Big players flock in; costs determine the way forward—Investigation and reflections on the coal-based ethylene glycol industry, Part 3

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Big players flock into the industry; costs determine the way forward — Investigation and reflections on the coal-based ethylene glycol industry, Part 3. Author/Source: China Chemical Industry News. Date: May 21, 2018. Clicks: 29. The reporter’s investigation revealed that as of now, there are 20 enterprises in China that produce ethylene glycol from coal (syngas), with a total production capacity of 3.77 million tons per year； There are 16 enterprises under construction, with a combined additional production capacity of 4.53 million tons per year ； More than 70 enterprises are planned to be established, with a total planned production capacity of 29.16 million tons per year. Industry experts warn that large projects should be avoided from becoming a \"heavy burden,\" and projects with total costs that fall outside the top 30% in the industry should not be constructed any further. 　 Recently, there has been a rapid expansion of ethylene glycol projects in our country. On April 7 this year, Zhejiang Tongkun Group, the world’s largest polyester fiber manufacturer, entered the upstream raw material sector of ethylene glycol, planning to invest 6 billion yuan to build a coal-based ethylene glycol production facility with an annual capacity of 1.2 million tons in two phases. The group has a polyester fiber production capacity of 5 million tons per year. Its current annual demand for ethylene glycol is 1.67 million tons, all of which is purchased from the market, with imports playing a major role in meeting this demand. In line with the company’s medium- to long-term development plan, its annual demand for ethylene glycol as a raw material is expected to reach 2.3 million tons in the medium term, and exceed 3 million tons in the long term. Building its own coal-based ethylene glycol production project helps Tongkun Group reduce market risks associated with raw material procurement, strengthen the company’s development momentum, and enhance its overall competitive capacity. 　 The 1.8 million tons per year ethylene glycol project of Yulin Chemical Company, Shaanxi Coal Group, is the largest coal-based ethylene glycol project planned to be built in China. As a demonstration project for the utilization of low-grade coal to produce new chemical materials, this project is located in the Qingshui Industrial Park in Yulin City. It is a large-scale coal conversion project that was given priority in the planning and construction by Shaanxi Coal and Chemical Group during the 13th Five-Year Plan period. At present, the tendering process for the overall design of this project has been launched. Construction is scheduled to begin in 2018, with a total investment of 21.946 billion yuan; completion and commissioning are planned for 2021. 　 In addition, other coal (syngas)-based ethylene glycol production projects that have been made public recently include the project carried out by Shanxi Jinyan Industrial Group for the comprehensive utilization of coke oven gas to produce 1 million tons of ethylene glycol per year along with 550 million cubic meters of LNG per year; a cooperation agreement for this project was signed. With a total investment of 8.2 billion yuan, the project will be built in two phases. Once completed, it will be the first project of its kind in China to utilize the \"Jinhua furnace gasification + medium-high pressure carbonylation to produce ethylene glycol\" technology on a commercial scale, and it will also be the project with the largest capacity for producing ethylene glycol from coke oven gas in China at present. The project is constructed in two phases; the first phase involves an investment of 3.7 billion yuan to build a facility capable of producing 400,000 tons per year of ethylene glycol along with 200 million cubic meters per year of LNG. 　 The 1 million tons per year coal-based ethylene glycol project of Inner Mongolia Joutai New Materials Company was recently launched in the Tuoketuo Industrial Park in Hohhot. The total investment in the project is 11.7 billion yuan, with completion and operation scheduled for 2020; upon operation, it is expected to generate annual sales revenue of 7.8 billion yuan. 　 Xinjiang Tianye Group and Donghua Engineering Co., Ltd. have signed an engineering design contract for the 600,000-ton/year ethylene glycol production unit of the first phase of the project to produce ethylene glycol from syngas at a capacity of 1 million tons per year. The project is located in the Shihu Tan New Materials Industrial Park in Shihezi, Xinjiang, and is scheduled to be completed and put into operation by the end of this year. 　 Industry experts say that if all the capacity currently under construction or planned to be built actually comes to fruition. The total production capacity will then exceed 36 million tons per year; in other words, the production capacity of the coal-based ethylene glycol route alone already far exceeds China’s current annual demand for ethylene glycol, which is 16.4 million tons. 　 “Coal-based ethylene glycol is the process route among China’s five major modern coal chemical industries that requires the least investment, has the shortest development path, features relatively mature technology, and shows the best prospects for growth; it is therefore only natural that it is highly favored by the industry. Recently, many new projects for producing ethylene glycol from coal have been launched, with the scale of each project increasing significantly; some of them now have an annual production capacity of over one million tons. For a coal-based ethylene glycol project of such scale, it is essential to ensure reliable technology, high-quality products, and smooth integration with the market, in order to maintain an effective production level, achieve economies of scale, and prevent such large-scale projects from becoming a burden. ”In response to the recent surge in interest in coal-based ethylene glycol production, Han Hongmei, deputy chief engineer at the Petroleum and Chemical Industry Planning Institute, emphasized that as more such projects come online, future projects need to pay closer attention to the supply and demand dynamics and changes in competitive conditions in the domestic ethylene glycol market, with a particular focus on cost considerations. 　 “I believe that, after fully considering all cost factors, if the total cost of ethylene glycol for subsequent projects does not rank within the top 30% in the industry, it is not advisable to invest further in such projects. ”Han Hongmei said.