Cost advantages exist, with room for further improvement—Investigation and Reflections on the Coal-based Ethylene Glycol Industry, Part 4

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There is still room for improvement in terms of cost advantages — Investigation and Reflections on the Coal-based Ethylene Glycol Industry, Part 4. Author/Source: China Chemical Industry News. Date: 2018-05-21. Clicks: 25. Cost determines the path forward; so, what factors influence the cost and price of ethylene glycol? The reporter conducted investigations from various aspects such as the production process, technological innovation, and the coordination between primary and secondary products, and found that China’s coal-based ethylene glycol industry is competitive within the global ethylene glycol industry landscape, highly dynamic, and has significant room for further development. 　 Zheng Weizhong, Secretary-General of the National Committee for the Development of New Coal Gasification Technologies and Executive Deputy Director of the National Fertilizer Industry Information Center, told reporters that, from the perspective of global technical routes for ethylene glycol production, the most competitive method is the one that uses ethane as a raw material, with production costs ranging from 3,200 to 3,500 yuan per ton (price at the port) ； Next is coal-based ethylene glycol, with a production cost of 4,500 yuan per ton (ex-factory price, based on coal as raw material at 600 yuan per ton) ； The least competitive method is the naphtha-based approach, with the cost upon arrival at the port exceeding 4,500 yuan per ton. However, due to the resource profile of \"abundant coal but limited oil and gas,\" the competitiveness of domestic ethylene glycol production technologies varies. The production cost of ethylene glycol made from coal is 4,500 yuan per ton, making it the most competitive option ； The production cost of ethylene glycol produced from imported ethane exceeds 4,500 yuan per ton, giving it moderate competitiveness ； The production cost of ethylene glycol from naphtha exceeds 5,000 yuan per ton (based on an oil price of $50 per barrel), making it the least competitive option. In summary, coal-based ethylene glycol is the most competitive domestically, but it has a cost disadvantage compared to the ethane method on the international stage. 　 He further analyzed and pointed out that the economic viability of coal chemical industry in China depends mainly on three factors: raw material prices, product prices, and process routes. Given that the product price and production process are fixed, the competitiveness of the coal-based ethylene glycol industry lies primarily in the raw material, namely the price of effective gas. In May 2016, Hualu Hengsheng announced that, with an effective gas cost of 0.54 yuan per cubic meter, the total cost of ethylene glycol produced by its coal-based ethylene glycol plant was below 3,500 yuan per ton. Based on this, the most competitive technical approach for producing ethylene glycol from coal is to use inexpensive raw materials such as coke oven gas, calcium carbide off-gas, and yellow phosphorus off-gas to manufacture ethylene glycol. However, the main problem with these routes is the low supply volume of feed gas and the difficulty in ensuring a stable supply, which prevents them from playing a dominant role in ethylene glycol production. 　 Furthermore, as domestic coal-based ethylene glycol production technology matures, its production costs are on a downward trend, and it is entirely possible for these costs to drop below 3,500 yuan per ton; this would enable such products to compete internationally with those produced via the ethane method. For example, the total cost of the products produced using the first-generation technology for converting syngas into ethylene glycol, developed by Shanghai Wu Zheng Engineering Technology Company, including taxes, is approximately 4,200 yuan per ton. The cost of products using the second-generation technology can be reduced to 2,378 yuan per ton. Even at oil prices around 30 dollars per barrel, these products remain highly competitive compared to ethylene glycol produced from petroleum. In addition, the Key Laboratory for Coal-to-Ethylene Glycol Technology at the Center for Applied Chemistry, Fujian Institute of Research on the Structure of Matter, Chinese Academy of Sciences, and Shanghai Huayi Energy Chemical Co., Ltd. have also developed a new generation of coal-to-ethylene glycol technology with outstanding comprehensive advantages; industrial demonstration plants are currently under construction. 　 Given the above circumstances, the opportunities for developing coal-based ethylene glycol production in China outweigh the risks. The key to whether such projects can remain profitable lies in the raw materials, specifically the cost of producing syngas. 　 Dr. Wang Yu, deputy director of the Energy and Chemicals Division at the Petroleum and Chemical Industry Planning Institute and a professor-level engineer, also provided a comparison between ethylene glycol produced from coal and that derived from other sources under high oil price conditions: when the international oil price is 80 dollars per barrel, the cost of ethylene glycol produced domestically from coal is approximately 4,896.1 yuan per ton ； The cost of imported ethylene glycol is approximately 4,185 yuan per ton, of which the production cost amounts to 3,450 yuan per ton, while transportation costs and tariffs combined total 735 yuan per ton ； The production cost of ethylene glycol via domestic routes is as high as 6,730 yuan per ton. It can be seen that coal-based ethylene glycol has weaker competitiveness compared to imported ethylene glycol ； It is more competitive compared to ethylene-based ethylene glycol. 　 “By employing advanced and low-cost technologies, profits are significant when production capacity is not saturated; once saturation is reached, only those with lower costs can survive. The key lies in who can operate faster and more steadily. ”Fu Xiangsheng, vice president of the China Petroleum and Chemical Industry Federation, noted that the cost of producing ethylene glycol via the petroleum route is 7,500 yuan per ton (based on a crude oil price of $75 per barrel), while the cost of producing it from coal is 5,000 yuan per ton. The cost of producing ethylene glycol from industrial emissions such as yellow phosphorus exhaust or calcium carbide furnace exhaust is 4,000 yuan per ton. Building an industrial plant with an annual capacity of 100,000 tons for extracting carbon monoxide from yellow phosphorus off-gases and producing ethylene glycol via oxalate routes would require an investment of around 800 million yuan. The annual sales revenue would be 1 billion yuan, while the annual profit amount would reach 400 million yuan. 　 Cao Lu, market director of the China Coal Chemical Industry Network, pointed out that in the production of ethylene glycol from coal, by-products account for a large proportion, which has a significant impact on the overall production costs. While strictly controlling the production of by-products, it is necessary to make rational use of these by-products as well as to develop extended industrial chains and pursue comprehensive resource utilization in order to enhance the overall competitiveness of the enterprise.