[Haichuan Project Updates] Hengli Petrochemical’s 2.5 million-ton PTA-5 unit comes online

According to statistics, 21 PTA units have been put into operation over the past decade (bringing an additional production capacity of 40.1 million tons), and 10 of these units (with an additional production capacity of around 20.1 million tons) utilized Invidia technology. At present, aside from the 2.2 million tons of PTA produced by Dushan Energy (Xinfengming) which uses BP’s technology, other domestic PTA plants using the Inovata P8 technology include Hengli Petrochemical’s Units 4 and 5 with a combined capacity of 5 million tons per year, Jiaxing Petrochemical’s second phase plant with a capacity of 2.2 million tons per year, Fujian Baihong’s plant scheduled to come online this year with a capacity of 2.5 million tons per year, Honggang Petrochemical’s Unit 2 with a capacity of 2.5 million tons per year, and Unit 3 with a capacity of 2.5 million tons per year, which is expected to go into operation in 2022.

Impressive, Hengli. Impressive, Jingding Company.

In recent years, the scale of PTA plants put into operation in China has generally been over 2 million tons. Compared with the newly built integrated upstream and downstream plants, the existing small-scale plants with a capacity of around 1 million tons will gradually lose their competitiveness. Under the pressure of overcapacity, some of these outdated small plants may be shut down, and China’s PTA industry could enter a new phase of consolidation. Among the many competitors, leading firms exhibit a distinct advantage. Firstly, for leading enterprises, since they already have a certain production foundation, the cost of expanding production is relatively low. For Hengli Petrochemical, the capacity of each of its fourth and fifth PTA production lines is 2.5 million tons, with an investment of around 3 billion yuan per line. The total investment for Yisheng New Materials’ new 6 million-ton PTA project is estimated at 6.731 billion yuan, while the environmental impact assessment cost for Fujian Baihong’s 2.5 million-ton PTA plant amounts to as much as 5.72 billion yuan. Secondly, the core cost competitiveness of PTA lies in its equipment and manufacturing processes; it is a typical industry that benefits from latecomer advantages, with larger-scale facilities resulting in lower costs the later they come online. Over the past decade, the marginal processing cost of PTA has dropped significantly from 1,000 yuan per ton to around 500 yuan per ton, mainly due to economies of scale brought about by large-scale production technologies as well as improvements in processing techniques. Taking Hengli Petrochemical’s PTA production line as an example, it employs Nvidia P8 technology, which reduces both material and energy consumption; it is estimated that the processing cost per ton can be reduced by about 100 yuan per ton, representing a reduction of around 20% compared to the current lowest cost per ton for PTA. Therefore, against the backdrop of increasingly fierce industry competition, the advantages of leading enterprises become even more prominent.

Shenyang Sanyo Storage Tank Co., Ltd. and Jinding Engineering Construction Co., Ltd. (CTCI Beijing) were established in 1993 through a partnership between CTCI, Taiwan’s largest engineering company, and SEI (formerly Beijing Petrochemical Engineering Company). They are large-scale general contractors for petrochemical projects in China. Our company has been seeking opportunities to collaborate with them, and finally won the bid in the electronic tender for two 1,000 m3 butadiene spheres for the project at Zhangzhou Qimei Chemical Co., Ltd., which involves an annual production capacity of 450,000 tons of ABS and AS. The tender was organized by that company on February 28, 2020. We signed a contract with Jingding Company this month. In June 2019, our company began to engage in discussions with Jingding Engineering Construction Co., Ltd. regarding this project. It was not a large-scale project for the spherical tank manufacturer, but it was unusual for it to take such a long time to complete. Over these eight months, our sales manager has engaged in repeated discussions and negotiations with the client regarding quotes; follow-up efforts continued even during the pandemic after the Spring Festival. Alone, the technical proposal was revised four times. Eventually, the client approved our company’s design and quote among all the alternatives offered, which demonstrates the strength of our company. Perseverance leads to success. Guided by the belief that \"we should go all out whenever there’s a chance,\" and through the joint efforts of the sales manager and various departments, our company was finally able to win the bid in the electronic bidding held on February 28, 2020. It served as a boost for the spherical tank company during a difficult period when the entire country was affected by the pandemic; more importantly, it enabled the establishment of a long-term partnership with this company through this project.

On October 16, 2019, Zhangzhou Qimei Chemical Co., Ltd. and Jingding Engineering Construction Co., Ltd. signed a general contract for the engineering construction of Qimei’s project to produce a total of 450,000 tons of ABS per year, at the Qimei office in Gulei, Zhangzhou. Chimei’s annual production capacity of 450,000 tons of ABS is located in the Gulei Port Economic Development Zone in Zhangzhou. Once completed, this facility will enable Chimei to further expand its market presence on the Chinese mainland and, through the Belt and Road Initiative, reach markets in ASEAN, thereby strengthening its position as the world’s largest supplier of ABS.