China’s Ethylene Sector to Expand Production in 2013

By Zhang Fuqin and Bian Gangyue, China Petroleum Planning & Engineering Institute

A 2012 review for China’s ethylene sector

1. Policies promotion

In 2012, China issued a number of policies related to the development of ethylene. These policies include the 12th Five-Year Plan for Petrochemical and Chemical Industry, the 12th Five-Year Plan for Ethylene sector, the 12th Five-Year Plan for Industry Energy Saving and Important Product Catalogue for the New Material Industry during the 12th Five-Year Period (2011-2015), etc. Of which, the 12th Five-Year Plan for Industry Energy Saving puts forward the comprehensive promotion of the technologies like large-scale ethylene cracking furnace technology, focuses on the promotion of technologies and equipment such as the air preheating of cracking furnace, the optimization of heat exchanging process, the optimization of pumparound heat removals, the utilization of medium and low temperature waste heat, pervaporation membrane separation, the deep heat integration of gas separation units, high efficient heating furnace and high efficient heat exchanger, demonstrates and promotes the optimization control technology of turbine compressor unit, and the integrated technology of gas turbine and the cracking furnace, and researches and promotes the advanced control technology for ethylene cracking furnace temperature and load, and the optimizing operation technology of C2 hydrogenation reaction process, etc. In addition, amid the energy-saving measures of ethylene sector, the optimization of raw material structure, the promotion of lightweight raw material, the support for energy saving renovation of ethylene enterprises, and the realization for the optimizing utilization of production system energy are put forward. By 2015, the comprehensive energy consumption of ethylene production will reduced to 875 kg of standard coal per ton of ethylene manufacture or 600 kg of standard oil per ton of ethylene.

2. Further increase in capacity

In early 2012, China had 24 ethylene producers with 29 sets of ethylene production units, and the domestic total capacity to make ethylene reached 15.31 million t/a. China’s newly added capacity to make ethylene was 1.6 million t/a in 2012, of which PetroChina Fushun Petrochemical Co., Ltd.’s 800 kt/a and PetroChina Daqing Petrochemical Co., Ltd.’s 600 kt/a ethylene projects were put into operation in October 2012. Therefore, China’s capacity to make ethylene has reached 16.91 million t/a, ranking second in the world. China has form five 1-million-ton ethylene production plants, and their combine capacity to produce ethylene accounts for around 1/3 of the national total. China’s average capacity of ethylene production units is close to 600 kt/a, being higher than 520 kt/a of the world average level.
   In the first ten months of 2012, East China was the largest ethylene production region in China, and the ethylene output in the region accounted for 30.2% of the national total. South China and North China ranked the second and third, respectively with the output proportion of ethylene being 21.4% and 18.6%.

3. Output of downstream products rose

In the first eleven months of 2012, China produced 13.551 million tons of ethylene, down 2.6% year-on-year.
   China’s output of major ethylene downstream products - synthetic resins, synthetic rubbers as well as synthetic fibers increased considerably, shown in Table 1.

Table 1 China’s output of resins, rubbers, fibers and their feedstock Jan. – Nov. 2012   (kt)
   Product    Output Jan-Nov 2012    Output Jan-Nov 2011    YoY Growth (%)
   Synthetic resins and copolymers    47 361    44 680    6
   PE resin    9 338    8 243    1
     LDPE resin    1 749    1 656    5.7
     HDPE resin    2 789    3 033    -8
     LLDPE resin    3 000    3 058    -1.9
     Medium density PE (MDPE) resin    29    37    -21.4
     Ultra high molecular weight PE (UHMWPE)    131    124    5.8
     PP resin     10 147    8 942    13.5
     PVC resin    12 040    11 798    2
     PS resin    1 978    1 887    4.8
   ABS resin    953    937    1.6
   Synthetic rubber    3 460    3 220    7.5
   Synthetic fiber monomers    20 121    18 028    11.6
   Synthetic fiber polymers    14 271    13 171    8.3
   Polyester    10 464    10 121    3.4
   Synthetic fiber    31 338    28 575    9.7
   Polyamide fiber    1 679    1 423    18
   Polyester fiber    27 481    25 360    8.4
   Acrylic fiber    632    638    -1
   Vinylon fiber    55    54    1.9
   Polypropylene fiber    332    275    20.8
   Spandex    280    247    13.5
   
