With oil prices falling, does dimethyl ether still have an advantage?

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With oil prices falling, does dimethyl ether still have an advantage? 　　Since the third quarter of last year, the global financial crisis has led to a sharp drop in international oil prices. Currently, international crude oil prices have dropped from nearly 150 yuan per barrel to around 40 dollars per barrel, representing a decline of over 70% compared to their peak levels. The decline in international crude oil prices has eliminated the price advantage of dimethyl ether as an alternative energy source. So, how should dimethyl ether develop in the future? What must dimethyl ether producers do to survive this tough period? With falling oil prices, the advantage of using gas as an alternative energy source is no longer there. In the years when international crude oil prices were soaring, dimethyl ether, as an alternative energy source, attracted significant attention from all sectors of society; investors showed great enthusiasm, and production and construction of dimethyl ether facilities expanded rapidly. In 2007 alone, the production capacity of dimethyl ether increased by 2.2 million tons, a rate of growth of 394%. The popularity of this product stems from its combustion properties similar to those of liquefied petroleum gas, as well as its similarity to diesel; it can thus serve as a substitute for both diesel and liquefied petroleum gas, being used as a fuel for vehicles and for domestic purposes. Currently, the use of dimethyl ether in urban gas accounts for over 90% of the total consumption of dimethyl ether. Second, it is valued for its cost advantage. In 2007, the price of liquefied petroleum gas exceeded 5,000 yuan per ton, with peaks reaching as high as 7,000 yuan per ton. The comprehensive cost of dimethyl ether produced on a scale of over one million tons is only 3,000 yuan per ton, while market prices are above 4,000 yuan per ton; at times, market prices even exceed 5,000 yuan per ton. Dimethyl ether manufacturers that use domestically produced methanol as raw material can achieve a profit of at least 1,000 yuan per ton. At that time, blending dimethyl ether with liquefied petroleum gas offered a significant cost advantage. 　　However, as international oil prices fell, liquefied petroleum gas prices also dropped. As a result, the cost advantage of dimethyl ether is completely eliminated. Liu Zaijing, deputy general manager of Shandong Lianmeng Chemical Co., Ltd., said that the current production cost of dimethyl ether is between 2,625 and 3,450 yuan per ton. In the middle to late December 2008, the price of liquefied petroleum gas in regions such as Henan, Shandong, and Hebei was around 3,000 yuan per ton; by December 31, the price of liquefied petroleum gas in some areas of Hebei had reached 2,800 yuan per ton. At the same time, dimethyl ether is also under pressure from imported liquefied petroleum gas; the CIF price of such gas in South China by mid-December was already 2,880 yuan per ton. 　　“For dimethyl ether to be used in combination with liquefied petroleum gas, its market price must be 1/3 lower than that of liquefied petroleum gas. ”Wang Yunhua, vice chairman of Dadong Neng Gas Company, told reporters as such. 　　Falling oil prices hinder the process of fuel substitution; dimethyl ether facing a similar challenging situation in replacing diesel. 　　Originally, another advantage of dimethyl ether as a fuel alternative for vehicles is that it possesses comprehensive advantages over LPG, natural gas, methanol, ethanol, and the like. It has been calculated that, on a per-calorie basis, 1.5 tons of dimethyl ether is equivalent to 1 ton of diesel. When the price of diesel is between 6,500 and 7,000 yuan per ton, a 1.5-ton batch of dimethyl ether costs only 4,500 yuan, offering a significant price advantage. The decline in international oil prices has led to a drop in diesel prices, with the current market price of diesel being around 4,500 yuan per ton. Based on a production cost of 3,000 yuan per ton for dimethyl ether, the production cost for 1.5 tons is 4,500 yuan; clearly, there is no price advantage left at this point. Moreover, the use of alternatives to diesel is still in its infancy; widespread adoption faces challenges such as the establishment of a pressure-based distribution system and the modification of vehicles. According to Zhou Longbao, a professor in the Department of Automotive Engineering at Xi’an Jiaotong University and president of the Shaanxi Internal Combustion Engine Society, to promote dimethyl ether on a large scale in the field of automotive diesel engines, it is necessary to modify the engine’s fuel injection and supply systems, as well as pressurize the fuel tanks; in addition, gas filling stations must be built. As a vehicle fuel intended for highly mobile transportation vehicles, specialized storage, transportation, and retail facilities need to be established from the place of production to retail outlets. If the cost advantage is lost, all these further engineering efforts will simply be unable to proceed. To get rid of the troubles caused by oil prices, it is necessary to develop new areas of application. Compared with foreign countries, research on the application of dimethyl ether in China is relatively lagging behind. According to data provided by the Petroleum and Chemical Planning Institute, at present, the vast majority of dimethyl ether in China is used as a domestic fuel, accounting for 94% ； Vehicle fuel accounts for only 2%, while other uses make up 4%. This is also a major reason why dimethyl ether was severely affected by this global financial crisis. In addition to hoping for a rise in oil prices and the successful implementation of alternative energy projects, many industry experts believe that developing new applications for dimethyl ether is an important way for it to thrive in an era of low oil prices. 　　