Current operating status of coal-based ethylene glycol

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At present, China has become the world’s largest market for ethylene glycol consumption. In China, 92% of ethylene glycol is used in the polyester industry, while the remaining 8% is utilized in antifreeze and unsaturated resin applications. China’s energy structure, characterized by abundant coal, limited gas reserves, and scarce oil, has, on the one hand, restricted the growth of domestic production capacity for ethylene-based ethylene glycol, while on the other hand, it has greatly stimulated efforts to develop coal-based ethylene glycol technologies and to build related projects in the country. Currently, coal-based ethylene glycol is gaining prominence, and its impact on the market cannot be underestimated. As a new type of coal chemical project, coal-based ethylene glycol experienced rapid development during the 12th Five-Year Plan period. To date, several large-scale production facilities with a capacity of 200,000 tons each have been put into operational use on a pilot basis. The quality of this product exceeds the current **standards for petroleum-based products, and it has gained full recognition from the polyester industry downstream; as a result, it holds great market potential and promising prospects. Currently, regions such as Liaoning and Henan have built multiple coal-to-ethylene glycol production lines, with a total capacity of over 1 million tons. It is worth noting that the cost bottleneck, the biggest market-related constraint for coal-based ethylene glycol, is gradually being overcome. On the one hand, this is due to domestic coal prices being at their lowest levels in 10 years, providing significant support in terms of raw materials; on the other hand, it is because new technologies, processes, and equipment are continuously being put into use, thereby improving the efficiency of the facilities. However, against the backdrop of low international oil prices, imported ethylene glycol remains the dominant player in the market. For a long time, our country has been a major consumer of ethylene glycol, but it is also highly dependent on imports, with the volume of imports increasing year by year. It is expected to exceed 9 million tons in 2015. The huge demand for ethylene glycol in our country, along with the supply gap, creates opportunities for importing products from abroad. The current upward trend in crude oil prices is likely to continue for some time; therefore, low-priced crude oil will still provide strong support for ethylene glycol. In the domestic market, imported products will remain the dominant force in the future. Secondly, driven by the expansion of ethylene oxide production in China, the self-sufficiency rate of domestic ethylene glycol is also gradually increasing. Over the past 10 years, particularly during the 12th Five-Year Plan period, there was an acceleration in the expansion of ethylene oxide production capacity in China; by the end of 2015, the country’s total annual production capacity had exceeded 4 million tons. However, at the same time, effective demand in the downstream sector did not grow in tandem, which severely restricted the utilization of ethylene oxide production capacity; currently, the overall operation rate is less than 70%. From the perspective of the industrial chain, ethylene glycol is the largest end-use product of ethylene oxide, accounting for approximately 70% of the ethylene oxide consumed. Therefore, due to the requirements of plant utilization and continuous production, ethylene oxide manufacturers still need to maintain a high level of ethylene glycol production, even when their profit margins are declining or even turn negative. Therefore, despite pressures from both domestic and international markets, domestic petroleum-based ethylene glycol has managed to increase the level of product self-sufficiency to a certain extent. In early December, the price of ethylene glycol dropped by more than 30% on a year-on-year basis. The reasons for this are, on the one hand, the consistently low levels of international crude oil prices, which provide inexpensive raw materials for the import of ethylene glycol from the Middle East; on the other hand, as domestic production capacity for ethylene oxide expands, the supply of domestically produced ethylene glycol increases, thereby driving down market prices. At the same time, coal-based ethylene glycol has seen rapid development in recent years, with large-scale production facilities coming online one after another, which has helped to stabilize the prices of petroleum-based products to some extent. Clearly, three forces have formed a competitive dynamic in which some are strong and others weak, with strengths and weaknesses shifting back and forth, and a tripartite market structure is gradually taking shape.