/image/img/20180228/1644546029444.jpg 4. The domestic ethylene glycol market has huge potential. In 2017, the prosperity of China’s polyester (PET) industry continued to improve, with enhanced profitability; the effective production capacity reached 50 million tons, while output was around 41 million tons. In 2018, terminal consumption of polyester in China continued to grow. Meanwhile, the implementation of policies restricting the import of waste plastics in China that same year would significantly reduce the import volume of recycled PET, thereby creating more market space for virgin PET. In 2017, China’s production of ethylene glycol exceeded 6 million tons, while its net imports were over 8.6 million tons. It is expected that China’s consumption of ethylene glycol will continue to grow strongly in the future. 5. Strong ethylene prices will provide strong support for the ethylene glycol market. In the petrochemical route, ethylene glycol is produced by using pure oxygen and ethylene as raw materials; an oxidation reaction yields ethylene oxide, which is then hydrated to form ethylene glycol. The sustained strength in ethylene prices has strongly supported the market for ethylene glycol, thereby providing coal-based ethylene glycol with greater profit margins.