EO Needs Deep Processing
Year:2007 ISSUE:35
COLUMN:MARKET REPORT
Click:360    DateTime:Dec.18,2007
EO Needs Deep Processing    

Zhu Jianmin, President of Liaoning Oxiranchemn Group Co., Ltd.       


Great deficit of EO downstream product market    

Nowadays, the largest application of ethylene oxide (EO) is the manufacture of mono-ethylene glycol (MEG). Other uses are the production of polyoxyethylene ether nonionic surfactants, ethanolamine, ethers of glycol, polyether polyols, etc. Manufacture of nonionic surfactants is another important application of EO.
     EO production developed rapidly in China. At the end of 2007, China's EO capacity will be over 2 million t/a, nearly doubling from 1.05 million t/a in 2004. In addition, EO units' both  newly built and expanded, are now spread in Liaoning, Jilin, Shandong, Zhejiang, Guangdong, Sichuan provinces, Tianjin, etc. EO capacity is expected to exceed 4.5 million t/a in 2010.
     In China, EO is mainly used to produce ethylene glycol, accounting for around 65% of the total. EO is also used to produce some fine chemicals including polyoxyethylene nonionic surfactants, ethanolamine, glycol ethers and polyether polyols.

The import situation of EO derivatives in China,
              2000 - 2005     (thousand tons)
Year    MEG     Glycol ethers    DEG    Ethanolamine    Nonionic surfactants
2000    1 050    50      137     51      46
2001    1 597    47      197     45      59
2002    2 146    71      239     62      71
2003    2 516    87      292     88      94
2004    3 391    102      311     89      153
2005    4 000    113     364     87      173
2006    4 061    117     337     94      184
DEG: Diethylene glycol
Source: CNCIC

   EO is not suitable for long distance transportation so the import and export amounts of EO total less than 10 tons per year. However, the imported amount of MEG and other EO downstream fine chemicals have increased rapidly in recent years. The imported amount of MEG was 205 thousand tons and 1.05 million tons in 1995 and 2000 respectively. The number climbed to 4 million tons in 2005 with the imported amount accounting for 78.62% of the total consumption, with an annual average growth of 30.7% during 2000 - 2005.
    1. In China, the development of polyoxyethylene ether nonionic surfactants has been steady in recent years with a total capacity around 300 thousand t/a. The domestic market appears to be saturated. Products portfolio mainly includes fatty alcohol polyoxyethylene ether, followed by nonylphenyl polyoxyethylene ether, etc.
    2. China has more than ten ethanolamine manufacturers, whose production units feature low capacity, underdeveloped process technologies and low product quality. The domestic demand for ethanolamine mainly depends on imported goods today.
    3. China's manufacturers of ethers of ethylene glycol are mainly located in Jiangsu province. Nowadays, there are still many problems for these local manufacturers in capacity, quality, cost, etc. China still has to import large amount of these products to meet its demand, with the amount increasing year by year. So the imported amount of monobutyl ether of ethylene glycol is increasing vigorously.
    4. China has a total polyether polyols capacity of over 400 thousand t/a at present, mainly distributed in Shanghai, Tianjin and Liaoning province. The polyether polyols manufacturers in China now have low capacities and underdeveloped process technologies so that the variety, quality and quantity of their products cannot meet the domestic demand. China imports a large amount of polyether polyols every year.

Buyers Call for Setting up Reasonable EO Price-Fixing System

In China, EO is now mainly manufactured by CNPC and Sinopec Group, and manufacturers presently have the right to price-fix the market price due to the supply deficit. EO manufacturers together with buyers should set up a win-win price-fixing rule. According to the international traditions, sellers and buyers should fix the market price of EO goods through negotiation, modify the present unreasonable monopoly pricing mode, gradually set up a strategic cooperative relationship between suppliers and users and develop EO extended sectors in a sound way. Since 2007, some newly built EO units in China have gone on stream one by one, and EO's former supply and demand imbalance between northern and southern China has been changed.
    Meanwhile due to the easy availability of imported MEG and the drive of huge monopoly profits, the domestic EO manufacturers have started to sell more and increase the price of EO repeatedly to optimize their economic benefits. Since 2004 the price of EO has been climbing rapidly and even approached RMB18 000 per ton in 2005, the historical zenith. Although the EO price dropped for a year, readjusting in 2006, it now remains around RMB15 000 per ton.