By Tan Jie, Sinopec Maoming Petrochemical Co., Ltd. Research Institute

The development has remarkable features

The capacity of ethylene glycol (EG) in China has made a stable increase in recent years. Ethylene glycol units in quite a few enterprises such as Sinopec Fujian Refining & Petrochemical Co., Ltd., Zhejiang Sanjiang Chemical Co., Ltd., Far East Union Petrochemical (Yangzhou) Co., Ltd., Inner Mongolia Erdos Xinhang Energy Co., Ltd., Henan Coal Industry Group Co., Ltd., Shanxi Yangmei Chemical Co., Ltd., Shandong Lihuayi Group Lijin Refining & Chemical Co., Ltd., Inner Mongolia Yigao Coal Chemical Technology Co., Ltd. and CNOOC-Shell Petrochemical Co., Ltd. have been completed and put on stream. The capacity of ethylene glycol reached 9 653 kt/a by July 2018 and the average annual growth of the capacity was 13.8% during 2013-2018. Table 1 shows the major ethylene glycol producers in China in 2018. 

   Table 1   Major ethylene glycol producers in China in 2018

   1. Rapid increase of capacity 

   The production of ethylene glycol through the coal chemical route is making a rapid development. Since the completion of the first unit for the production of ethylene glycol through the coal chemical route in China in 2009, the capacity has made a rapid increase along with the constant improvement of production technology and product quality. By contrast, the proportion held by the capacity of ethylene glycol produced with naphtha ethylene as raw material keeps coming down. The capacity of ethylene glycol using naphtha ethylene as raw material was 3 708 kt/a in 2013, accounting for around 73.31% of the total; the capacity was 4 903 kt/a in 2018, the proportion in the total was down to 50.79% and the average annual growth was only around 5.8%. 

   2. Multi-channel of raw material sources 

   In ethylene glycol units in 2018, the capacity using ethylene as raw material was 4 903 kt/a, accounting for around 50.79% of the total. The capacity using methanol as raw material was 1 230 kt/a, accounting for around 12.74%. The capacity using syngas as raw material was 3 520 kt/a, accounting for around 36.47%.

   3. Diversity of major investors 

   With the involvement of foreign capital and private capital in recent years, the monopoly of the ethylene glycol sector by state-owned enterprises such as Sinopec and PetroChina has been toppled and a pattern featuring various types of major producers such as state-owned enterprises, private enterprises and joint-venture enterprises has been formed. In 2018 the capacity of ethylene glycol in enterprises subordinate to Sinopec was 3 324 kt/a, accounting for around 34.43% of the total. The capacity in enterprises subordinate to PetroChina was 829 kt/a, accounting for around 8.59%. The capacity in enterprises subordinate to CNOOC was 750 kt/a, accounting for around 7.77%. The capacity in other types of enterprises was 4 750 kt/a, accounting for around 49.21%. 

   4. Gradual change of capacity distribution 

   In past years ethylene glycol units in China were mainly concentrated in East China, North China and Northeast China. In recent years, however, with the constant completion of ethylene glycol units using the coal chemical route the capacity of ethylene glycol in regions with rich coal resources such as Inner Mongolia, Henan, Shanxi and Xinjiang has made a rapid increase and considerable changes have taken place in capacity distribution. In 2018 the capacity of ethylene glycol in East China was 3 517 kt/a, accounting for around 36.43% of the total. The capacity in South China was 1 255 kt/a, accounting for around 13.00%. The capacity in Central China was 1 480 kt/a, accounting for around 15.34%. The capacity in North China was 1 822 kt/a, accounting for around 18.87%. The capacity in Northeast China was 619 kt/a, accounting for around 6.41%. The capacity in Southwest China was 660 kt/a, accounting for around 6.84%. The capacity in Northwest China was 300 kt/a, accounting for around 3.11%. Zhejiang is the biggest province for the production of ethylene glycol today and the capacity in the province is 1 430 kt/a, accounting for around 14.81% of the total. Jiangsu comes next and the capacity in the province is 1 032 kt/a, accounting for around 10.69%. Henan is the third and the capacity in the province is 1 000 kt/a, accounting for around 10.36%. 

   5. Coexistence of the petroleum ethylene route and the coal chemical route 

   Introduced technologies are combined with domestic technologies. Ethylene glycol units using the petroleum ethylene route all use technologies introduced from abroad (including those of world-famous ethylene glycol technology licensors such as SD, Shell and Dow). Technologies used in coal chemical units are mainly developed by China itself. 

The domestic demand still needs to be satisfied by import

   As neither the capacity nor the output of ethylene glycol in China can meet the actual domestic demand, great quantities need to be imported each year. The import amount of ethylene glycol was 6 644.1 kt in 2008. The import amount made a stable increase afterwards. Due to demand reduction, the import amount was down to 7 572.8 kt in 2016, a drop of around 13.67% from the previous year. Pushed by factors such as limited output pickup and higher downstream demand, the import amount once again went up drastically to 8 750.1 kt in 2017, an increase of around 15.55% over the previous year. 

   Ethylene glycol imported in mainland China mainly comes from Saudi Arabia, Taiwan, Canada, Singapore and Korea. The amount imported from these 5 sources in 2017 reached 7 150.9 kt, accounting for around 81.72% of the total import amount, an increase of around 11.34% over 6 422.3 kt in 2016. 

   At the time of making import, small amounts of ethylene glycol are also for export. Major export destinations include Australia, Korea, Malaysia, Japan and Singapore. In 2017 the amount exported to Australia was 1 186.96 t, accounting for around 6.54% of the total export amount, a drop of around 92.06% from the previous year. The amount exported to Korea was 11 051.2 t, accounting for around 60.92%, an increase of around 889.64% over the previous year. The amount exported to Malaysia was 457.59 t, accounting for around 2.52%, an increase of around 17.20% over the previous year. The amount exported to Japan was 354.74 t, accounting for around 1.96%, an increase of around 62.06% over the previous year. The amount exported to Singapore was 3 340.58 t, accounting for around 18.41%, an increase of around 235.65% over the previous year.

