Ethylene is the basic raw material for the petrochemical industry, and ethylene production has become a measure of the level of development of a country’s petrochemical industry. In recent years, with the rapid development of the national economy, the domestic ethylene industry has developed rapidly and has become the world’s second largest ethylene producer and consumer after the United States. From a global perspective, naphtha is also the main raw material for the production of ethylene. The Middle East and North America are mainly light hydrocarbon (ethane) raw materials, and China’s resource-restricted raw materials are still mainly naphtha. With the rise of the domestic coal chemical industry in recent years, the proportion of domestic coal (methanol) ethylene production capacity to total production capacity has reached about 20%. The domestic ethylene industry has developed a distinctive road different from international counterparts.
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From a global perspective, the production of ethylene capacity has a clear cyclicality, generally divided into raw material-driven and demand-driven. For example, the ethylene plant that was put into operation in the Middle East from 2007 to 2010 was mainly benefited from low-cost ethane feedstock. At present, there is a shortage of ethane in the region, and new plants are mostly based on naphtha or mixed cracking. Since the shale gas revolution in North America, it has brought a lot of cheap ethane since 2011. The ethylene cracking unit in the region has been changed to ethane raw materials, and a large number of ethane cracking units have been built. The overall production time is concentrated in Between 2017 and 2020. The newly added ethylene production capacity in China is mainly driven by demand. Due to high crude oil prices and weakened demand for refined oil in 2011~2017, the newly added capacity is mainly based on coal (methanol) to olefins.
According to statistics, as of the end of 2017, the total domestic ethylene production capacity reached 24.3 million tons, an increase of 4% year-on-year; the output reached more than 18.2 million tons, an increase of 2.4%. The annual import of ethylene reached 2.16 million tons, an increase of 30% year-on-year. As the demand for ethylene-derived products such as polyethylene and ethylene glycol continues to grow, domestic demand for ethylene has steadily increased. In 2017, the apparent consumption of ethylene was about 20.37 million tons, up 4.8% year-on-year; the equivalent consumption of ethylene was about 39 million tons, the equivalent gap was more than 20 million tons, and ethylene and its derivatives were heavily dependent on imports.
The commissioning of some new installations this year will have a positive effect on the supply of ethylene. Among them, the 1.2 million-ton ethylene plant of Zhonghai Shell Phase II has been put into operation, and its commissioning will greatly improve the supply gap in South China. Before the end of the year, the 450,000 tons of Yanan Energy and the 300,000 tons of ethylene equipment from Jilin Cornell will be put into production. The annual new capacity is expected to be around 2 million tons. Beginning in 2019, the country will usher in an outbreak of new ethylene plants. According to incomplete statistics, by the end of 2020, more than 14 million tons of ethylene capacity will be put into production in China, including about 9 million tons of oil routes and 5.5 million tons of coal (methanol) routes. In addition, there are still about 7 million tons of light hydrocarbon (ethane) cracking projects due to the Sino-US trade war, the possibility of short-term shelving is relatively large. If the above-mentioned 14 million tons of equipment can be put into production as scheduled, the shortage of domestic ethylene supply will be greatly improved by then.
After several years of development, there have been some changes in the consumption structure of domestic ethylene. Among them, linear low-density polyethylene (LLDPE) accounts for about 27% of total consumption, high-density polyethylene (HDPE) accounts for about 26%, low-density polyethylene (LDPE) accounts for about 11%, and ethylene glycol accounts for about 11%. Ethylene oxide accounts for about 9% and styrene accounts for about 8%. Among them, ethylene glycol, HDPE and LDPE have the lowest self-sufficiency rates of 34%, 49% and 53%, respectively. The contradiction between supply and demand is outstanding.
On the whole, with the further opening of the domestic crude oil import policy and the maturity of coal chemical technology, more private enterprises began to enter the ethylene industry, and the overall supply pattern of ethylene began to show positive changes. Large-scale refining and chemical integration projects bring cost and technology impacts due to large-scale scale and diversification of raw materials, while coal (methanol) olefins projects also show better cost and raw material advantages under higher crude oil prices. The Chinese model of walking on two legs will bring new development opportunities to the ethylene industry, and the spring of the ethylene industry is not far behind.
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