China’s Ethylene Glycol Industry – Analysis of the Present Status and Development Prospects

By Cui Xiaoming, Sinopec Yanshan Petrochemical Co., Ltd.

Ethylene glycol (EG) is an important organic chemical raw material mainly used to produce polyester fibers and anti-freezing agents. It can also be used to produce unsaturated polyester resins, lubricants, plasticizers, nonionic surfactants and explosives. Its applications are very extensive.
In China today, ethylene is usually used as the primary raw material to produce EG through ethylene oxide. The production units are all imported, from sources including those of Royal Dutch Shell, SD (Scientific Design Inc.) of the United States and Dow Chemical (formerly UCC) of the United States. The other, non-petroleum route uses syngas to synthesize EG through various routes. The production technology already commercialized in China mainly uses coal or natural gas as raw material to produce the syngas.

Table 1    Construction and expansion of EG units in China, 2013-2017 (kt/a)

Enterprise or project    Capacity    Process     Startup schedule
PetroChina Sichuan Petrochemical Co., Ltd.     
360    petroleum ethylene    2013
Sinopec Wuhan Petrochemical Co., Ltd.     
280    petroleum ethylene    production already started in 2013
Sinopec Yangzi Petrochemical Co., Ltd.     
100    petroleum ethylene    2013
China-Kuwait Guangdong Refining & Chemical Integrated Project (Zhanjiang of Guangdong)      
400    petroleum ethylene    2014
Sinopec Shanghai Petrochemical Co., Ltd.     
380    petroleum ethylene    2015
Henan Yongjin (Mengjin) Chemical Co., Ltd.     
200    coal-to-EG    2013
Henan Yongjin (Shangqiu) Chemical Co., Ltd.     
200    coal-to-EG    2013
Wison Group Hengyuan Chemical Erdos Huawei Energy Co., Ltd.     
200    coal-to-EG    2014
Kairuan Group (Inner Mongolia) Chemical Co., Ltd.     
400    coal-to-EG    2014
Inner Mongolia Tongliao GEM Chemical Co., Ltd.     
400    coal-to-EG    2014(second phase)
Shaanxi Coal and Chemical Industry Group Co., Ltd.     
200    coal-to-EG    2015
Hebi Baoma Group Co., Ltd.     
300    coal-to-EG    first phase 50kt/a, 2013
Inner Mongolia Yigao Coal Chemical Technology Co., Ltd.     
200    coal-to-EG    2014
Shaanxi Yanchang Petroleum (Group) Co., Ltd.     
800    coal-to-EG    2016
Ningbo Heyuan Chemical Co., Ltd.     
500    methanol-to-EG    production already started in 2013
Boyuan Holding Inner Mongolia Sunite Soda Co., Ltd.     
200    coal-to-EG    2014
Qianxi Coal Chemical Investment Co., Ltd.     
300    coal-to-EG    2013
Shanxi Xiangkuang Hongtong Coal Chemical Co., Ltd.     
200    coal-to-EG    2014
Xinjiang Baotailong Coal Chemical Co., Ltd.     
200    coal-to-EG    2014
Inner Mongolia Erdos Elion Resources Group Co., Ltd.     
300    coal-to-EG    2015
Inner Mongolia Huadian Hulunber Energy Co., Ltd.     
400    coal-to-EG    2016
Shuangyashan Guodian Shengshi Co., Ltd. EG Project    
400    coal-to-EG    2014
Xinjiang Zhongtai Mining & Smelting Co., Ltd.     
100    calcium carbide furnace tail gas    2015
Anhui Huaihua Group Co., Ltd.     
100    syngas-to-EG    2014
Sinopec Hubei Chemical Fertilizer Co., Ltd.     
200    syngas-to-EG    2013
Zhejiang Rongsheng Xinjiang Cheku Investment Co., Ltd.     
400    natural gas/coal-to-EG    2015
Guizhou Taijiahe Energy Investment Group Co., Ltd.     
300    coal-to-EG    2016
Shanxi Yangquan Coal (Group) Co., Ltd.     
400    coal-to-EG    2014
Xinjiang Tianye (Group) Co., Ltd.     
200    syngas-to-EG    2015
Xinjiang Zhongtai Mining & Smelting Co., Ltd.     
100    calcium carbide furnace tail gas    2015


