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China targets propylene self-sufficiency

China targets propylene self-sufficiency Source:
Date: 26-03-2013
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A stated goal to reduce exposure to other markets will drive an enormous increase in propylene and propylene derivatives capacity in China by 2020, an executive with IHS Chemical said Thursday.
Matthew Thoelke, director for olefins and derivatives in Europe, the Middle East and Africa, says China holds the key to the future propylene market because of its status as the world’s largest importer.
"The Northeast Asian, Taiwanese, South Korean and Japanese petrochemical industries have grown up on the back of Chinese demand,”Mr. Thoelke said at the IHS World Petrochemical Conference.
However, evolving market conditions are helping to spur a wave of new investment that could put China closer to self-sufficiency by the end of the decade.
By 2020, Mr. Thoelke predicts that over a third of expected Chinese production will come from new propane dehydrogenation (PDH) and methanol-to-olefins complexes. Both categories were almost non-existent as recently as 2011.
"The dominance of methanol-to-olefins capacity, which will be primarily sourced from coal-based methanol, reflects the Chinese push for self-sufficiency,”Mr. Thoelke said.“China’s on-purpose investments will reduce import requirements.”
After several million tons of new capacity start up between 2014 and 2016, China is expected to account for over 40% of global on-purpose propylene capacity -- up from around 5% as recently as 2010.
The trend toward cracking lighter feedstocks, such as ethane, in North America and the Middle East may also contribute. With limited by-product propylene production in crackers, supply isn’t keeping up with demand in some locations, which could lead to higher global pricing patterns.
As a result, China is planning to take supply into its own hands with the latest wave of projects. But while it will“narrow the gap”by 2020, Mr. Thoelke predicts China will remain a significant propylene importer for the foreseeable future.
"Primarily in the form of derivatives, they will still remain in the import market, even after the assumed growth in production," he said.
The conference continues through Thursday at the Hilton Americas in downtown Houston.
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