Dimethyl ether is not only a new energy source but also an important chemical raw material. Developing downstream products using dimethyl ether as a raw material helps to promote the structural adjustment of the dimethyl ether industry and achieve product diversification; it also facilitates the utilization of existing production capacity. Domestic manufacturers should make more efforts in this area. For example, a range of bulk basic chemical raw materials and fine chemical products with wide applications and promising market prospects, such as N-diamines, vinyl acetate, methyl acetate, ethyl acetate, acetic anhydride, dimethyl carbonate, dimethyl sulfide, ethylene, propylene, acetonitrile, toluene, xylene, formaldehyde, and dimethylamine. 　　Professor Song Yibing from Shantou University told reporters that synthesizing dimethyl carbonate using dimethyl ether and carbon dioxide as raw materials is one of the pathways for the further utilization of dimethyl ether. The introduction of dimethyl ether not only overcomes the inherent drawback associated with water generated during the oxidative carbonylation of methanol, which can render the catalyst ineffective, but also retains the advantages of the gas-phase carbonylation of methanol. This represents a reasonable and promising method for synthesizing dimethyl carbonate; it has attracted considerable attention from world-renowned petrochemical companies and has become one of the hot topics in international research. 　　Some industry insiders believe that although the market for high-purity dimethyl ether is small, it still holds value. Hebei Qingneng Dimethyl Ether Co., Ltd. is building a facility with an annual production capacity of 30,000 tons of high-purity dimethyl ether, targeting markets such as auto spray paints and automotive aerosols. Hu Zi’ang, the general manager of the company, said that dimethyl ether is widely used in chemical production, and the key lies in developing the technologies for its use. 　　Dimethyl ether also has potential advantages as a blowing agent for polystyrene, polyurethane, and thermoplastic polyester foams; the foam products produced using it feature uniform cell sizes, good flexibility, as well as improved pressure resistance and crack resistance. According to Liu Xiaoyan, vice president of the China Polyurethane Industry Association and chief engineer at Jiangsu Chemical Research Institute, the company responsible for the Foam Professional Committee, dimethyl ether has not yet been used as a foaming agent in polyurethane foam production. The Plastic Research Institute at North University of China is carrying out research in this area. Professor Jia Runli, the director of the institute, told reporters that this research is complex and requires a lot of work; currently, the conditions for large-scale application are not yet available. 　　Japan is currently the country in the world that carries out the most comprehensive and in-depth research on dimethyl ether applications. Since the beginning of this century, agencies such as Japan’s Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure, Transport and Tourism, Ministry of the Environment, as well as Japanese companies in the oil, gas, and metals sector, have provided funding for a range of dimethyl ether application projects. These include the development of efficient fuel-grade dimethyl ether combustion systems, high-efficiency micro dimethyl ether fuel cells, dimethyl ether low-temperature steam reforming systems, and dimethyl ether reforming hydrogen supply systems for use in vehicles. In our country, the development of application markets for dimethyl ether batteries, dimethyl ether generator sets, and dimethyl ether boilers remains unexplored. Dimethyl ether generator sets are a good alternative to diesel generators. With further economic development, the shortage of electricity during peak load times in the eastern coastal areas will become more severe. Distributed energy systems will gradually become the main source of energy supply. If efficient and low-pollution small and medium-sized dimethyl ether engine sets can be developed, installing a dimethyl ether fuel tank in each household in the regions of Jiangsu, Zhejiang, Guangdong, and Fujian would suffice to meet the needs for electricity, air conditioning, hot water, and heating. 　　Experts also reminded relevant departments and enterprises to carry out foundational work during the period of low oil prices, in order to pave the way for dimethyl ether to replace diesel and liquefied petroleum gas. It is necessary to strengthen the infrastructure development for alternative energy sources as well as the research, development, and production of related equipment, in order to prepare for the further promotion and use of dimethyl ether when oil prices rise.