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Wan Lei: It is estimated that the production capacity for producing ethylene glycol from coal in 2019 will be 1.42 million tons. Author/Source: Sina Finance; compiled and published by the Nitrogen Fertilizer and Methanol Technology Network. Date: June 27, 2019. Clicks: 33. On June 26, the 12th China Plastic Industry Conference, organized by the Dalian Commodity Exchange, was held in Hangzhou. The theme of the conference is “Innovating industrial services to promote the integration of industry and finance”. Sina Finance provides live video coverage throughout the event. Wan Lei, Deputy Secretary-General of the Polyester Division of the China Chemical Fiber Industry Association, attended the conference and delivered a keynote speech. Wan Lei said that in 2018, the world’s EG production was 37.83 million tons, while production volume was 31.22 million tons; thus, the global supply of EG was sufficient. But returning to China, in 2018 China’s EG production rose to 6.93 million tons, an increase of 12.4% on a year-on-year basis; the product utilization rate was 75%, up by 0.2% compared to the previous year. Of this, the fiber industry consumed 15.32 million tons. Wan Lei compiled statistics on the new projects related to ethylene glycol in 2019 and 2020; it is estimated that the production capacity for ethylene glycol derived from coal was 1.42 million tons in 2019, and this figure will increase by 3.15 million tons once those projects come online in 2020. According to statistics, there are 46 projects under construction, with an ongoing production capacity of 17.58 million tons. Assuming that all 46 projects under construction are 50% complete, the total production capacity for ethylene glycol produced from coal/syngas in 2023 will reach 15 million tons, accounting for over 50% of the total ethylene glycol production. He pointed out that the Coal Chemicals Special Committee has made estimates indicating that by 2020 and 2023, China’s apparent consumption of ethylene glycol will reach 19.7 million tons and 24.5 million tons respectively. At that time, the total domestic production capacity for ethylene glycol will be 17.3 million tons and 26.8 million tons. If all the ethylene glycol produced from coal is used in polyester production, then our oil consumption will decrease significantly. In addition, Wan Lei also provided the following description of the current situation in China’s ethylene glycol industry: After ethylene glycol was listed on the Dalian Commodity Exchange last year, coal-based ethylene glycol could not yet be used for delivery purposes. The fiber industry shows great interest in ethylene glycol, and I have been keeping a close eye on developments in this area. Returning to polyester, in 2018 we imported 586,000 tons of PX; after 2019 and 2020, the dependence on PX imports dropped sharply as production capacity was adjusted to meet demand. Our import capacity for ethylene glycol remains at 59%. After 2019, our major petrochemical projects such as Zhejiang Petrochemical, Hengyi Brunei, and Hengyi will come online. With an output of 13 million tons of PX, the total PX production volume is set to double over the next 5 years, thereby breaking through the bottlenecks in the polyester industry. As can be seen from the diagram in the lower right, our ethylene glycol supply was sufficient in 2019, and we aim to gradually increase our influence in this area. According to EG, the world’s EG production in 2018 was 37.83 million tons, while the production volume was 31.22 million tons; thus, EG production on a global scale is sufficient to meet demand. But returning to China, in 2018 China’s EG production rose to 6.93 million tons, an increase of 12.4% on a year-on-year basis; the product utilization rate was 75%, up by 0.2% compared to the previous year. Of this, the fiber industry consumed 15.32 million tons. EG production in our country has been on the rise, but there is one issue: of the total capacity for producing ethylene glycol, 5.77 million tons are produced via the ethylene method, 650,000 tons via the MTO method, and 4.46 million tons via the coal syngas method. It can be seen that the utilization rate of ethylene glycol produced from syngas is 50%. China has abundant coal but limited oil resources; it would be a shame if these large coal resources are not utilized to fully exploit production capacity. A few days ago, a researcher from the Fujian branch of the Chinese Academy of Sciences explained to us that one-third of the cost of producing ethylene glycol from coal is related to raw material costs, while two-thirds is due to energy transportation costs. The utilization rate is not high, and transportation costs are very high. If the utilization rate could reach 100%, we would be able to reduce the cost of coal-based ethylene glycol, resulting in a more significant impact. At the same time, ethylene glycol cannot meet 100% of the polyester industry’s needs. In 2019, an additional 2.64 million tons of ethylene glycol were produced from oil sources and 1.66 million tons from coal sources, for a total of 4.3 million tons; yet demand still exceeded supply, requiring imports. By 2022, the production capacity of ethylene glycol from coal was 13.5 million tons, but there was still a shortage. The concentration rate of ethylene glycol is listed here; oil-based ethylene glycol is concentrated in the Middle East, North America, and Northeast Asia, while China is an important market for ethylene glycol. We have also compiled statistics on the new projects related to ethylene glycol in 2019 and 2020; it is estimated that the production capacity for ethylene glycol derived from coal will be 1.42 million tons in 2019, and this figure will increase by 3.15 million tons once those projects come online in 2020. Since the coal-based ethylene glycol projects generated high profits before October 2018, these companies had a high level of enthusiasm for investing in them. According to statistics, there are 46 projects under construction, with an ongoing production capacity of 17.58 million tons. Assuming that all 46 projects under construction are 50% complete, the total production capacity for ethylene glycol produced from coal/syngas in 2023 will reach 15 million tons, accounting for over 50% of the total ethylene glycol production. The Coal Chemicals Special Committee has made estimates indicating that by 2020 and 2023, China’s apparent consumption of ethylene glycol will reach 19.7 million tons and 24.5 million tons respectively. At that time, the total domestic production capacity for ethylene glycol will be 17.3 million tons and 26.8 million tons. If all the ethylene glycol produced from coal is used in polyester production, then our oil consumption will decrease significantly. Ethylene glycol and the development of China’s polyester industry: We all know that there are differences