1. Present production status

Starting from 1977, when Beijing Yanshan Petrochemical General Plant took the lead to construct a 60kt/a EG production unit with the oxygen direct oxidation process introduced from SD of the United States, EG production in China developed rapidly. Many new or expansion EG units have been completed and put on stream in recent years. Coal-to-EG units, in particular, have appeared rapidly. By the end of August 2013, the total capacity for EG in China reached 5 058kt/a.
After years of development, China’s EG industry has following characteristics today:
(1) The production mode emphasizes different production processes equally, such as the petroleum route and the non-petroleum route (mainly the coal or natural gas route), coexistence of different production scales and combinations of imported and domestic technologies. Technologies from well-known EG producers in the world such as SD, Shell and Dow Chemical all have been used in China. The commercialization of the coal-to-EG technology developed in 2009 by CAS Fujian Institute of Research on the Structure of Matter indicated the successful development of the non-petroleum route in China. The non-petroleum capacity for making EG has reached 900kt/a today, accounting for 17.79% of the total. The petroleum-based capacity is 4 158kt/a, accounting for 82.21%. The capacity using the technology from SD is 1 976kt/a, accounting for 39.07%of the petroleum-based capacity; Shell technology accounts for 1 272kt/a, or 25.15%; Dow Chemical technology accounts for 910kt/a, or 17.99%.
(2) Major technology developers are varied. Petroleum-route EG units all use technologies introduced from abroad. Coal chemical technologies are all developed by China itself. In addition to CAS Fujian Institute of Research on the Structure of Matter, many other research institutes, universities and enterprises are conducting R&D in coal-to-EG technologies, such as East China University of Science and Technology, Anhui Huaihua Group Co., Ltd., Pujing Chemical Industry (Shanghai) Limited, Research Institute of Sinopec Shanghai Petrochemical Co., Ltd., Tianjin University, Southwest Research & Design Institute of Chemical Industry and Shanghai Wuzheng Engineering Technology Co., Ltd. Considerable progress has been made and some findings have already been commercialized.
(3) The sources of raw material are diversified. In addition to ethylene, the traditional raw material, Shandong Hualu Hengsheng Group Co., Ltd. and Xinjiang Tianye (Group) Co., Ltd. have constructed EG units using calcium carbide furnace tail gas as raw material. Ningbo Heyuan Chemical Co., Ltd. uses methanol as raw material. Commercial units using the hydrogen and carbon monoxide contained in industrial purge gas to synthesize EG will also be constructed in China.
(4) Major investors will be varied. EG units in China were mainly concentrated in Sinopec and PetroChina in the past. Owing to the involvement of foreign and private capital, major investors are developing toward diversification today.
(5) Production is growing in scale and is increasingly concentrated. Major investors, whether they are the State, private investors or foreigners, choose the large-scale, high-tech investment strategy, and the scale is mostly above 200 kt/a. The economics and competitiveness of EG units have been greatly enhanced. Sinopec Shanghai Petrochemical Co., Ltd. is the biggest EG producer in China today and its EG capacity is 605 kt/a, accounting for around 11.96% of the national total. Sinopec Zhenhai Refining & Chemical Co., Ltd. comes next, and its EG capacity is 550 kt/a, accounting for 10.87%. Ningbo Heyuan Chemical Co., Ltd. ranks third, and its EG capacity is 500 kt/a, accounting for 9.88%.
(6) Geographic distribution has changed. EG units in China were once mainly concentrated in East China, North China and Northeast China. With the completion of EG units using coal or natural gas as raw material, the growth of the EG capacity in Inner Mongolia, Henan, Shanxi and Xinjiang, with their rich coal resources, is quite rapid in recent years. In the next few years, EG production in China will adopt the coal route mainly in the western region and the petroleum route mainly in the southeastern region.

