CTO to Relieve China's Polyolefin Shortages

By Yang Weilan, Consulting Department of China National Chemical Information Center

Today’s coal-to-olefin (CTO) process includes coal gasification, purification of the synthesized gas, methanol synthesis, methanol-to-olefin (MTO), olefin separation, and the preparation of saleable olefin-based products.

1.Brisk project construction

At present, China has five CTO plants in operation (see Table 1), and their combined capacity to make olefins is 2.36 million t/a. Together, their capacities to make the olefin-based products polyethylene (PE), polypropylene (PP) and MEG (mono-ethylene glycol) are 400 000 t/a, 1.76 million t/a and 500 000 t/a, respectively.
According to incomplete statistics, China has around 40 CTO plants either under construction or in a preparatory stage. (Some of these projects are listed in Table 2.) If all of these are built and put into production on schedule, China's CTO capacity is forecast to reach 15 million t/a by 2015, and 19 million t/a by 2017.
China’s CTO units being built or planned for construction mainly have the following characteristics:
(1) Most are located in the coal-rich regions of western China and northern China or in eastern coastal regions, near the polyolefin consumers and with convenient transportation. New CTO plants are to be constructed mainly in coal-rich regions, while in the coastal regions, mainly MTO plants are built.
(2) The sources of investment are diversified. The central enterprises, local state-owned enterprises, private enterprises and foreign-funded enterprises are all involved. Large state-owned enterprises include coal enterprises such as Shenhua Group, China National Coal Group, Shaanxi Coal and Chemical Industry Group Co., Ltd and Datong Coal Mine Group, oil companies like Sinopec Group and Shaanxi Yanchang Petroleum (Group) Corporation, and power enterprises including Datang International Power Generation Co., Ltd and China Power Investment Corporation. Private enterprises include Legend Holdings Limited and Fude Energy Co., Ltd.
(3) PE and PP are the main products of most of these new plants.

Table 1   China’s CTO Plants Now in Operation

Producer    Capacity (kt/a)    Startup time    Process technology    Remarks
Shenhua Baotou Coal Chemical Co., Ltd    600    August 2010    DMT    The plant was put into commercial operation on January 1, 2011, and its polyolefin output has reached 500 000 tons in 2011 and 546 000 tons in 2012.
Datang Inner Mongolia Duolun Coal Chemical Co., Ltd    460    October 2010    MTP    A plant using inferior lignite as raw material was put into trial production in March 2012, and gradually achieved an operating rate of 70% in the second half of 2012.
Shenhua Ningxia Coal Industry Group    500    October 2010    MTP    Plant was put into trial production in April 2011, and its PP output was 170 000 tons in 2011 and 405 000 tons in 2012.
Sinopec Zhongyuan Petrochemical Co., Ltd    200    October 2011    SMTO    The plant uses outsourced methanol as raw material.
Ningbo Heyuan Chemical Co., Ltd    600    February 2013    DMTO    This Fude Energy Co., Ltd subsidiary uses outsourced methanol as raw material, and its olefin-based products are MEG and PP.
Total             2 360


Table 2   Some of China’s CTO Plants Being Built or Planned for Construction

Producer    Location    Capacity
(kt/a)    MTO
technology    Downstream products
Pucheng Clean Energy Chemical Co., Ltd    Pucheng of Shaanxi Province    700    DMTO-II    PE and PP
Wison (Nanjing) Clean Energy Co., Ltd    Nanjing of Jiangsu Province    295    MTO/OCP    Butanol and octanol
ZhongAn United Coal & Chemical Industry Co., Ltd    Huainan of Anhui Province    600    S-MTO    PE and PP
Zhongtian Hechuang Energy Co., Ltd    Erdos of Inner Mongolia????    650×2    SMTO/OCC    PE and PP
Sinopec Zhongyuan Petrochemical Co., Ltd    Hebi of Henan Province    600    S-MTO    PE and PP
Sinopec Guizhou Bijie Zhijin     Zhijin of Guizhou Province    600    S-MTO    PE and PP
China Power Investment Corporation/ Total    Erdos of Inner Mongolia?    800    MTO/OCP    Polyolefin
Yili Coal Electrochemistry Co., Ltd of China National Coal Group     Yili of Xinjiang region    600    DMTO    PE and PP
Mengda New Energy Chemical Co., Ltd  of China National Coal Group    Erdos of Inner Mongolia?    600    DMTO    PE and PP
Shaanxi Yulin Energy  Chemical Co., Ltd of China National Coal Group    Yulin of Shaanxi Province    600    DMTO    PE and PP
Zhongmei Yulin Energy Chemical Co., Ltd of Shaanxi Yanchang Petroleum (Group) Co., Ltd    Yulin of Shaanxi Province    600    DMTO/OCT    PE and PP
Dow-Shenhua Shaanxi Yulin Project    Yulin of Shaanxi Province    2 200    MTO    Butanol, octanol, EO/EG, PE, PP, n-propanol, ethanolamine, acrylic acid, etc.
Shenhua Shaanxi Methanol Downstream Processing Project    Yulin of Shaanxi Province    600    DMTO    PE and PP
Shenhua Ningxia Coal Industry Group    Yinchuan of Ningxia region    500    MTP    PP
Shenhua Baotou Coal Chemical Co., Ltd    Baotou of Inner Mongolia    600    DMTO    -
Shenhua XinJiang Coal-Based New Material Project    Urumqi of Xinjiang region    680    DMTO    PE and PP
Zhejiang Xingxing New Energy Technology Co., Ltd????    Jiaxing port of Zhejiang Province    600    DMTO    PE and PP
Jiutai Energy (Zhungeer) Co., Ltd    Erdos of Inner Mongolia?    600    UOP    PE and PP
Shanxi Coking Co., Ltd of  Shanxi Coking Coal Group Co., Ltd????    Hongdong of Shanxi Province????    600    DMTO    PE and PP
Datong Coal Mine Group    Datong of Shanxi Province???    600    DMTO    PE and PP


