Project of Jilin 300,000t/year Propylene Oxide

1.Introduction to the Project

1.1 Project Background

1.1.1 Product Introduction

Propylene Oxide (English name is propylene oxide, hereinafter referred to as PO), also called

methyloxirane or propylene oxide, it is colorless and transparent liquid under normal

temperature and pressure, having similar ethers smell. Main physical property: boiling point

(101kPa) 34.23, freezing point -112.13, relative density (d204) 0.859, vapor pressure (25) 75.86kPa, flash point -37, explosion limit (in the air) 3.1-27.5% (VOL) , able to be mutually dissolved with acetone, carbon tetrachloride, diethyl ether, methanol and many

solvent. Chemical property of propylene oxide is active, easy ring-opening polymerization,

able to react with water, ammonia, alcohol and carbon dioxide to produce corresponding

compound or polymer, and polymerize on more than two compound of active hydrogen, the

produced polymer is generally called polyether glycol.

Propylene oxide is the third largest propylene derivative except polypropylene and vinyl

cyanide, and the important basic organic chemical raw material. Propylene oxide is mainly

used for polyether glycol production; second is for production of surfactant, propylene

carbonate and propylene glycol. In addition, it is applied in alcohol ether, hydroxypropyl

methyl cellulose (HPMC), modified starch, hydroxypropyl acrylate and other aspects. The

derivatives of propylene oxide have nearly one hundred kinds, which are important raw

materials of fine chemical products, widely used in automobiles, buildings, food, tobacco,

medicine, cosmetics and other industries.

1.1.2 Market Prospects

1. Supply and demand and forecast of international market

In 2008, world production capacity of propylene oxide was 7.808 million tons/year, output

6.759 million tons, and unit average rate of operation 86.6%. In 2008, world propylene oxide

industry had very high concentration ratio, America Dow Chemical and Lyondell Company are

the two largest manufacturers in the world, and they have controlled nearly half of the world's

propylene oxide market. Dow Chemical established production units in America, Germany and

other places, with total production capacity 1.881 million tons/year, accounting for 24.1% of

world's total capacity, adopting chlorohydrins technique; Lyondell Company has production

capacity 1.733 million tons/year, respectively established production units in America, France,

Holland and other places, accounting for 22.2% of world's total capacity, adopting co-

oxidation technique. It is predicted that the capacity of world propylene oxide by 2015 will

reach around 10.8 million tons/year, and around 12.5 million tons/year by 2020.

World propylene oxide consumption in 2003 was 5.437 million tons, world propylene oxide

consumption amounted to 6.759 million tons. During 2003-2008, annual average consumption

growth rate was 4.4%. West Europe, North America and Asia are main propylene oxide

production and consumption regions in the world. In 2008, world propylene oxide

consumption was 6.759 million tons. The consumption is mainly concentrated in West Europe,

Asia and North America regions, the consumption is respectively 2.384 million tons, 1.981

million tons and 1.965 million tons, respectively accounting for 35.3%, 29.3% and 29.1% of

total consumption. North America is the net output region of world propylene oxide, and West

Europe, Asia and other regions are main input regions of propylene oxide products.

In 2008, world propylene oxide is mainly used for polyether glycol production, the

consumption was 4.286 million tons, accounting for 63.4% of total consumption; second is for

propylene glycol production with consumption 1.231 million tons, accounting for 18.2% of

total consumption; alcohol ether accounted for 5.9%; and other accounted for 12.5%.

It is predicted that demand volume of world propylene oxide by 2015 will reach around 9.72

million tons. During 2008-2015, annual average demand growth rate was 5.3%; it is predicted

that world propylene oxide demand volume in 2020 will reach around 11.25 million tons,

during 2015-2020, annual average demand growth rate was 3.0%. World propylene oxide

demand structure is still mainly based on polyether glycol, which will push forward the rapid

growth of propylene oxide demand.

2. Supply and demand and forecast of domestic market

In 2009, the capacity of domestic propylene oxide reached about 1.262 million tons/year,

output 1.134 million tons, and unit average rate of operation 89.9%. In addition to propylene

oxide units of CNOOC and Shell Petrochemicals Co., Ltd. adopt co-oxidation method of co-

production styrene, other propylene oxide units adopt chlorohydrins method. It is predicted that

during 2010-2015, domestic propylene oxide capacity will appear new growth peak, Shandong,

Jiangsu and Zhejiang are main regions for domestic capacity growth. CNOOC and Shell

Petrochemicals Co., Ltd. plans to expand by stages, at that time, the capacity will reach

290,000 tons/year; Nanjing Jinpu Company plans to expand propylene oxide integration units

of Chemical Industrial Park in Nanjing, and newly increase 120,000 tons /year propylene oxide

capacity, at that time the capacity will reach 200,000 tons/year; ZRCC Lyondell Co., Ltd.

constructed 285,000 million tons/year co-oxidation method propylene oxide production unit in

Zhenhai, Ningbo, and put into production in June 2010. If the project mentioned above can be

completed as scheduled and put into production, part of units short of competitiveness may be

shut down. It is predicted that domestic propylene oxide production capacity will reach around

1.9 million tons/year by 2015, production capacity will reach about 2.4 million tons/year in

2020.