   While increasing the ethylene production, enterprises has increased investment in R&D in succession to further improve the added value of products. For example, Sinopec Maoming Petrochemical Co., Ltd. has conducted trial production of new polypropylene product with high rigidity and high heat resistance. It is reported that a new polypropylene product with high rigidity and high heat resistance has firstly made successful trial production in No.2 polypropylene unit of Sinopec Maoming Petrochemical, and this innovative PP products is superior to the ordinary products in the melt index, thermal deformation temperature, modulus and impact strength, etc., and can meet the needs of terminal products that have higher requirements on flexural modulus and heat deformation temperature. Sinopec Yangzi Petrochemical Co., Ltd. has successfully produced a new flame retardant cable material. Sinopec Yangzi has successfully produced 200 tons of flame retardant cable material with high added value-rubber-modified chlorinated polyethylene base material. Rubber-modified chlorinated polyethylene, which is produced through the chlorination of rubber-modified chlorinated polyethylene base material, is widely used in the sector of high performance cable. It has the advantages of good flexibility, flame retardant and oil resistant in comparison with traditional cable materials, can meet the special requirements, especially suitable for the special environments like the interior of the machine, and becomes a “noble” new member of cable material family. The successful development and production of rubber-modified chlorinated polyethylene base material has opened up a new way for the improvement of economic added value of polyolefin products in Sinopec Yangzi.

4. Import volume increased drastically

According to the statistics, in the first ten months of 2012, China’s import volume of ethylene reached 1.139 million tons, up 36.7% year-on-year, valued at US$1.42 billion, and the average imported price was US$1 246.7 per ton, a growth of 1% year-on-year.

5. Diversified raw materials

In China’s ethylene raw materials, naphtha accounts for around 64% and hydrogenation tail oil and light diesel oil occupies around 10%, respectively. With startup of coal-to-olefins (CTO) projects in Shenhua Baotou and Sinopec Zhongyuan Petrochemical Co., Ltd., China has made progress in the industrialization of ethylene production using non-petroleum based raw materials like coal and gas. At present, four CTO industrial demonstration units, which are in operation, include Shenhua Baotou 600 kt/a ethylene project that has a capacity of polyethylene and polypropylene being 300 kt/a, respectively, was put into trial production, and produced polyolefin products in September 2010, Datang Duolun CTO project that can annually produce 460 thousand tons of polypropylene, 240 thousand tons of byproduct refined methanol, 129.5 thousand tons of gasoline and 66.6 thousand tons LPG, Shenhua Ningmei 500 thousand t/a coal-to-propylene (MTP) project that has produced qualified propylene and annually produces 520 thousand tons of polypropylene, and Sinopec Zhongyuan Petrochemical’s 200 kt/a project whose trial run is in a good condition.

6. Promoting energy saving renovation

In order to further reduce the energy consumption of ethylene units, the domestic enterprises have conducted the energy saving renovation for cracking furnace, and optimized the energy utilization of the system. Sinopec Yangzi has successfully completed its ethylene energy-saving renovation project, including the replacement of cold box in new area, the internals installation in 12 towers, and the expansion and replacement of 30 pumps and 46 heat exchangers.

7. Localization rate of equipment increases

The localization rate of Sinopec’s new ethylene equipment has reached 70%-85%. For example, the localization rate of Sinopec Tianjin Petrochemical’s ethylene unit is 78%. The localization rate of Sinopec Maoming Petrochemical’s new ethylene cracking units reaches 88%, of which the core equipment like cracking gas compressor and cold box have all achieved localization.
     PetroChina Daqing Petrochemical Co., Ltd.’s 1.2 million t/a ethylene expansion project with the domestic independent design was completed in 2012. Its complete sets of 800 kt/a ethylene technology, with cracking furnace, three compressors (cracking gas compressor, propylene refrigerant compressor and ethylene refrigerant compressor), cold box and cryogenic tank totally achieving localization, has been employed in the new Wuhan ethylene project.

