Proposal for 40,000 tons/year polyoxymethylene project

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Polyoxymethylene is an engineering plastic produced from methanol as a raw material. It possesses excellent mechanical properties, electrical properties, wear resistance, stability, and chemical resistance; in particular, it has outstanding fatigue resistance, good self-lubricating properties, and strong colorability. It is now used to replace non-ferrous metals such as copper and zinc and their alloys, and is widely applied in industries such as automobiles, machinery, chemicals, electronics, electrical appliances, instruments, and daily necessities. It is a **new type of high-tech product in the field of synthetic materials, designed to encourage development.** 2. Project scale, investment, and returns: Our company plans to build a polyoxymethylene production facility with an annual capacity of 40,000 tons, along with a corresponding facility for producing formaldehyde (37%) at an annual capacity of 120,000 tons. The total investment in the project is approximately 857 million yuan; it is planned to be completed within three years, with a production period of 14 years. The average annual sales revenue is 552 million yuan; the internal rate of return for the project is 17.55% before tax and 14.02% after tax. The average annual profit amount is 136 million yuan, while the average annual after-tax profit is 95.57 million yuan. The payback period is about 8 years (including the construction period). For RMB loans, the repayment period is calculated based on the maximum repayment capacity after the project goes into operation, and it is 5.18 years (including the construction period). 3. Process flow and equipment: This project requires 52,000 tons per year of methanol as a raw material, and it is planned to use the 200,000 tons per year methanol plant operated by the Xinjiang Petroleum Administration. Methanol is catalytically oxidized to form formaldehyde, which is then polymerized to produce polyformaldehyde; the process flow is shown in the figure above. The main technical and economic indicators for formaldehyde production using the iron-molybdenum method in China are now close to those of advanced foreign technologies; however, the current production scale is small, and the catalysts as well as the exhaust gas treatment systems still need further improvement and development. Since the polyoxymethylene production unit for this project is imported, the requirements for the concentration of formaldehyde and the level of impurities are also quite high. The production capacity of formaldehyde for this project is 120,000 tons per year, and only abroad does one possess the technology and capability to build facilities of such a large scale. In addition, some patent holders, such as Perstorp, possess large-scale production facilities as well as extensive experience in production process optimization and technological improvements; they have a network of manufacturing partners with whom they work on a long-term basis for their exports ； Furthermore, since multiple sets of technologies have already been exported to our country, the patent fees for those exports are very low. Therefore, the formaldehyde production facility plans to adopt mature foreign patent technologies and key equipment, namely the ferro-molybdenum process. The formaldehyde plants consist of two identical units, each with an annual production capacity of 60,000 tons, resulting in a total production capacity of 120,000 tons per year (37%); the two units share one exhaust gas treatment system. Methanol, the raw material supplied from outside the unit, enters the methanol pre-evaporator under flow control. The exhaust gas from the absorption tower and fresh air are mixed in the required ratio by a circulation fan, and then both enter the pre-evaporator. The mixture of methanol and air that emerges from the pre-evaporator goes into the methanol evaporator, where it exchanges heat with the gas generated in the main reactor. Once all the methanol in this mixture has vaporized and is superheated, it enters the main reactor. The reaction gas generated in the main reactor is cooled by heat exchange in a methanol evaporator, and then enters the absorption tower 1, where it comes into countercurrent contact with most of the dilute formaldehyde sent from the bottom of absorption tower 2 for absorption. The formalin solution at the bottom of Tower 1 is pumped back to the lower part of that tower using a circulation pump; most of it is recycled in this way, while a small portion is taken out directly as finished formalin and sent to the formalin storage area for storage. The gas emerging from the top of one tower enters the second absorption tower, where it comes into countercurrent contact with desalinated water from the outside to complete the final absorption process. The dilute formaldehyde liquid at the bottom of the second absorption tower has a small portion of it pumped, using a two-tower circulation pump, to the methanol pre-evaporator for heat recovery; the dilute formaldehyde liquid after heat recovery still enters the first absorption tower as an absorbent there. The remaining majority of this liquid passes through a circulation cooler before entering the first absorption tower to serve as its absorbent. Most of the exhaust gas emerging from the tops of the two towers returns to the fan inlet to be mixed with the raw materials, while the excess goes into the ECS reactor for catalytic combustion, where it is converted into CO2 and H2O, thereby achieving harmless treatment; the heat generated in this process is then converted into by-product steam. Polyoxymethylene products are generally divided into homopolymers and copolymers. Current copolymer products represent the direction of development, and more importantly, the domestic market is well-suited to copolymerized polyoxymethylene; therefore, the target product chosen for this project is a copolymer product. The production technology of polyoxymethylene is highly complex, and the technology developed in China for producing this material is not yet satisfactory; therefore, it is necessary to introduce mature patented technologies from abroad. The polyoxymethylene production plant mainly consists of the following units: formaldehyde concentration unit, trioxymethylene unit, pentaerythritol production unit, butyl acetal production unit, polymerization unit, grinding and passivation unit, monomer removal unit, mixing unit, granulation unit, and packaging unit. The raw material, formaldehyde, is first concentrated; the concentrated formaldehyde is then used, in the presence of a catalyst, to produce triformaldehyde, which is subsequently purified through processes such as concentration and distillation to yield high-purity triformaldehyde. Pure trioxanene undergoes a copolymerization reaction with