Due to the overcapacity and the downturn in the market, the methanol industry is looking for new outlets. One of the most promising outlets is considered to be methanol to olefins. In the context of the low price of methanol and the remaining gap in olefins demand, various projects for methanol to olefins have been launched. Analysts believe that due to the lack of necessary preliminary research and market analysis, the methanol-to-olefins industry has emerged a dark cloud of overcapacity.
Over 20 million tons of planned production capacity
According to statistics from China Chemical Network, as of the end of 2009, the total coal-to-olefin production capacity planned for the country has exceeded 20 million tons. The production of methanol-to-olefins that was put into operation or planned for production in August this year has already reached about 4.4 million tons.
On August 2nd, Donghua Science and Yuanxing Energy signed a 1 million-ton/year methanol to olefin project engineering design contract in Ordos, Inner Mongolia; on August 10th, Sinopec and the Hebi Municipal Government of Henan Province cooperated with Hebi Coal Chemical Integration Project. Signing the agreement, Sinopec will build 1.8 million tons/year of methanol-to-olefins projects locally; on August 25, Total, one of the world’s four largest petrochemical companies, said that it plans to invest in the construction of the world’s first coal-to-olefins integration in Inner Mongolia, China. The project has an annual production capacity of about 1 million tons; on August 27, the project of 600,000 tons/year of methanol to olefins of Zhejiang Xingxing New Energy Technology Co., Ltd. officially settled in Jiaxing Port Area.
Prior to this, the first phase of the 1.8 million-ton/year coal-to-methanol project of Erdos Nenghua of Yanzhou Coal was commenced in Inner Mongolia in March. The company will also accelerate the preparatory work for the conversion of methanol to 1 million tons of olefins; in May, Shanxi Lanhua Coal Industry Group signed a cooperation agreement with Sinopec Nanjing Chemical Co., Ltd. to jointly build 1.8 million tons of methanol and 600,000 tons of olefins in Shanxi Jincheng.
In addition, by the end of 2010, China will also form a 300,000-ton polyethylene and 300,000-ton polypropylene project for Shenhua Baotou Coal, a 460,000-ton/year polypropylene project for Datang Duolun, and a coal production of 520,000 for Shenhua Ningxia Coal Group. Ton/year polypropylene project, a total of 1.58 million tons of coal-to-polyolefin production capacity, of which 300,000 tons of polyethylene, polypropylene, 1.28 million tons.
Overcapacity appears
The heat of olefins produced by coal chemical companies across the country is like the methanol heat of that year. Companies and local governments saw the possibility of profitability. They did not conduct in-depth research and blindly planned projects. People in the industry are concerned that after the project is completed several years later and the market has undergone new changes, methanol to olefins may repeat the overcapacity of the methanol industry.
The expansion of methanol to olefins production capacity is not commensurate with the demand. Yu Yu, deputy director of the Institute of Marketing of the Institute of Economics and Technology of China Petrochemical Corporation, said that the increase in polyolefin demand in 2010 will be significantly lower than in 2009. According to another information, the new polyethylene production capacity expected to be put into production from 2010 to 2012 will reach 4.55 million tons.
It is predicted that from 2012 to 2016, there will be only 5 million tons/year of polyolefin gap in China. Taking into account the impact of imported olefin products on the domestic market, especially the Middle East petrochemical industry's encroachment on the domestic market with abundant resources, huge capacity, and low-priced products, the overcapacity of methanol-to-olefins production is faintly visible.
What is counterproductive is that the expansion of methanol to olefins production capacity does not give methanol more room to expand, and the surplus of methanol remains. Wang Min, an analyst at China National Chemicals Network, said that in a number of methanol-to-olefin projects that have been put into production in recent years, taking into account factors such as resources and costs, the "purchasing methanol" proposal has not been widely adopted and replaced by coal-to-olefins integration. project. This means that this part of the consumed methanol is produced by the project itself and it does not bring any benefit to the methanol industry.
In addition, despite the successful commissioning of some devices, the core issues such as device stability, product quality, and market response are still in doubt and need to be examined. This is another burden on the overcapacity of methanol to olefins.