China MEG Development Under Diverse Olefins Feedstocks

Preface

The global petrochemical industry is undergoing a new round of structural adjustment, with feedstocks becoming more diverse. The booming development of shale gas and shale oil in the U.S., as well as coal chemical and PDH technology has changed the industrial pattern of global energy and petrochemical fields. As the energy structure changes greatly, China’s MEG industrial structure also experiences deep adjustment.

China’s energy structure also changes dramatically when the global energy structure develops diversely. It has become a trend for olefins feedstocks to be diversified. According to statistics, during the 12th Five-Year Plan, China’s newly-added ethylene capacity mainly came from CTO projects in western China and MTO projects in eastern coastal areas. MEG, which consumes 20% of ethylene resources, is the largest downstream product of ethylene. The MEG industry gained deep development during the 12th Five-Year Plan period. As shown in the chart below, China’s MEG capacity increased from 3,360kt/a to 7,280kt/a during the 12th Five-Year Plan period, with the capacity growth rate of 21%.

The newly-added MEG capacity was released intensively in 2015. Most of the newly-added units were coal-based MEG units from 2011 to 2014. In 2015, units at China Sanjiang Fine Chemicals, Fujian Refining & Petrochemical and Far Eastern Group were completed and put into production, making China’s MEG capacity rushing. 

China’s MEG capacity mainly lie in East China, near the consumption area. In the eastern area, MTO units are intensively located. The other newly-added units are scattered and locate in North China, Central China and Southwest China where coal resources or coal enterprises are intensive.

With the capacity increase, China’s MEG import dependence degree has dropped from 70% in early 12th Five-Year Plan period to 62% in 2016. Nevertheless, the MEG supply gap remains large in China. Therefore, it is foreseeable that China’s MEG industry will see more market entrants during the 13th Five-Year Plan period. 

According to primary statistics, there will be 2,960kt/a newly-added MEG capacity in China from 2017 to 2018, among which coal-based MEG will account for 86.5%. The newly-added units will mainly concentrate in Northwest China, Southwest China, North China, etc. The maturity of CTO production technology has improved greatly after several years’ development, and the industry operating rate has increased a lot. However, it still takes time to catch up with the integrated unit which can operate stably in a long period with high operating rates. Particularly, China’s government exerts higher requirements on environmental protection currently, thus, whether the MEG capacity increase can push up the output still needs observation.