Table 2   Foreign trade of EG in China since 2005 (kt, US$/t)

Year    Import                                  Export
    Import volume     Average price    Export volume    Average price
2005    4 000.3        881.76               12.3               883.77
2006    4 061.3        844.00                0.9             2 379.60
2007    4 801.7        1 010.77            2.1             2 109.86
2008    5 216.4        1 023.57           29.4             1 268.41
2009    5 828.1          604.51            6.7             1 068.18
2010    6 644.1          868.38            5.0             1 581.02
2011    7 270.2        1 184.53            6.0             1 707.29
2012    7 965.3        1 043.62           10.8             1 292.00
First half
of 2013    4 118.3        1 086.91            3.4             1 394.55

Table 3   EG import volume and major sources, 2010-2012 (kt, %)

Source    2010    2011    2012
Import volume Proportion Import volume Proportion Import volume Proportion
Canada                        526.4    7.92    526.6    7.24    564.7    7.09
Saudi Arabia              2 794.6    42.06    3 465.2    47.66    3 691.9    46.35
Korea                        451.5    6.80    368.9    5.07    448.2    5.63
Taiwan                      1 210.2    18.21    1 123.9    15.46    1 189.0    14.93
Singapore                    563.4    8.48    567.4    7.10    445.5    5.59
Japan                         77.3    1.16    136.5    1.88    225.0    2.82
USA                            156.8    2.36    96.5    1.33    268.3    3.37
Kuwait                        318.2    4.79    349.8    4.81    488.7    6.14
Iran                        412.8    6.21    523.1    7.20    435.2    5.46
Malaysia                     66.8    1.01    64.8    0.89    82.5    1.04
Other countries                 66.1    1.00    47.5    0.65    126.3    1.58

Table 4    Major Trade forms for the import of EG to China, 2010-2012 (kt, %)

Trade form    2010    2011    2012
    Import volume    Proportion     Import volume    Proportion    Import volume    Proportion
General trade                    4 508.5     67.85    4 696.2    64.60    4653.3    58.42
Bonded warehouse transit goods    1 071.7     16.13    1 386.7    19.07    1821.1    22.86
Processing by imported materials  663.6     9.99    722.7     9.94    837.9    10.52
Bonded warehouse entry/exit goods 398.4     6.00    463.8     6.38    652.7    8.19
Others                                1.9     0.03      0.8     0.01    0.3        0.01
Total                            6 644.1    100.00    7 270.2    100.00    7 965.3    100.00


2. Construction and expansion

As the capacity and output of EG in China cannot meet domestic demand, many enterprises plan to construct or expand EG units. For new capacity that will be constructed from 2013 to 2017, projects of Sinopec and PetroChina mainly use the petroleum ethylene route, and the new capacity of the two companies is 1 520kt/a. Compared with a coal-to-liquid or a coal-to-olefin unit, a coal-to-EG unit has advantages like low investment, short industrial chain, clear market demand, low admission threshold and ease of popularization. The development of the EG production from coal or natural gas through syngas is encouraged by the national government as it is in line with China’s inherent energy resource structure – scarce oil/gas and abundant coal.
According to preliminary statistics, the capacity of coal-to-EG units being constructed or planned for construction has reached 6 000kt/a. Nevertheless, as the coal-to-EG technology being adopted is developed in China and long-term commercial operation has been not tried, the technology has much room for improvement. It is expected that the total capacity for EG in China can reach 9 500 kt/a in 2017, at most. Table 1 shows the construction and expansion of EG units in China during 2013-2017.