the second monomer, pentaerythritol, in the presence of a catalyst. The crude polymer is produced through grinding and passivation, followed by post-treatment during which various additives are added; finally, extrusion granulation yields the finished copolymer formaldehyde granules. II. Favorable conditions for project construction 1. Continuous growth in market demand for polyoxymethylene products: With the rapid development of China’s electrical industry and automobile manufacturing sector, consumption of polyoxymethylene in the country is increasing swiftly. Between 1992 and 1995, the average growth rate was 21% ； The average growth rate from 1995 to 1998 was 34% ； In 2003, the apparent domestic consumption was around 150,000 tons ； It is estimated that the apparent domestic consumption of polyoxymethylene will reach 180,000 tons in 2005, and 240,000 tons by 2010. Currently, 93% of polyoxymethylene is imported. At present, China’s total production capacity for polyoxymethylene is 11,900 tons per year, with actually only Yuntianhua (10,000 tons per year) in operation. The polyoxymethylene projects of Shanxi Broccoli Technology Co., Ltd., Lanxing Group Shanghai Solvent Factory, and Daqing Oilfield Methanol Plant have been approved by the **Planning Commission. In addition, several foreign companies are building or plan to build polyoxymethylene production facilities in China using foreign capital. Including our company’s 40,000 tons per year polyoxymethylene project, the total production capacity of these planned facilities is 140,000 tons per year. It is evident that over the next 10 years, a huge market gap in the domestic market will continue to exist, giving this project very broad market prospects. From the perspective of the domestic macroeconomy, with the rapid development of the manufacturing sector and structural adjustments in the industry, the demand for raw materials, especially new types of composite materials, is set to increase sharply, leading to continued rising prices. 2. The advantages in natural gas resources and prices are evident. Firstly, there is a sufficient supply of natural gas raw materials. The natural gas production of the Karamay oil field in Xinjiang was 2.5 billion cubic meters in 2003, and it is expected to reach 5 billion cubic meters by 2010. Secondly, the raw material prices are low. Currently, the natural gas settlement price in Karamay is 0.54 yuan per cubic meter, offering a significant price advantage compared to the eastern and coastal regions. The Xinjiang Petroleum Administration plans to build a methanol plant with an annual capacity of 200,000 tons in the first phase by 2005, to the east of the Karamay Petrochemical Company, with another plant having an annual capacity of 800,000–1,000,000 tons to be constructed by 2010. This facility produces methanol using the inexpensive natural gas from the Karamay oil field; it relies on the Karamay Petrochemical Company for utilities, has a large scale, and thus low production costs. The pricing of its methanol product will be significantly lower than the average price in the domestic market. The site for our company’s polyoxymethylene production facility will be adjacent to the methanol plant, allowing for co-production and thus reducing intermediate transportation costs. 3. Policy advantages for carrying out this project in Karamay: Polyoxymethylene is a high-tech product belonging to the category of new synthetic materials that are encouraged for development; it can thus benefit from various preferential policies at both the national and local levels in terms of land use and taxation. By building this project in the Karamay region of Xinjiang, one can also take advantage of the preferential policies related to the development of the western region. Currently, the Xinjiang Uygur Autonomous Region is taking advantage of the favorable opportunities presented by the implementation of the Central Government’s \"Overall Plan for Xinjiang’s Economic Development and Political Stability\" to introduce a series of preferential policies in areas such as land use, tax collection, investment attraction, transportation, and power supply. These policies aim to channel funds, technology, and resources toward enterprises and products with competitive advantages, thereby providing streamlined support for the development of the petrochemical industry. This creates more favorable conditions for the investment and construction of this project. 4. Existence of a first-mover advantage: Although there are currently seven or eight companies in China planning to build polyoxymethylene production facilities, only Yuntianhua (as part of a technical upgrade and expansion project, with an original production capacity of 10,000 tons per year and an expanded capacity of 30,000 tons per year), Zhangjiagang’s DuPont facility, and Nantong’s Boride Japan facility have already entered the construction phase. If the other companies that are in the preparation stage manage to complete their constructions successfully, their commissioning will also take place after 2007. The polyoxymethylene project requires substantial financial resources and presents significant technical barriers; those who enter the market first will be able to create strong obstacles for later entrants. Therefore, it is advisable to start this project as early as possible. With nearly two decades of rapid economic development and the adjustment of Western industrial structures, China is becoming a hub for global manufacturing. Industries that are major consumers of polyoxymethylene, such as the automotive, machinery manufacturing, and electronics sectors, have seen tremendous growth. A market system for polyoxymethylene has been established, and through nearly 30 years of research on this material in China, a group of professionals in the polyoxymethylene industry has been trained. Those who are willing to work on projects and those who are efficient and fast can seize the market; they have the talent needed to keep newcomers at bay. III. Existing Problems 1. At present, apart from Poland, other foreign companies with polyoxymethylene production technology are only interested in establishing wholly-owned factories in China and refuse to transfer the technology. Therefore, the introduction of polyoxymethylene production technology presents certain difficulties. 2. Although the demand for polyoxymethylene continues to rise, with several polyoxymethylene projects that have received approval from the Planning Commission, as well as those currently under construction coming online successfully, domestic production capacity for polyoxymethylene will increase rapidly, inevitably intensifying market competition. 3. Since methanol from the Petroleum Administration is planned to be used as the raw material for this project, the method of supplying such raw materials needs to be further determined.