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Tecnon OrbiChem Marketing Seminar at APIC 2008The World Chemical Industry Focuses on Asia
Victor Peng, Consultant Acetyls & Methanol Singapore, May 27, 2008
Coal-based Methanol Helps China to Independence for Acetic Acidand a Leading Position in DME
AGENDA
• China’s Importance In The Global Methanol Market
• Composition of Coal And Natural Gas-based Methanol Production In China
• China’s Independence of Acetic Acid Production• China’s Leading Position In DME
GLOBAL METHANOL MARKET
Everyone anticipating a “flood of methanol” as more projects come online
in Middle East and China
2007 2008 2009 20100
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Thousand Tons
RoW
China
Figure 1GLOBAL METHANOL CAPACITY ADDITIONS 2007-2010
Source: Tecnon OrbiChem
100
200
300
400
500
600
700
800
900
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Dollars/ton
Source: Tecnon OrbiChem
Figure 2METHANOL CONTRACT PRICES – 2005-2008
Asia
N America
West Europe
100
200
300
400
500
600
700
800
900
1,000
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Dollars/ton
Source: Tecnon OrbiChem
Figure 3METHANOL SPOT PRICES – 2005-2008
Asia
N America
West Europe
AGENDA
• China’s Importance In The Global Methanol Market• Composition of Coal And Natural Gas-based
Methanol Production In China• China’s Independence of Acetic Acid Production• China’s Leading Position In DME
21%
3%
70%
1%
5%12%
3%
78%
1%
6%
Oil
Natural Gas
Coal
Nuclear
Hydroelectric
Source: BP Statistical Review of World Energy June 2007
Figure 4COMPOSITION OF CHINA’S ENERGY PRODUCTION AND CONSUMPTION IN 2006
Production Consumption
2007 2008 2009 2010 Plan0
2,000
4,000
6,000
8,000
10,000
12,000
Coal-based
Natural Gas-based
Source: Tecnon OrbiChem
Figure 5COMPOSITION OF COAL AND NATURAL GAS-BASED METHANOL CAPACITY ADDITIONS IN CHINA
Thousand Tons
AGENDA
• China’s Importance In The Global Methanol Market• Composition of Coal And Natural Gas-based Methanol
Production In China• China’s Independence of Acetic Acid Production• China’s Leading Position In DME
MethanolCarbonylation
AcetaldehydeBased
ButaneOxidation
By-Product CoalGasification
EthyleneOxidation
NaphthaOxidation
Others0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Capacity, ktpa
2005
2010
2015
Source: Tecnon OrbiChem
ACETIC ACID CAPACITY BY PROCESS
North America28%
South America0%
West Europe14%
China22%
Northeast Asia17%
Middle East & Africa
1%
East Europe4%
South & Southeast Asia14%
Total = 11,054 kMT
Figure 6GLOBAL ACETIC ACID CAPACITY TO PRODUCE –2006 BY REGION
Source: Tecnon OrbiChem
North America25%
South America0%
West Europe12%
China28%
Northeast Asia16%
Middle East & Africa
2%
East Europe4%
South & Southeast Asia13%
Total = 12,105 kMTSource: Tecnon OrbiChem
Figure 7GLOBAL ACETIC ACID CAPACITY TO PRODUCE –2007 BY REGION
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-700
-600
-500
-400
-300
-200
-100
0
100
200
Source: Tecnon OrbiChem
Figure 8CHINA’S ACETIC ACID NET TRADE 2005-2015
Thousand Tons
Source: Tecnon OrbiChem
Figure 9ACETIC ACID CAPACITIES IN CHINA (2007)
Ji’an Shenghua: 200k (ethanol-based)
Jilin Petchem: 210k (ethylene-based)
Tianjin Guanda: 40k (ethanol-based)
Xinyu Sanyang: 100k (ethanol-based)
Wujing: 230k (CMC)
Jinyimeng: 100k (ethanol-based)
Yankuang Cathay: 300k (CMC)
Jiangsu Sopo: 600k (CMC)
Yaraco: 400k (GMC)
Nantong Acetic Acid: 20k (ethanol-based)
Henan NanyangTianguan: 15k (ethanol-based)
Yangzi Petchem: 90k
(ethylene-based)
Celanese: 600k (CMC)
Shanghai Petchem: 100k
(ethylene-based)Nanning Chemical: 20k (ethanol-based)
CMC=Coal-based Methanol Carbonylation
GMC=Natural Gas-based Methanol Carbonylation
Daqing Petroleum Administration:
200k (CMC)
Source: Tecnon OrbiChem
Figure 10ACETIC ACID CAPACITIES IN CHINA (2008-2012)
Ji’an Shenghua: 200k (ethanol-based)
Jilin Petchem: 210k (ethylene-based)
Tianjin Guanda: 40k (ethanol-based)
Xinyu Sanyang: 100k (ethanol-based)
Wujing: 230k (CMC)
Jinyimeng: 100k (ethanol-based)