3. Consumption status and prospects

With the rapid development of China’s polyester industry, the consumption of EG has increased constantly in recent years. The apparent consumption of EG in China was only 3 462.0 kt in 2003. It went up to 6 582.8 kt in 2007, and up further to 10 977.5 kt in 2012, an increase of 7.47% over 2011. The average annual growth of apparent consumption was 10.76% during 2007-2012. Despite considerable growth in capacity and output, the self-sufficiency rate is therefore still quite low because the demand also increased constantly. The self-sufficiency rate was 28.00% in 2003, came down to 27.09% in 2007 and picked up to 27.54% in 2012.
The consumption of EG in polyester products accounts for 93.0% of the total consumption in China. In this sector, most of EG is used to produce fibers, and small amounts are used to produce films, sheets and bottles. Around 7.0% of EG is also used to produce anti-freezing agents, adhesives, paint solvents, cold-resistant lubricants, surfactants and polyester polyols. After excessively rapid development for several years, China’s polyester industry faces overcapacity. The operating rate of production units has been decreased continually. Some small-scale polyester producers have stopped production. With impacts from Renminbi appreciation, the reduction of export rebates and the global financial crisis, the export volume of textiles is down in recent years and the demand for raw materials such as EG has also declined. China’s textile industry also has problems such as increased costs of labor, raw materials and energies, and policy constraints with regard to the environment and natural resources. The pace of development will therefore be slower for a considerable period of time, and the demand for EG will also fall significantly. With the rapid development of the automobile industry and the increasing number of vehicles in use, however, the consumption of EG in anti-freezing agents will be higher. Overall, the demand for EG in China will still increase in next few years, but the growth will be lower. It is expected that the demand for EG in China will reach 13 000-13 500kt in 2017. The capacity will be only around 9 500kt/a at that time.

4. Import and export

Table 2 shows the foreign trade volume of EG in China in recent years.
According to customs data, China imported 2 516.1 kt of EG in 2003, and that increased to 4 061.3 kt in 2006. It was 6 644.1 kt in 2010, an increase of 14% over the previous year, and reached 7 965.3 kt in 2012, an increase of 9.56% over the previous year.
Meanwhile, small amounts of EG made in China have been exported. The export volume was 0.9 kt in 2006 and reached 108 kt in 2012, an increase of 80% over the previous year.
EG is imported to China mainly from the Middle East, Asia and North America. The Middle East is the biggest source. The amount imported from Saudi Arabia, Kuwait and Iran was 4 615.8 kt in 2012, accounting for around 57.95% of the total import volume to China and up 6.4% (4 338.1 kt) from the previous year. Table 3 shows China’s major import sources of EG in recent years.
The EG is imported to China mainly in forms of general trade and bonded warehouse transit goods. The amount imported in these two forms reached 6 474.4 kt in 2012, accounting for 81.28% of the total and being 6.44% higher than in 2011 (6 082.9 kt). The amount imported in general trade was 4 653.3 kt, accounting for around 58.42% and being around 0.91% lower than in the previous year. The amount imported as bonded warehouse transit goods was 1 821.1 kt, accounting for around 22.86% and being around 31.33% higher than in the previous year. Table 4 shows the major trade forms for the import of EG in China in recent years.

