Why does Wanhua chemical choose the propane route

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Why does Wanhua chemical choose the propane route for the million ton ethylene project?

why does Wanhua chemical choose the propane route for the million ton ethylene project?

January 3, 2019

recently, a topic has attracted the attention of the industry. Why is the million ton ethylene project of satellite Petrochemical more profitable than that of Wanhua chemical because of different raw material routes? Why does Wanhua chemical choose the propane route for the million ton ethylene project

the following contents are from the on-site records of the general meeting of shareholders:

-- how economical is propane as ethylene? Why not choose ethane route

first of all, Wanhua has a special advantage in cracking propane to make ethylene, which is related to the advance layout

Wanhua started its layout in 2013. In response to the Middle East's lack of understanding of Wanhua enterprises, it took some measures: in 2014, in order to let Middle East suppliers know Wanhua, Wanhua specially issued 1billion yuan of bonds in Hong Kong. In order to rate the investment grade, it showed that Wanhua was not a cheeky enterprise, which could be competent for American Middle East suppliers to understand Wanhua's good plastic materials. Wanhua has a certain say in LPG market procurement. Wanhua has the right to recommend CP pricing in China * and knows the price trend earlier than other similar customers. In 2017, Wanhua became a price recommender in the Far East and established Wanhua's reputation in the Middle East; Last year, in LPG related trade, Wanhua made a net profit of 179million yuan in trade of Chinese coatings

and Wanhua has natural cave resources; 1.18 million cubic meters for phase I and 1.2 million cubic meters for phase II; The seasonal periodicity of propane price is very obvious. The price is high in winter and cheap in summer. The ground warehouse has huge investment, small installation and large floor area. Underground storage has obvious advantages. It can be stored in summer and released in winter, which significantly reduces the procurement cost, and also helps Middle East producers adjust their inventory (Wanhua reverse operation)

secondly, China ethylene price Jinan experimental machine factory expects everyone's good results. Now it is still the naphtha cracking decision 3 The adjustment of lifting guide wheel is not positive, and light hydrocarbon cracking has not yet been carried out. After the shale gas revolution in the United States, a large number of by-products of propane have made naphtha price: propane price has changed from 1:1 to 1:0 9 (naphtha USD/ton, propane USD 500/ton), in an important window period. In 2016, Wanhua foresighted and judged that the price of propane would decline; In China, ethylene is priced by naphtha cracking, so the price advantage of propane route appears

thirdly, there are few ethane export terminals in the United States. A large amount of ethylene is digested domestically and can be transported to China. I don't know how much. Competition between China and the United States may lead to the interruption of sources. Only the United States has ethane, while liquefied gas is available all over the world

Wanhua's PDH unit has 80000 tons of ethane by-product a year, which is cracked to make ethylene; The by-product methane has a low added value and is used as fuel

-- what is the reason for not cracking butane

in the past, the price difference between propane and butane was USD/ton, which was 5 USD/ton in May this year (500vs.505); In summer, the safety of butane used in Southeast Asia is high, and the price of butane will rise; In terms of supply, when natural gas is extracted, the output of propane is% more than that of butane

therefore, propane cracking is appropriate in both quantity and price

another version of the field record:

second, the benefit problem. Wanhua is following the path of integrated development. Raw material products are universal products, such as propylene homogenization. Wanhua is moving forward, such as PDH devices. There are seven sets in China. Wanhua has incomparable benefits. Wanhua has a net profit of 1.44 billion yuan. Their * benefits are not as much as ours. We do Po, butanol, polyether and system materials, With the road of integration, no enterprise in our industrial chain can match. In the future, we will make ethylene, and we will make a lot of Poe. Currently, four companies can do Poe. Wanhua has developed it for 3 years, but the industrial development needs a cultivation process. The logic of ethylene is the same. It will be combined with MDI industrial chain to solve the problem of by-product hydrogen chloride. At the same time, the company will also develop the downstream high value-added olefin industry. China's olefin industry is a mass transit product, such as polypropylene, acrylic acid and ester. The company will do the industrial chain, and we will let * support it, because we will do high value-added things

12. For the ethylene project, in fact, the propane route is not very economical. Although it is now an economic means, propane production of ethylene will produce a large amount of methane, and the energy consumption of stripping methane is high. In general, the operation cost of this production route is high. Why not wait for ethane to come out and make this product

in addition to the basic logic of industry judgment, Wanhua has special advantages:

*, the company has a great say in LPG procurement. Among the CP pricing power in the world, the company is an enterprise with recommendation power in China. In 2017, the company earned 179million net profits from LPG trade

second, the company currently has 1million cubic meters of underground caverns, and 1.2 million cubic meters of underground caverns will be built in phase II. The periodicity of propane price is very obvious. Without heating in summer, the price is very low, and in winter, the price is very high. However, propane as an above ground storage has poor effect, large floor area, insecurity and huge investment. The advantages of underground frozen storage are obvious

at present, the price of ethylene in China mainly comes from the price of naphtha cracking because the tensile test is not convenient for testing, and there is no light hydrocarbon cracking. In the past, when there was no shale gas revolution in the United States, the price of naphtha was about the same as that of propane. During the shale gas revolution in the United States, a large number of propane by-products led to the decline in propane prices. In the important window of the shale gas revolution in the United States, the company predicted that the price of propane would fall. At this time, the advantage of investing in cracking materials and ethylene was obvious. Facts have also proved this point. At present, the price of propane is 80%-90% of that of naphtha. The price of naphtha is more than 600 dollars, and the price of propane is more than 500 dollars

third, the United States exports very little ethane (there are few export terminals), which is mainly digested by China. How much is transported to China is unknown

there is competition between the United States and China. In the future, there is a risk that the United States will not directly export ethane to China. Only the United States has ethane, and the Middle East basically does not. LPG is available all over the world

the above three logics are the great advantages of Wanhua's investment in propylene, which will bring excess returns to shareholders

at present, ethane cracking is still a trend. Will the PDH unit be replaced with ethane in the future

the PDH unit of the company produces 80000 tons of ethane per year. There is an ethane cracking furnace in the ethylene unit of phase II. Now the ethane of phase I is directly used as fuel. Later, the company uses the ethane produced by phase I PDH plant as phase II material, and most of the methane produced by phase II as phase I material, which can be used as fuel. This is the fourth advantage of the company

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