2. PE shortage will be reduced

In 2012, China's output of PE reached 11.465 million tons, of which the output of coal-based PE was around 360 000 tons, accounting for around 3% of the total. China imported 7.888 million tons of PE in 2012, 40% of the PE consumed here. China’s PE supply and demand are listed in Table 3.
According to incomplete statistics, the overall capacity of PE units in China’s CTO plants has been forecast to reach 6.17 million t/a by 2015, and 7.07 million t/a by 2017. But due to a lot of policy and market uncertainty faced by CTO development projects, experts have posed three plausible scenarios for the coming five years:
? optimistic – The capacity accounts for 80% of the total of PE units in CTO projects being built or planned for construction.
? neutral – The capacity accounts for 60% of the total of PE units in CTO projects being built or planned for construction.
? pessimistic – The capacity accounts for 40% of the total of PE units in CTO projects being built or planned for construction.
In these three scenarios, the PE to be capacity added by China’s current CTO construction projects would reach 5.65 million t/a, 4.24 million t/a and 2.83 million t/a, respectively by 2017, meeting 22.3%, 16.7% and 11.2% of the total domestic demand.
In the next five years, with the construction of a large number of CTO projects, China’s PE shortage will be relieved somewhat, the nation’s dependence on imported PE will reduced, and CTO will become an important force in China's PE market.

3.PP supply and demand will be balanced

In 2012, China's output of PP reached 11.216 million tons, of which the output of coal-based PP was around 800 000 tons, accounting for around 7% of the total. China imported 3.909 million tons of PP in 2012, and the nation’s dependency on imported PP was around 25%. China’s yearly PP supply and demand is shown in Table 4.
According to the statistics, by 2015 and 2017, the capacity of PP units in China’s CTO projects will reach 8.0 million t/a and 9.5 million t/a, respectively. Based on the same reasons as PE, the PP capacity in CTO projects is supposed to have three scenarios: the optimistic scenario (the capacity accounts for 80% of the total of PP units in CTO projects being built or planned for construction), the neutral scenario (the capacity accounts for 60% of the total of PP units in CTO projects being built or planned for construction) and the pessimistic scenario (the capacity accounts for 40% of the total of PP units in CTO projects being built or planned for construction). It is forecast that in the three scenarios, the capacity of PP units in China’s CTO projects will reach 7.82 million t/a, 5.86 million t/a and 3.91 million t/a, respectively by 2017, accounting for 37.6%, 28.1% and 18.8% of the total domestic demand.
With the construction of a large number of CTO plants, China’s PP market will shift from shortage to a supply/demand balance or even oversupply.


Table 3   China’s PE Supply and Demand (kt/a, kt)

Year    Capacity    Output    Import volume    Export volume    Apparent consumption
2006    7 820    6 044    4 891    40    10 896
2007    8 070    7 112    4 535    61    11 586
2008    8 070    7 433    4 497    67    11 863
2009    11 870    7 802    7 409    62    15 200
2010    13 340    10 063    7 358    158    17 263
2011    13 340    10 975    7 443    322    18 097
2012    15 240    11 465    7 888    288    19 065
2017 (forecast)    24 500    19 600    5 966    -    25 366


Table 4   China’s Supply and Demand of PP  (kt/a, kt)

Year    Capacity    Output    Import volume    Export volume    Apparent consumption
2006    7 840    5 866    2 945    26    8 785
2007    8 300    7 131    3 070    31    10 170
2008    9 260    7 331    2 789    42    10 078
2009    11 160    8 160    4 163    45    12 278
2010    13 160    9 800    3 868    83    13 585
2011    13 890    11 104    3 778    166    14 716
2012    15 250    11 216    3 909    142    1 4983
2017 (forecast)    28 000    22 400    -1 600    -    20 800


4. Conclusion

The many new CTO plants will substantially relieve China’s heavy and long-standing dependence on imported PE. Compared with PE, PP raw materials are more abundant in China. In addition to MTO and MTP (coal-to-propylene), domestic sources for PP raw material include steam cracking, FCC (fluid catalytic cracking) and propane dehydrogenation. In the future, China’s PP supply and demand pattern will shift from shortage to a supply/demand balance or even oversupply, and coal-based PP will pose a threat to oil-based PP.