In 2019, Zhejiang Petrochemical’s 1.4 million tons/year ethylene plant will be put into operation. The main competitors of China’s ethylene industry will be further diversified and the competition will be more intense.
After half a century of development, China’s ethylene production capacity has entered a rapid development stage from the initial embryonic stage, is moving from a rapid development stage to a high-quality development stage, and is accelerating from a large ethylene producer to a strong ethylene producer.
The average scale of ethylene plant in China is higher than that in the world.
China is the second largest ethylene producer after the United States
In the 1960s, the first steam cracking unit in China was built and put into operation in Lanzhou Petrochemical Company, which opened the history of petrochemical industry in China with ethylene plant as the leader. After half a century of development, China’s ethylene industry has made tremendous progress, especially since 2005, the development has been more rapid. On the one hand, China’s enterprises have completed the second round of capacity expansion and transformation relying on the original equipment. On the other hand, 12 new cracking units with a scale of over 800,000 tons per year and a batch of coal-to-olefin units have been built. The total annual production capacity has increased from 7.4 million tons to over 25 million tons, which is the second largest ethylene producer in the world after the United States, accounting for about 14.7% of the global ethylene production capacity.
Although China’s ethylene production capacity and output are growing rapidly, there is still a big gap compared with the market demand. The net import of ethylene derivatives in China accounts for 50% to 60% of ethylene equivalent consumption each year. In 2017, China’s ethylene output was 18.24 million tons and its equivalent consumption was about 42.5 million tons. A large number of downstream ethylene derivatives such as polyethylene and ethylene glycol still need to be imported. Among them, the import of polyethylene accounted for 47% of the total consumption, especially high density polyethylene (HDPE) accounted for 59%, and ethylene glycol (EG) accounted for nearly 60%.
In recent years, with the slowdown of China’s GDP growth and the increase of ethylene equivalent consumption base, the annual growth rate of ethylene equivalent consumption has slowed down. During the Eleventh Five-Year Plan and the Twelfth Five-Year Plan, the annual growth rate of ethylene equivalent consumption decreased from 10% in the Tenth Five-Year Plan to about 7%, and further dropped to about 5% in the last three years.
The scale of ethylene plant is an important factor affecting ethylene production capacity and unit production cost. In the 1960s, the capacity of the first ethylene plant in China was only 0.5 million tons per year; from 1970s to 1990s, with the introduction of new equipment and technology, the largest ethylene plant reached 300,000 tons per year, usually consisting of 10 cracking furnaces and two switching furnaces, with a capacity of about 30,000 tons per year. Since 2005, advances in materials and technology have made it possible to design and build larger ethylene plants. Most of the ethylene plants built and put into operation in China have a scale of 800,000 to 1 million tons per year. Up to now, there are 32 sets of ethylene production equipment for steam cracking process in China, with an average scale of 636,000 tons per year, which is twice as large as that in 2005, and also higher than the world average scale (585,000 tons per year).
Continuous optimization of ethylene industry development
Base layout, optimization of raw materials, diversification of process and diversification of participants
While the overall production capacity and scale have been improved, the development of ethylene industry in China has also undergone many changes, mainly in the layout, raw materials, process routes and participants.
The layout of ethylene industry is very important, which is directly related to the development of petrochemical industry and economic benefits. Before 2000, 18 ethylene plants were scattered in 16 locations of 15 cities, and the cost of public works, logistics transmission, environmental protection and management services was high. It was difficult to centralize the utilization of cracking by-products, and the processing depth of products was not enough, which seriously affected the overall competitiveness.
After entering the 21st century, the construction layout of ethylene projects in China has been improved. New large-scale projects are mainly concentrated in eastern and southern China. In 2015, the National Development and Reform Commission issued the “Petrochemical Industry Planning and Distribution Plan” for the overall layout of the petrochemical industry in the coming period, requiring new ethylene projects to be laid out in seven major petrochemical industry bases, namely, Changxing Island in Dalian, Caofeidian in Hebei, Lianyungang in Jiangsu, Caojing in Shanghai, Ningbo in Zhejiang, Huizhou in Guangdong and Gulei in Fujian, in accordance with the integration of refining and large-scale plant. To build, the annual production capacity of ethylene plant has reached more than 1 million tons. This not only takes into account the resources and market advantages, but also pays attention to the impact of logistics conditions on competitiveness, which will play a guiding role in the future ethylene distribution in China.
In terms of cracking raw materials, resource factors are the key factors affecting the structure of cracking raw materials for ethylene plant in a country. In the 1970s and 1980s, light diesel oil accounted for more than 70% of ethylene raw materials, light hydrocarbon and naphtha only accounted for 13%, and flash oil and heavy oil accounted for about 10%. By the end of the 1980s and the beginning of the 1990s, progress had been made in the light and high quality of ethylene raw materials. The proportion of light diesel oil had dropped dramatically to about 50%, the proportion of naphtha had increased to over 30%, and there were more than 10% light hydrocarbons and hydrogenated tail oil, but light diesel oil still dominated. Since 1996, with the improvement and processing of diesel oil, the increasing utilization of light hydrocarbon resources and the increase of imported crude oil, ethylene raw materials have been developing towards light and high quality. The proportion of light diesel oil decreased to about 1/3, and the proportion of naphtha increased to about 45%.
In the 21st century, the proportion of naphtha has further increased to over 60%, light diesel has further decreased to about 10%, and there are about 10% light hydrocarbons and about 10% hydrogenated tail oil. Generally speaking, naphtha is the main raw material for ethylene production in China, while other raw materials are supplementary.
