Ethylene Glycol Makers Should Expand Its Applications   

After three monoethylene glycol (MEG) units at Zhenhai Refining & Chemical Company, Tianjin Petrochemical Company and Liaoning North Chemical Industry Corporation were completed and put into operation, as of November 2010, China had 16 MEG producers, with a total capacity of 3.648 million t/a, accounting for about 14.2% of the world's total capacity. It is estimated that China's annual MEG output is about 2.6 million tons in 2010. CNPC, Sinopec and CNOOC have 89% of China's total MEG capacity. In the next few years, China will build several more MEG units, including Chengdu Ethylene Project's 380 000 t/a unit, Anhui Fengyuan Biochemical Company Limited's 180 000 t/a unit, Wuhan Ethylene Project's 300 000 t/a unit and Henan Heyang Alcohol Company Limited's 200 000 t/a bio-process-based unit. Henan Yongjin Chemical Co., Ltd. and Tongliao GEM Chemical Co., Ltd. will jointly build two 200 000 t/a coal-based MEG units. It is expected that by 2014, China's total capacity will reach 5.5 million t/a. By then, the short supply of MEG in China will be alleviated to some extent.
   China's MEG capacity and output are growing rapidly, but due to the strong demand for MEG from polyester and other industries, China's MEG production still cannot meet the domestic demand. So, China has to import large quantities of MEG every year, and China's MEG import volume seems to be increasing year by year. According to customs statistics, China's MEG import volume was 2.5161 million tons in 2003 and 4.8017 million tons in 2007. In 2009, it grew to 5.8281 million tons, up 11.73% year on year. In the first 10 months of 2010, China's MEG imports amounted to 5.5867 million tons, up 16.61% year on year.
   China's imports of MEG mainly come from Saudi Arabia, Canada, South Korea and China's Taiwan region. In the first 10 months of 2010, China's MEG import volume from Saudi Arabia reached 2.3156 million tons, accounting for 41.4% of China's total MEG imports.
   In recent years, with the rapid development of China's polyester industry, the demand for MEG is constantly growing in China. In 2004, China's apparent consumption of MEG was only 4.3143 million tons. But in 2009, it reached 7.7714 million tons, up 10.2% year on year, and accounting for about 43.02% of the world's total MEG consumption.
   Polyester makers are the main consumers of MEG and account for 93.7% of the total consumption of MEG. The rest is used for the production of antifreeze, adhesives, paint solvents, everlubes, surfactants and polyester polyols. China's polyester capacity has become excessive due to irrational development over the past few years. The operating rate of polyester plants has decreased year by year, and a number of small polyester enterprises are gradually withdrawing from the competition. In addition, in the past two years, due to RMB appreciation, export tax rebate rate adjustment and the global financial crisis, China's textile exports have been reduced, so the demand for MEG and other raw materials has decreased accordingly. In addition, China's textile industry has also faced the rising costs of labor, raw materials and energy and the constraints of the environment and resources. In the coming years, the development of the textile industry will continue to be in the doldrums, so the growth of the demand for MEG will slow down. However, with the development of China's auto industry and the rapid growth of car ownership in China, the application of MEG in the antifreeze will increase. It is expected that by 2014, China's demand for MEG will reach 11 million - 11.5 million tons. By then, China's MEG capacity will be 5.5 million t/a, so there will be a large gap in the market.
    Overall, the world's MEG capacity has been in surplus, and the production and consumption of MEG in developed countries and regions, such as North America, Western Europe and Japan, have slowed down their growth rate. But the MEG capacity has grown dramatically in the Middle East and Asia (especially China). Especially in the Middle East, a large number of ethane-based and low-cost MEG units have subsequently been built and put into operation. This has changed the world's supply and demand pattern of MEG. Therefore, in the future, the development of the world's MEG industry will depend primarily on the development of the Middle East and Asia.
　　Now, China's MEG industry features relatively small capacity and output, relatively backward production technology and high production costs. China started to produce and develop the downstream products of MEG relatively late. The downstream products of MEG in China have poor economic returns and lack competitiveness in domestic and international markets. In China, about 94% of MEG is used for the production of polyester, so MEG has a single consumer structure in China. Meanwhile, China's textile industry frequently suffers global trade frictions. If the production of polyester in China is reduced, this will certainly produce huge impacts on China's MEG industry. Some MEG producers in the United States, Western Europe and Japan have been committed to the market development of ethylene oxide derivatives. China should strengthen the application development of MEG in other areas, gradually change the single consumer structure of MEG and form an efficient industrial chain spanning from application to production to resolve market risks and to promote the healthy and orderly development of China's MEG industry.

Table 1 China's major MEG producers and capacity in 2010                            (kt/a)
Producer    Capacity    Source of ethylene oxide technology
Sinopec Beijing Yanshan Petrochemical Co., Ltd.     80     SD oxidation process
CNPC Liaoyang Petrochemical Fiber Company     200     SD oxidation process
CNPC Fushun Petrochemical Company     60     Shell oxygen process
CNPC Jilin Petrochemical Company     159     SD oxygen process
Sinopec Beijing Dongfang Petrochemical Co., Ltd.     40     SD oxygen process
Sinopec Yangzi Petrochemical Company    262    SD oxygen process
Sinopec Shanghai Petrochemical Company     605     SD oxygen process
Sinopec Maoming Petrochemical Company     100     Shell oxygen process
Sinopec Tianjin United Chemical Co., Ltd.     62     Shell oxygen process
CNPC Dushanzi Petrochemical Company     50     SD oxygen process
BASF - YPC Co., Ltd.     300     SD oxygen process
CNOOC and Shell Petrochemical Co., Ltd.     320     Shell oxygen process
Tongliao GEM Chemical Co., Ltd.    200     Self-developed coal chemical process
Sinopec Zhenhai Refining & Chemical Company    650    DOW chemical process
Sinopec Tianjin Petrochemical Company     360     DOW chemical process
Liaoning North Chemical Industry Corporation     200     SD oxygen process
Total     3 648