At the 18th National Ethylene Annual Conference recently concluded, the National Ethylene Industry Association released a survey report that the domestic ethylene plant in the past two years has been affected by the market downturn, rising raw material prices and other factors, and has taken parking overhaul, technical transformation and other means to strive for breathing space. But a set of data shows people the other side of the market. In 2013, domestic ethylene production was 16.225 million tons, and apparent consumption was 17.929 million tons. In other words, China still needs to import 1.74 million tons of ethylene. On the one hand, the market is "not enough to eat", on the other hand, there is excess capacity, why the contradiction arises? When China becomes an emerging market for international petrochemical producers, why does the domestic ethylene industry encounter a "frost period"?
Encountering "Cold Current"
According to statistics, there are 27 ethylene production enterprises and 35 sets of equipment in China. The production capacity has increased from 4.422 million tons in 2000 to 17.885 million tons in 2013, basically every five years. Among them, more than 90% of the production capacity is contributed by the three major oil groups.
Faster than capacity expansion is the domestic building materials, packaging, automotive and other industries'appetite for downstream ethylene products. According to an article in Chemistry Weekly in 2012, the number of polymers consumed in China has exceeded half of that consumed in Asia. It is predicted that China's market demand will be at least 37.5 million tons in 2016. According to the "Twelfth Five-Year Plan" of China's olefin industry, the annual ethylene production capacity of China will reach 27 million tons by 2015. Obviously, China has not been able to achieve 100% ethylene self-sufficiency.
However, what worries the industry most is not the inadequacy of market demand, but the overcapacity that is difficult to digest. This contradiction between supply and demand seems almost a false proposition, but it is real. According to the investigation of the National Ethylene Industry Association, since 2008, the domestic ethylene production enterprises have generally seen the phenomenon of unsalable products, a large increase in inventory and operating losses. After 2012, the situation has become more and more serious. Nearly half of ethylene plants in China have taken measures of shutdown and overhaul to avoid loss expansion.
The contradiction of supply not only exists between the ethylene production enterprise and the market, but also within the enterprise. The shortage of raw materials and rising costs have restricted the development of domestic ethylene industry. In 2015, China's ethylene production will reach 23.835 million tons, and it is estimated that 70 million tons of naphtha will be needed. With the acceleration of urbanization and the increase of domestic demand, the contradiction between supply and demand of raw materials will be further intensified.
The domestic ethylene industry is experiencing the strongest "cold current" since the new millennium.
Why is it cold?
It is not difficult to see from the comprehensive discussion that the domestic ethylene industry is not in a cold situation in the past two years. In 2008, many ethylene enterprises in China took measures to limit production and stop production because of the financial crisis. But in the same economic situation, imported products are booming in the Chinese market, but domestic enterprises are in a state of anxiety. The main reason is that the price of the product is the market choice.
The price of ethylene depends largely on the price of raw materials. Facing the ethylene products made from natural gas and ethane in North America and Middle East, domestic ethylene has no price advantage. Compared with domestic ethylene, the cost of using shale gas to produce ethylene in the United States is only half that in China. In the Middle East, even after long-distance transportation, the CIF price of products such as polyethylene and ethylene glycol is three or four hundred dollars lower than that of products produced by coastal chemical plants in China. Due to the limited capacity of the local market, about 70% of ethylene derivatives in the Middle East are exported. The Chinese market has become one of its main target markets. Faced with the impact of imported products, domestic ethylene, even close to the world's most active market, can only sigh.
The overall competitiveness of domestic ethylene is not strong, which is also related to the layout and scale. Europe, the United States, the Middle East, Japan and South Korea are highly centralized. Taking the United States as an example, the ethylene production capacity in the Gulf of Mexico coastal areas accounts for 95.1% of the total production capacity in the United States, while 35 steam cracking units in China are distributed in 15 provinces and cities. Decentralized layout increases the cost of ethylene production enterprises in public works, logistics transmission, environmental protection and management services, and is not conducive to centralized utilization and deep processing of cracking by-products.
After more than ten years of construction, China has built 22 10 million tons of refineries, but the average scale of the units is still small. At present, the average scale of Saudi ethylene plant has reached 910,000 tons, China is only 567,000 tons per year, and the scale of steam cracking plant under 300,000 tons per year is up to 11 sets. With the intensification of competition, the starting gun of the knockout match has been sounded. Last year, Shanghai Petrochemical Company and Jilin Petrochemical Company were overwhelmed and shut down two sets of old and small units. According to the rules of the market, the decommissioning of small devices is inevitable.
How to break the ice
Where should China's ethylene industry make efforts to solve the dilemma? The root cause of the dilemma of domestic ethylene enterprises lies in the production cost higher than the world average level.
In view of the problem that naphtha is used as raw material for ethylene production and affects the competitiveness of products, Professor Li Dongfeng of Beijing Institute of Chemical Technology of Sinopec has proposed two solutions: one is to recover dry gas from refinery, which is no longer used as fuel for balanced refinery, but as cracking raw material; the other is to purify by-products produced in ethylene cracking process and increase its added value. "In fact, a large part of dry gas is ethane and propane, which can produce ethylene. A refinery of 800,000 tons can recover 500,000 tons of dry gas and produce 200,000 tons of ethylene. This will turn the raw materials into materials with greater economic value. The enterprise can recover the cost in two years by rebuilding the plant, and also has the power to invest. At the same time, it makes up for the shortage of natural gas resources, shortage of raw materials and high cost in China.