Since 1990s, the consumption of domestic propylene oxide has kept rapid growth. In 2000,

domestic propylene oxide output 252,000t, import volume 29,000t, export volume was very

small, apparent consumption 281,000t. Till 2009, domestic propylene oxide output reached

1.134 million tons, import volume 255,000t, export volume was very small, apparent

consumption reached 1.389 million tons. During 2000-2009, annual average growth rate of

domestic propylene oxide output and consumption was respectively 18.2% and 19.4%. Growth

of domestic propylene oxide output was less than consumption growth, degree of self-

efficiency reduced to 81.6% in 2009 from 89.7% in 2000. In 2009, domestic propylene oxide

apparent consumption was 1.389 million tons. It was mainly used for polyether glycol,

propylene glycol, surfactant, alcohol ether, propylene carbonate/DMC, modified starch,

hydroxypropyl acrylate, HPMC and other fields. In 2009, domestic propylene oxide

consumption composition and demand forecast in 2015 is shown in the table below:

Table 1 2009 Domestic Propylene Oxide Consumption and 2015 Demand Forecast (Unit:

10,000t)

Consumption

Field

2009 2015 2009-2015

Annual Average

Demand Growth Rate

(%)

Consumption Proportion

(%) Demand

Volume Proportion(%)

Polyether

glycol 105.6 76.0 156.0 78.8 6.7

Propylene

glycol 10.4 7.5 17.2 8.7 8.7

Other 22.9 16.5 24.8 12.5 1.3 Total 138.9 100.0 198.0 100.0 6.1

It is predicted that domestic propylene oxide demand volume in 2015 will reach about 1.98

million tons, during 2009-2015, annual average demand growth rate was 6.1%; it is predicted

that domestic propylene oxide demand volume in 2020 will reach about 2.4 million tons, and

annual average demand growth rate will be 3.9% during 2015-2020. Domestic polyether glycol

is still the largest demand field of propylene oxide. The rapid growth of output will drive the

rapid increase of propylene oxide.

1.1.3 Advantaged Conditions and Necessity of Project Construction

In 2009, domestic propylene oxide capacity reached 1.262 million tons/year, output 1.134

million tons, consumption1.389 million tons, gap between supplies and demand 255,000 tons,

solved by import. In 2009, domestic propylene oxide is mainly used for polyether glycol,

propylene glycol, surfactant, alcohol ether, propylene carbonate/DMC, modified starch,

hydroxypropyl acrylate, HPMC and other fields.

It is predicted that domestic propylene oxide production capacity in 2015 will reach 1.9 million

tons/year, demand volume will reach about 1.98 million tons, and the annual average demand

growth rate will be 6.1% during 2009-2015. Domestic polyether glycol is still the largest

demand field of propylene oxide, the rapid growth of its output will drive the rapid increase of

propylene oxide demand.

It is predicted that in 2015, although the contradiction between supply and demand of domestic

propylene oxide has been relieved, the gap between supply and demand still exists, gap volume

is 175,000t. It is predicted that in 2015, the newly increased capacity of domestic propylene

oxide is mainly concentrated in Eastern China regions, the supply and demand pattern will

change. The supply and demand of Central South and Eastern China has surplus volume, and

other regions have gap between supply and demand. Domestic propylene oxide regions are

unbalanced in supply and demand, which will aggravate the market competition of Central

South and Eastern China regions. The construction of this projection will fill in the gap of

market to certain extent, and relieve the current situation of unbalanced supply and demand, so

the project construction is very necessary.

1.2 Content and Scale of Project Construction

1.2.1 Content of Project Construction

1. Production technology

According to the analysis of world propylene oxide production development trend, hydrogen

peroxide technique has its unique competition advantages in economy, environment and future

development opportunity and other aspects compared with traditional has propylene oxide

chlorohydrins technique and co-oxidation technique, therefore, hydrogen peroxide direct

oxidation technique will become the main production technique for newly established

propylene oxide projects in the following period.