In recent years, ethylene production enterprises have made great progress in strengthening the organization and utilization of light and high-quality raw materials such as light hydrocarbons in oilfields, condensates and refineries. At the same time, the refining structure adjustment makes more high-quality raw materials flow into ethylene plant. The proportion of light hydrocarbons and hydrogenated tail oil exceeds 1/3, the proportion of naphtha decreases to about 55%, and the proportion of light diesel oil decreases to less than 10%.
In terms of process route, before 2008, all ethylene production in China adopted steam cracking process. Over the past 10 years, the process route has been diversified: in 2008, Shenyang Chemical Company built its first catalytic pyrolysis (CPP) unit with heavy oil as raw material, with ethylene production capacity of 150,000 tons per year; in 2010, Shenhua Baotou Coal Chemical Company built its first coal (methanol) olefin production unit with ethylene production capacity of 300,000 tons per year.
At present, steam cracking process is still the mainstream of ethylene production in China, accounting for about 80% of the total ethylene production capacity, and coal (methanol) to ethylene accounts for about 17%. Other technologies are still in the stage of exploration, research and development or industrial transformation, including naphtha catalytic cracking to ethylene, methane as raw material, oxidative coupling (OCM) method or one-step anaerobic ethylene production, biomass ethanol as raw material through catalytic dehydration to ethylene, natural gas, coal or biomass as raw material through syngas to ethylene and so on.
In terms of market participants, before 2005, China’s ethylene production mainly concentrated in Sinopec and PetroChina. Since 2005, with the start-up of ethylene projects of Yangba integration, Zhonghai Shell, Zhongsha Tianjin Petrochemical Company, Fujian United Petrochemical Company and Sino-Korean Petrochemical Company, as well as the start-up of several coal (methanol) olefin production projects such as Shenhua Baotou, Zhongyuan Ethylene Company and Ningbo Heyuan Petrochemical Company, China’s ethylene market has formed four major enterprises: central enterprises, joint ventures, coal (methanol) olefin production enterprises and importers. Supply system is the source pattern.
The Future of Ethylene Industry
The speed of structural adjustment and upgrading has been accelerated, and the overall level of ethylene industry has been greatly improved.
In the next few years, China’s ethylene production capacity will continue to grow rapidly. Not only are many refining projects in state-owned enterprises at the stage of construction and preparation, but also some powerful large private enterprises are expanding into the ethylene field. Some private enterprises have announced plans to use imported ethane to crack ethylene. At the same time, foreign capital is constantly entering. Some coal (methanol) to olefin projects are also under construction.
Considering the construction cycle, progress and some uncertainties, it is estimated that the ethylene production capacity in China will exceed 32 million tons per year at the end of the 13th Five-Year Plan and 45 million tons per year at the end of the 14th Five-Year Plan. With the increase of capacity base, the annual average growth rate is still about 7%.
However, from the perspective of consumption growth, with the slowdown of China’s economic growth and the increase of ethylene equivalent consumption base year by year, the growth rate of ethylene equivalent consumption will gradually slow down, “13th Five-Year Plan” will be reduced to 4%, and “14th Five-Year Plan” will also decline. Even so, China’s ethylene production still can not meet the market demand. It is estimated that China’s ethylene equivalent consumption will reach 48 million tons by 2020. It still needs to import about 20 million tons of ethylene derivatives such as polyethylene and ethylene glycol.
With the increase of production capacity, the market participants are also increasing, and the competition is becoming increasingly fierce. China’s ethylene supply and demand gap has attracted the attention of domestic and foreign investors. Not only private enterprises and local enterprises will participate in the competition of domestic ethylene downstream products market, but also foreign capital will enter with the relaxation of foreign investment access requirements for petrochemical projects and the abolition of the restriction on the proportion of joint ventures. Basf, ExxonMobil and other petrochemical giants have announced that they will build ethylene projects solely in China.
The downstream product market of domestic ethylene will gradually form a multi-agent interactive market pattern between large petrochemical enterprises such as coal chemical industry, private petrochemical enterprises, local petrochemical enterprises, wholly foreign-owned enterprises and China Petroleum, Sinopec, China National Offshore Oil, Sinochem Group and other large-scale petrochemical enterprises and imported products. The competition will become more intense, which will play an important role in macro-policies, market norms and standards system. Influence.
In the new production capacity, with the commissioning of large ethylene projects such as Zhejiang Petrochemical Company, Hengli Petrochemical Company, Zhangzhou Gulei Petrochemical Company and Shenghong Petrochemical Company, as well as the shutdown of individual small-scale and low-profitability units, the average scale of steam cracking ethylene plant will continue to increase, reaching about 700,000 tons per year. The layout of the seven major petrochemical industrial bases will also be basically formed. The ethylene production capacity in the Yangtze River Delta, the Pearl River Delta and the Bohai Bay Rim will account for 60% of China’s total production capacity. Concentration will be further enhanced, and resources will be fully optimized and rationally utilized to achieve intensive management.
In the tide of the development of the times, the technology of new projects is becoming more and more advanced. With the adoption of the most advanced production technology and control technology in the world, the commissioning of new projects designed and constructed in accordance with the most advanced energy-saving and emission reduction standards in the world, and the continuous overall optimization of existing projects through the combination of various advanced technologies and processes, the operation level of ethylene plant has been greatly improved, which will promote the overall technical level of the domestic petrochemical industry.
The proportion of high-end products such as high-performance resins, special rubber and elastomers, high-performance fibers and their composites, functional membranes and other high-end products downstream of ethylene has increased, and the competitiveness has been increasing. At the same time, with the help of energy Internet and supply-side reform, we can accurately dock the demand of consumer market, actively grasp the frontier information, and improve the quality and efficiency of supply.