The signing of the ethylene glycol peak-shaving project underscores the company’s core technical advantages in coal-based ethylene glycol production

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This post was last edited by liaifeng on 2018-8-4 at 17:57. The signing of the ethylene glycol peak-shaving projects highlights the company’s core technical advantages in coal-based ethylene glycol production. Author/Source: Date: 2018-07-31. Clicks: 94. Donghua Technology Company signed the “EPCM Contract for the Ethylene Glycol Unit in the Second Series of Peak-Shaving Improvement Projects” and the “EPCM Contract for the Ethylene Glycol Unit in the Phase I Production Facility Peak-Shaving Project” with companies in Keqi, Inner Mongolia, and Fuxin, Liaoning, respectively. The company is responsible for the overall engineering design of the ethylene glycol units and the peak-shaving projects, as well as for EPCM management, procurement of equipment and materials, construction, and all aspects up to the intermediate handover of the projects. Both projects are capable of producing 400,000 tons of ethylene glycol per year. The owner of both projects is Datang Energy Chemical Co., Ltd. The estimated investment for each project is 1.698 billion yuan; the costs related to engineering design and EPCM management amount to 44.32 million yuan each, resulting in a total investment of 3.398 billion yuan. 1) The signing of the ethylene glycol peak-shaving project underscores the company’s core technical advantages in coal-based ethylene glycol production. The coal-to-ethylene glycol technology developed by Donghua Technology in collaboration with Yubei Kogyo features good stability and high operational efficiency, and it has been widely adopted by customers. The original design for the Keqi/Fuxin coal-to-natural gas project called for natural gas to be the only main product. Due to factors such as relatively poor coal supply conditions and **lowered prices for natural gas, the project faced losses. Therefore, Datang decided to build a peak-shaving project in Keqi/Fuxin using the production facilities from the first phase of the project. Once completed, this project will produce primarily natural gas, as well as high-value chemicals such as methanol and ethylene glycol, depending on market conditions. The signing of this project also highlights the outstanding market advantages of the company’s Ube coal-to-ethylene glycol technology. 2) Policies in the coal chemical industry are improving marginally, the economic viability of coal-based ethylene glycol has increased, and the industry is in good health. In March 2018, the **Energy Bureau issued the ‘Guidelines for Energy Work in 2018’, setting clear requirements for advancing several new coal chemical demonstration projects during that year. It focused on progressing the construction of those projects that had already begun, as well as facilitating the approval and construction of projects that met the necessary conditions. The policies governing the coal chemical industry improved significantly; among various sub-sectors, coal-based ethylene glycol production has become economically viable. At crude oil prices of $50–60 per barrel and coal prices (for raw coal: lignite) of 300–400 yuan per ton, it is possible to achieve profitability from coal-based ethylene glycol production. As oil prices continue to stay above this threshold, project owners in the coal chemical sector are becoming more willing to invest, thereby boosting the industry’s prosperity. 3) With sufficient orders on hand, the company’s performance is seeing a turning point. As oil prices rise, the economic viability of coal-based ethylene glycol increases; as a result, not only are the existing projects of the company progressing more rapidly, but new design contracts for coal-based ethylene glycol are also arriving in large numbers. In 2017, the company’s total value of signed project contracts amounted to 4.518 billion yuan (a year-on-year increase of 44.48%), of which 4.255 billion yuan came from EPC contracts (also a year-on-year increase of 44.48%), while 263 million yuan was related to design and consulting services (a year-on-year increase of 13.85%). In the first quarter of 2018, the company’s new order value was 383 million yuan, of which 109 million yuan came from design and technical services, and 274 million yuan from turnkey project contracts. The total value of orders on hand was 17.018 billion yuan. Going forward, the company’s performance is set to improve, with a turning point in its financial results.