B 2013 projection of China’s ethylene sector

With the increasing progress of industrialization and urbanization, China’s demand for ethylene is estimated to grow 5%-7% year on year during 2013-2015. It is predicted that China’s equivalent consumption of ethylene will exceed 35.0 million tons by 2015 and the potential demand for high-end products will be large, offering a broad space for the development of China’s ethylene sector. In 2013, the development of China's ethylene sector is expected to show the following characteristics:

1. China’s ethylene sector needs to manage challenges from the Middle East and North America

In recent years, by virtue of their rich source and low price of the light hydrocarbon raw material, the Middle East countries, especially Saudi Arabia, have strengthened the development of ethylene sector and their main target markets are China and East Asia, having a very obvious impact on China’s ethylene sector.
   The Middle East producers mainly use ethane as raw material to produce a large quantity of ethylene and its derivatives, making the global prices of polyethylene and ethanol lower. Whereas the consumption ability in the Middle East is very limited, so the impact from the Middle East on China’s ethylene sector is increasing.
   In addition, the large-scale development of shale gas in the United States has brought plentiful and cheap ethane and condensate. If the ethylene capacity expansion plans are implemented on schedule, the capacity to make ethylene in the United States will greatly increase. Relying on its low cost raw materials and technology advantages, the ethylene sector in the United States will be most competitive and will influence the market pattern of global ethylene and its downstream derivatives in the future. The pressure and challenges from ethylene products in the Middle East and North America on China’s ethylene sector will increase.

2. China’s ethylene sector will develop towards large scale

According to the 12th Five-Year Plan for the ethylene sector announced by the Ministry of Industry and Information Technology of China, by 2015, China’s capacity to make ethylene will reach 27.0 million t/a and the output will be 24.3 million tons. China’s average capacity of ethylene production units using naphtha route will reach over 700 kt/a, the diversification rate of olefin feedstock will be more than 20%, three 2-million-ton ethylene production bases will be formed, and the localization rate of large-scale units will further increase.
   In 2013, China will still be in the peak of ethylene capacity expansion. With the startup of the projects like Sichuan ethylene and Wuhan ethylene as well as the capacity expansion in the existing ethylene units, and combining with the capacity of the MTO/MTP (methanol-to-olefins/methanol-to-propylene) projects which are under construction, it is expected that the growth of ethylene capacity in China will exceed 4.0 million t/a and the production scale of ethylene units will further expand.

3. Diversified raw materials and process routes

China should continue to broaden the field of ethylene cracking raw materials, encourage the ethylene production process using non-petroleum as raw materials, improve the technical level, produce products with high added value, make efforts to reduce the production cost of ethylene and accelerate the development of new processes. The lightweight and diversification of raw materials are the development trend of China’s ethylene sector.

4. Strengthens the processing and utilization of ethylene downstream products

China should formulate an overall plan for the comprehensive utilization of C4, C5 and C9 fractions (byproducts of ethylene), make a reasonable selection of varieties, form the economic scale, highlight the features of product, and improve the economic benefit.

5. Pays more attention to the energy-saving and benefit-increasing, speeds up scientific and technological innovation and further improves the localization degree of the units.

6. Effectively guide and control the development of ethylene sector, moderately improve access threshold, prevent low-level redundant construction and unduly investment.

At present, the global chemical industry is at the low stage of a boom cycle, however, it is expected that in the next few years, the operation and profitability of petrochemical industry with ethylene sector as a lead will gradually improve, and by around 2015 the petrochemical industry will be probably at the peak of a new round of cycle. China’s ethylene sector should actively optimize the structure adjustment, promote the progress of science and technology, improve the added value of products, promote industrial upgrading and enhance its competitiveness.