Yankuang Cathay: 300k (CMC)
Jiangsu Sopo: 600k (CMC)
Yaraco: 400k (GMC)
Nantong Acetic Acid: 20k (ethanol-based)
Henan NanyangTianguan: 15k (ethanol-based)
Yangzi Petchem: 90k
(ethylene-based)
Shaanxi Yulin: 150k (GMC)
Wujing: 300k (CMC)
BP YPC: 500k (GMC)Guizhou Crystal: 36k (CMC)
Shandong Hualu Hengsheng: 200k (CMC)
Henan Shunda: 200k (CMC)
Yunnan Yunwei: 200k (CMC)
Jiangsu Sopo: 600k (CMC)
Yaraco: 650 (GMC)
Shandong Mingshui Great Chemical: 100k (CMC)
Celanese: 600k (CMC)
Shanghai Petchem: 100k
(ethylene-based)
CMC=Coal-based Methanol Carbonylation
GMC=Natural Gas-based Methanol Carbonylation
Nanning Chemical: 20k (ethanol-based)
Shaanxi Weihe:
35k (CMC)
Yanchang Group: 200k (CMC)
Daqing Petroleum Administration:
200k (CMC)
AGENDA
• China’s Importance In The Global Methanol Market• Composition of Coal And Natural Gas-based Methanol
Production In China• China’s Independence of Acetic Acid Production• China’s Leading Position In DME
WHAT IS DME
• DME is the simplest ether having the chemical formula of CH3OCH3
• DME is a colourless gas at ambient temperature, chemically stable, and can be easily liquefied.
• The physical properties of liquid DME are so similar to those ofLPG that DME can be distributed, stored, etc. using LPG handlingtechnology.
• DME’s low auto ignition temperature makes it a promising fuel candidate for diesel engines.
• DME is being used as an aerosol propellant in hair spray and other personal care products to replace CFC and LPG propellants
HOW IS DME BEING MADE
Methanol DME
Dehydration
Source: Tecnon OrbiChem
Figure 11DME AS A COOKING FUEL
Picture Courtesy of Shandong Jiutai
Figure 12DME AS A AUTOMOBILE FUEL
Picture Courtesy of Shandong Jiutai
Figure 13
DME AS AN AEROSOL PROPELLANT
Picture Courtesy of Shandong Jiutai
Figure 14DME AS A WELDING AND CUTTING FUEL
Picture Courtesy of Shandong Jiutai
Figure 15DME AS A REFRIGERANT
Picture Courtesy of Shandong Jiutai
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
1,0002,0003,000
4,0005,0006,0007,0008,0009,000
10,00011,00012,00013,000
Thousand Tons per Annum
Source: Tecnon OrbiChem
Figure 16DME CAPACITIES - CHINA
0
200
400
600
800
1,000
1,200
0 20 40 60 80 100
Figure 17DME vs PROPANE
Bulk Propane or DME, $/ton LPGequivalent
Brent Crude Oil $/bbl
Plots of propane price month by month
1996-2008
Plots of propane price month by month
1996-2008
A1 Total ex plant cost - 200 ktpa coal-based DME plant
A2 Cash cost - 200 ktpa coal-based DME plant
Source: Tecnon OrbiChem
B1
B2
Total ex plant cost - 1000 ktpa coal-based DME plant
Cash cost - 1000 ktpa coal-based DME plant
A1
B1A2
B2
0
200
400
600
800
1,000
1,200
0 20 40 60 80 100
Figure 18DME vs DIESEL
Bulk Diesel or DME, $/ton Dieselequivalent
Brent Crude Oil $/bbl
Plots of diesel price month by month
1996-2008
Plots of diesel price month by month
1996-2008
A1
B1
Source: Tecnon OrbiChem
A1 Total ex plant cost - 200 ktpa coal-based DME plant
A2 Cash cost - 200 ktpa coal-based DME plant
B1
B2
Total ex plant cost - 1000 ktpa coal-based DME plant
Cash cost - 1000 ktpa coal-based DME plant
A2
B2
CONCLUSIONS• The “virtual flood” of methanol from Middle East and China is not yet
so severe as expected. But China helped improve the methanol industry balance.
• About 80% of the new methanol capacities that will come on stream in China from 2008 to 2010 are coal-based. 94% of the planned capacities in China are coal-based.
• China became the world’s largest acetic acid producer in 2007, and will gradually achieve self-sufficiency of acetic acid production through to 2012, and become a net exporter from 2014.
• DME produced from cheap coal in China is competitive with hydrocarbon fuels derived from crude oil at present, and likely to be competitive in the foreseeable future.
• Final Conclusion: Increasing domestic methanol capacities, mainly coal-based, helps China achieve self-sufficiency of acetic acid and a leading position in DME as a new fuel.
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