in impurities between coal-based ethylene glycol products and those based on petroleum, but on June 22nd, we held a seminar in Quanzhou on the application of coal-derived ethylene glycol in the polyester industry. Some companies reported that their products met the national standards quite well. However, for polyesters, there is still some variation in the product quality of individual companies, as well as in the standards set by regulatory bodies and those used across the industry. Although some companies meet standards that are higher than those set by national regulations, downstream polyester textile manufacturers still have doubts. Our investigations show that 30% of these companies use a mixture of coal-based ethylene glycol and petroleum-based ethylene glycol, while some companies use 100% coal-based ethylene glycol; they remain cautious when using it in high-end products. Specifically, in the production process of coal-based ethylene glycol, the by-products differ from the trace impurities such as aldehydes, alcohols, and esters that arise from the petroleum-based route. Feedback from downstream users indicates that certain of these trace impurities can have adverse effects on the spinning equipment used for producing filaments and yarns; this can lead to issues such as filament breakage during production, difficulties in dyeing, or color variations after dyeing. We have analyzed the issue and are hoping for the use of coal-based ethylene glycol in polyester textiles. Mainly, there is insufficient communication between upstream and downstream parties, as well as a lack of systematic research. We conducted a statistical classification of the impurities in coal-derived ethylene glycol and found that alcohols accounted for 50%, ethers 16%, esters 14%, and aldehydes 10%. Impurities include purity, light transmittance, impurities such as 1,2-butanediol and ethylene carbonate, all of which can affect their use in the textile industry. The fiber industry is divided into three categories: short fibers, filaments/films, and membranes. In terms of membrane types, there are those used for water bottles and carbonated drink bottles; the airtightness of these membranes is important. Coal-based ethylene glycol can generally be used in combination with these materials. As for short fibers and filaments, coal-based ethylene glycol is used to a slightly greater extent in short fibers, while conventional products are still used for filaments. In our fiber industry, regarding ethylene glycol, we are interested in the types of impurities present. If the types and levels of these impurities remain stable, then we can use it in a certain amount, regardless of whether it meets certain standards or not. However, if the types and levels of impurities are unstable, we can only reduce the amount used. This table shows the results of a sample survey conducted by our fiber industry among manufacturers of ethylene glycol produced from coal. We have intentionally blurred these figures to prevent the disclosure of specific company data. For the coal-based ethylene glycol manufacturers, their test reports are relevant to our textile fiber industry; however, the test reports from our industry cannot be shared with those ethylene glycol manufacturers. As a result, each party develops its own standards – the ethylene glycol manufacturers establish their own national standards, which are not recognized by the textile fiber industry. Generally speaking, the disadvantage is that impurity content affects the melting point, crystallization properties, and processing characteristics; the advantage is that a decrease in melting point and crystallization properties facilitates processing. The costs of ethylene glycol produced using different processes are listed here. Currently, ethylene glycol imported from the Middle East costs around 4,000 yuan per ton, while that imported from other sources costs 5,500 yuan per ton. Given the current coal prices, ethylene glycol produced from coal costs 4,500 yuan per ton, whereas that produced from naphtha costs 6,000 yuan per ton. When the original price was 40 yuan per ton, oil-based ethylene glycol was cost-effective. Of course, there are now indicators for water consumption and fuel consumption, and it is hoped that the overall cost of ethylene glycol can be reduced. At this time, we are facing a shortage of ethylene glycol supply. If we can ensure an adequate supply of oil-based ethylene glycol, then for coal-based ethylene glycol, it is not only necessary to ensure its quality but also to have it at the same price. In February, the Ministry of Industry and Information Technology convened a meeting with our Coal Chemicals Professional Committee and Polyester Professional Committee to discuss ways of expanding the use of coal-based ethylene glycol in the fiber industry. In line with the spirit of this meeting, we held a conference in Quanzhou to explore specific applications of coal-based ethylene glycol in this industry. Dr. Chen was also present to engage in discussions with us; representatives from both the polyester industry and the coal chemicals industry attended the meeting as well, and certain common understandings were reached. It is hoped that our coal-based ethylene glycol manufacturers, polyester producers, as well as universities and research institutions can jointly form a working group to clarify roles and responsibilities based on the principle of mutual trust and cooperation. It’s not that the coal-based ethylene glycol industry refuses to share its own testing results with the polyester industry, nor that the polyester industry is unwilling to disclose the impact of coal-based ethylene glycol on the ethylene glycol industry. At the same time, we hope to use third-party testing institutions to have them assess the authenticity of coal-based ethylene glycol, and use this data to provide feedback to the ethylene glycol manufacturers, thereby establishing internal control indicators. Thirdly, some coal-based ethylene glycol is already being used in the polyester industry. We also urge these companies that produce coal-based ethylene glycol to summarize their experience, conduct more detailed quantitative analyses of the impact of impurities on different polyester types, and expand the application of this technology to the entire ethylene glycol sector. At the same time, we call on coal-based ethylene glycol manufacturers to work together to improve the overall level. Once the individual level is increased, some requirements are met, and even the delivery requirements set by the DCE are satisfied; however, the ethylene glycol produced by other companies does not meet these requirements, or the quality of their products is unstable, and we consider such products to be unsuitable for delivery as well. I hope that we, together with our upstream and downstream partners, can promote the use of ethylene glycol