The consumption in the polyester sector is over 90%

   The apparent consumption of ethylene glycol in China was 14 532 kt in 2017, an increase of around 11.33% over the previous year.  

   The polyester production is the major consumption sector of ethylene glycol in China and the consumption accounts for around 93.0% of the total. Remaining around 7.0% is used to produce anti-freezing fluids, adhesives, paint solvents, cold-resistant lube oils, surfactants and polyester polyols. After the unduly rapid expansion made in previous years, the polyester sector is faced with a status of capacity surplus and the operating rate of production units keeps coming down. Some small polyester producers have gradually quitted competition. With impacts from the appreciation of Renminbi, the readjustment of export rebate rates and the slowdown of world economic development, export amounts of textiles in China have made a gradual reduction in recent years and the demand of raw materials such as ethylene glycol is therefore lower than before. The textile sector is also affected by increases in labor cost, raw material cost and energy cost and constraints from environment and resources and the development speed will be slowed down for a considerable period of time. All these will lead to a demand reduction of ethylene glycol. With the development of the automobile industry and the increase of the total automobile amount, however, the consumption of ethylene glycol in anti-freezing fluids will go up. The demand of ethylene glycol in China will therefore still have some increase in next few years, but the growth will be slowed down. It is expected that the demand of ethylene glycol will be 18 500-19 000 kt in 2022.

   Due to impacts from factors such as price fluctuation of crude oil and coal and downstream demand in the polyester sector, the market price of ethylene glycol in China has made considerable ups and downs in recent years. Owing to the brisk demand in downstream sectors and the high price of raw materials, the market price of ethylene glycol is expected to be maintained at a relatively high level for some time with no big fluctuations. 

Development trend

   The capacity of ethylene glycol in China will still make a constant expansion. As the overall market demand of ethylene glycol has maintained a benign increase and the apparent demand is huge, quite a few ethylene glycol units in China including a 500 kt/a unit in Shandong Hualu-Hengsheng Chemical Co., Ltd., a third-phase 600 kt/a unit in Xinjiang Tianye (Group) Co., Ltd., a 300 kt/a unit in Shanxi Woneng Chemical Technology Co., Ltd., a second-phase 400 kt/a unit in Inner Mongolia Erdos Xinhang Energy Co., Ltd., a 300 kt/a unit in Xinjiang Tianying Petrochemical Co., Ltd., a 600 kt/a unit in Xinjiang Tianye Huihe New Material Co., Ltd., a 300 kt/a unit in Inner Mongolia Connell Chemical Co., Ltd., a 600 kt/a unit in Hubei Sanning Chemical Co., Ltd., a 240 kt/a unit in Inner Mongolia Jianyuan Coal Chemical Co., Ltd., a 400 kt/a unit in Shenhua Yulin Energy and Chemical Co., Ltd., a 300 kt/a unit in Erdos Jinchengtai Chemical Co., Ltd. and a 300 kt/a unit in CNSG Hong Sifang Co., Ltd. will be constructed in next few years. All these new units will basically use the coal-to-EG technology. In terms of location, more than a half of them will be concentrated in Northwest China, Southwest China and North China. In case all these units can be completed and put on stream on schedule, the total capacity of ethylene glycol in China is expected to be over 10 000 kt/a in 2022. 

   Despite the stable capacity growth of ethylene glycol made in recent years, the downstream polyester sector has also maintained a rapid development. The gap is the supply/demand of ethylene glycol can hardly be bridged in near future and the import amount will still hold a considerable proportion. Ethylene glycol to be imported in mainland China will still mainly come from Saudi Arabia of the Middle East and Taiwan, Singapore and Korea of peripheral regions. Market competition between domestic products and imported products will be fiercer at that time.

   Through developments in past years, the coal-to-EG technology has made a drastic upgrading in China and the overall operation load has also been greatly improved. The supply ability of ethylene glycol to the domestic market will be enhanced in future, but there will still be quite a distance from the long-cycle and high-load stable operation of integrated units. In the macro environment of stringent policies on environmental protection, in particular, environmental protection will be a focus of attention in the ethylene glycol production. Close watch should therefore be made to whether the capacity upgrading of ethylene glycol can bring about a synchronous output increase. 

   The coal chemical industry will be the key to the supply/demand growth of ethylene glycol in China. The development of the coal chemical industry will play a significant role in the development of ethylene glycol and related sectors. With the implementation of the new law on environmental protection and special action plans for the prevention and control of air pollution, water pollution and soil pollution, requirements on environmental control in the coal-to-EG sector will become stricter. Issues such as how to raise the level of energy conservation and environmental protection and how to reduce the cost for “wastes” treatment will become research focuses in the development of the modern coal chemical industry including coal-to-EG. Moreover, it is already an inevitable trend for China to launch carbon trading and levy environmental protection tax. The overall competitiveness of coal-to-EG will also be affected. In coal-to-EG byproducts hold a considerable proportion and produce quite great impacts on the entire production cost. While exercising strict control on the generation of byproducts, a good job should be done to rationally use byproducts, extend industrial chains and make comprehensive resource utilization so as to enhance the overall competitiveness of enterprises.

   Regarding ethylene glycol units using the petroleum ethylene route, as most of them use introduced technologies and new units will be seldom constructed, the future focus will be laid on ways for accelerating research on new catalysts and process technologies, increasing utilization rate of production units, reducing production cost, improving product quality and expanding export.