5. Price analysis in China

5.1 Import price
The import price of EG in China increased constantly during 2006-2008. It reached US$1 023.57/t (CIF tax-exclusive price, the same below) in 2008. Due to the world financial crisis and the low-price ethane-based EG in Middle East, the import price plummeted in 2009, reaching US$904.51/t, down 40.94% from the previous year. With the rehabilitation of the world economy, the price of EG made picked up steadily in 2010. The import price reached US$1 184.53/t in 2011. With impacts from various factors such as falling oil prices and the European debt crisis, the demand for EG in downstream industries was weakened. The import price of EG was reduced to US$1 043.62/t in 2012, a drop of around 11.90% from the previous year. The import value was US$1 086.91/t during January-June 2013, an increase of around 2.58% over the same period of the previous year.
China is the largest consumer and importer of EG. The self-sufficiency of EG in China is less than 30% despite the worldwide oversupply. The amount imported from the Middle East accounted for around 58% of the total import volume to China in recent years. Countries that have made major impacts on China’s EG industry include Saudi Arabia, Iran and Kuwait, mainly because EG production from ethane in these countries is low cost. EG projects being constructed or planned for construction in China are mainly coal-to-EG units and the production cost is around RMB3 800/t, much lower than that of the traditional petroleum route (around RMB6 300/t). The cost of the ethane process used in the Middle East (around RMB1 500/t), however, is far superior to the coal-to-EG process used in China. The import price of EG in China in next 3-5 years will therefore be influenced by the production status in foreign countries and will increase constantly, but the growth margin will not be big.
5.2 Market price
The price of EG is influenced by the price of raw material ethylene (or ethylene oxide), the status of the downstream polyester industry, and even more, the price of raw material crude oil (or coal). The price of EG in China started a downslide from September 2011 and dropped to RMB8 600/t in December. It came further down to RMB7 200/t in July 2012 and reached the low for the whole year. It started to pick up during August-September and reached RMB8 500/t in September. The market price made a gradual reduction once again during October-December and dropped to RMB7 700/t at the year end.
The market price started to increase during January-February 2013 and reached RMB8 600/t in February. It gradually came down afterwards, dropped to RMB7 800/t in March and fluctuated between RMB7 530-7 600/t during April-July. The market price rebounded in August and went up to RMB8 150/t.
With the price rise of crude oil, the production cost of EG will increase. The development of the upstream PET industry will also boost the demand for EG. Both the cost and the downstream demand will therefore support further increases of EG prices. It should however also be noticed that further capacity expansion of low-price ethane-based EG in the Middle East, rapid development of shale gas capacity and the completion of coal-to-EG units in China will all affect the price of EG produced from the petroleum ethylene process. Overall, it is expected that the price of EG in China will still fluctuate in the next 3-5 years, but the fluctuation margin will be in a controllable range and no drastic ups and downs like those seen in a time of financial crisis will happen.

6. Existing problems and development suggestions

(1) The EG capacity in China has expanded quite rapidly in recent years. Nevertheless, great quantities of EG will still have to be imported for a considerable period of time, because the operating rate of production units is not high and the demand in the downstream polyester industry has increased. Advanced technologies should be adopted to expand the capacities of the existing production units, reduce production costs and enhance the competitiveness of enterprises. Enterprises are advised to construct large EG units (at least 300 kt/a) to ease the supply shortage in China and sharpen their competitive edge in both domestic and overseas markets. Although the coal-to-EG technology has a bright prospect, it is still in the initial stage of commercial production and not yet well developed. The construction or expansion of coal-to-EG units without careful consideration may lead to a waste of resources and disorderly competition in market.
(2) EG production in China today mainly uses the petroleum ethylene route with most of the technologies being introduced from abroad. Future focus should be laid on the development and utilization of new catalysts with high activity, high selectivity and high stability. The coal-to-EG technology in China has developed rapidly, but it is not yet well developed. Further improvements still have to be made in the stability and life of hydrogenation catalysts, the quality of products and the scale-up of CO dehydrogenation reactors, catalytic coupling oxo reactors and nitrite regeneration reactors.
(3) In China, EG is mainly used to produce polyesters, a situation very different from that in developed countries. It is therefore imperative to diversify the application fields of EG. Efforts should be made to strengthen application development in downstream industries such as unsaturated polyester resins, lubricants, plasticizers, nonionic surfactants, explosives, coatings and inks, to change move away from depending on a single application, to form an effective industrial chain from production to application, to mitigate market risks and to promote the sound and orderly development of China’s EG industry.
(4) The world’s EG capacity is in surplus. The supply of EG in China is however insufficient and there is heavy import dependence. The coal-to-EG technology is more competitive than the traditional petroleum route, but there is no cost advantage compared with the production route using ethane as raw material, favored in the Middle East. Enterprises in China should be prepared to cope with international competition.
(5) New technologies for the EG production should be developed actively. Only the EG unit of Tongliao GEM Chemical Co., Ltd. uses technology developed in China. Other EG units all use the petroleum ethylene route introduced from abroad. It is therefore necessary to strengthen technological R&D, especially for EG synthesis technologies such as the vinyl carbonate process, ethylene oxide catalytic hydration, direct synthesis from syngas, and cellulose catalytic conversion.