Hydrogen peroxide direct oxidation(HPPO) technique chlorohydrins technique overcame the

disadvantages of equipment's serious corrosion, much waste liquid and waste residue of

chlorohydrins technique, it is featured by simple technique flow, nearly free of joints products,

small impact on environment, which is the recognized internationally recognized "green" and

environmental protection production technology. From the future period of time, according to

the analysis of world propylene oxide production development trend, HPPO technique will

become main production technique for newly established propylene oxide projects. This

project is recommended to adopt the world most advanced HPPO technique.

At present, hydrogen peroxide technique patent manufacturers including Yingchuang and Dow

Chemical and other companies, these patent techniques are advanced and reliable. The

technique adopted for this project should be determined through comprehensive comparison

after contract negotiation.

Table 2 Consumption of Main Raw Materials

No. Name and Specification Unit Consumption

Quota Annual Usage Remark

1 Propylene (polymerization level)

t 0.784 235200 Outsourcing

2 Hydrogen peroxide (based on 100%)

t 0.615 184500 Outsourcing

3 Methanol t 0.033 9900

Table 3 Consumption of Public Utilities

No. Name and

Specification Unit

Consumption

Quota Hour

Consumption Annual Usage Remark

1 Process water t 0.22 8.25 66000 Park supply

2 Circulating water t 368 13800 110400000 Park supply

3 Electricity kWh 69 2587.5 20700000 Park supply

4 Vapor (1.0MPa) t 3.3 123.75 990000 Park supply

5 Instrument air

(0.6MPa) Nm

3 2 75 600000 Park supply

6 Nitrogen (0.6MPa) Nm3 4 150 1200000 Park supply

7 Freezing MJ 598 22425 179400000 Park supply

8 Natural gas MMBTU 0.24 9 72000 Park supply

4. Equipment area and fixed number

Equipment area: 180,000m2

Fixed number: 180 persons

1.2.2 Scale of Project Construction

In order to improve the technical level of domestic propylene oxide production and

concentration ratio, this project adopts hydrogen peroxide technique to produce propylene

oxide equipment, the scale is set 300,000 tons/year, and annual operating time 8,000h.

The production program of this project is annual output of propylene oxide is 300,000t, and

by-product of propylene glycol 6,000t.

1.3 Forecast of Economic and Social Benefits

1.3.1 Major Indexes for Forecast of Economic Benefits

Table 4 Static Technical and Economic Indexes

No. Project Name Unit Quantity Remark

1 Total investment 10,000

yuan 240000

2 Construction investment 10,000

yuan 210000

3 Annual sales income 10,000

yuan 372000

Price of propylene oxide

12,000 yuan/t

Price of propylene glycol

20,000 yuan/t

4 Annual total cost 10,000

yuan 301680

5 Annual profit and tax amount

10,000 yuan

70320

6 Annual profit amount 10,000 52250

yuan 7 Investment tax rate % 29.3 8 Investment profit rate % 21.8

9 Period for recovery of

investment (before income

tax) 7.3

Including construction period

3 years

1.3.2 Analysis of Social Benefits

After this project is completed, it will drive the local economic development and local

employment, thus properly promoting the development of local society and the progress of

pillar industries of Jilin City.

1.4 Total Investment and Funds Raising Plan of the Project

1.4.1 Total Investment of the Project

Construction investment of 300,000t/year propylene oxide project equipment is 2.1 billion

yuan, total investment of the project is 2.4 billion yuan.

1.4.2 Funds Raising

Investment attracting

1.5 Ways of Cooperation

Joint venture, cooperation.

1.6 What to be Invested by Foreign Party

Funds or technical introduction

1.7 Construction Site of the Project

Jilin Chemical Circulating Economic Demonstration Park

1.8 The On-going Condition of Project

Project proposal has been completed.

2. Introduction to Partner

2.1 Basic Conditions

Project undertaker: Jilin Chemical Circulating Economic Demonstration Park

2.2 Introduction to Project Undertaker

Jilin Chemical Circulating Economic Demonstration Park was established in 2008 on the basis

of strategic cooperation framework agreement signed by Jilin provincial government and

CNPC after it was approved by provincial government on October 28. The Park enjoys

provincial-level development zone administration authority and relevant policies, which is

featured by distinct industrial advantages, abundant energy and materials, convenient traffic

and logistics and favorable policy environment. The total are is planned 59.8km2. It fully

depends on raw material advantages of China petroleum and Jilin Petroleum and Chemical

Company, mainly develop petroleum and chemical industry, fine chemical industry, new

chemical materials, biological chemical industry, strive for constructing into a chemical

industry base with famous, strong international competitiveness and influence.

2.3 Contact Method

Contact address: No. 6, Hanyang South Street, Longtan District, Jilin City, Jilin Province

Tel: 0432-63020240 63041733 63041771

E-mail:longtanmail@163.com