How much impact did the Shanghai Petrochemical fire accident have on the ethylene glycol market?

At around 4:00 on June 18, 2022, a fire broke out in the ethylene glycol plant of Shanghai Petrochemical
.
Statistics show that the annual production capacity of Shanghai Petrochemical's ethylene plant is 700,000 tons, and there is a 600,000-ton ethylene oxide-ethylene glycol co-production plant
.
In this accident, its ethylene oxide plant was directly affected, and the entire large ethylene plant may even be shut down
.

At present, the annual production capacity of ethylene glycol in China is about 21 million tons
.
From the perspective of supply-side production methods, the ethylene process is the main source of ethylene glycol, with an annual production capacity of about 14 million tons
.
The production route of the ethylene method is ethylene-ethylene oxide-ethylene glycol, and the main difference lies in the different production processes of ethylene
.
Among them, the production capacity of ethylene glycol produced by the naphtha cracking route is about 11 million tons, and the production capacity of ethylene glycol produced by the MTO route is about 900,000 tons.
It is also worth mentioning that Satellite Chemical will put 1.
82 million tons of ethylene glycol into production in Lianyungang in 2021.
The alcohol plant adopts the route of ethane cracking to ethylene
.
In addition, China's coal-to-ethylene glycol is produced by hydrogenation of dimethyl oxalate.
In recent years, due to cost and quality reasons, the growth momentum has slowed down, and the total production capacity is about 7 million tons
.
From the perspective of supply structure, the price of ethylene glycol in China is mainly supported by the cost of naphtha cracking, or the correlation between the price fluctuation of ethylene glycol and the oil price is relatively high
.

In 2021, the corresponding output of China's ethylene glycol production capacity is 11.
8 million tons, and the operating rate is 56%
.
The lower operating rate is undoubtedly closely related to the profitability of the installation
.
For example, from January 2021 to May 2022, the CIF price of ethylene glycol in East China is US$676/ton, and the average CIF price of ethylene is US$1,085/ton.
The production cost is about 800 US dollars / ton, which means that the loss of ethylene glycol produced by externally mined ethylene monomer is 124 US dollars / ton, and the loss per ton is close to 1,000 yuan
.
Then, for an integrated enterprise, that is, the enterprise that relies on naphtha, methanol, and ethane to produce ethylene and is equipped with an ethylene oxide-ethylene glycol unit?

For the process of ethylene glycol production, the final cost of competition is the complete production cost of ethylene
.
The lower the production cost of ethylene, the lower the production cost of ethylene glycol, the stronger the cost competitiveness of the enterprise, and the better the profitability
.
Still taking the interval from January 2021 to May 2022 as an example, the completion costs of naphtha cracking, methanol-to-olefins (MTO), and ethane cracking to produce ethylene are $1,208/ton, $1,093/ton, and $650, respectively.
/ ton, which means that the single ton of ethylene produced by naphtha cracking loses about 123 US dollars, MTO is basically at break-even, and the ethane cracker makes a profit of 435 US dollars / ton per ton of ethylene, and the single ton of integrated ethylene glycol is completely The production costs are US$876/ton, US$809/ton and US$552/ton respectively
.
From the perspective of the ethylene method, except for the ethane cracking-ethylene oxide-ethylene glycol route, which has a profit of more than US$100 per ton, other routes have losses to varying degrees, and the naphtha route has the most serious losses
.

So what about the nearly 7 million tons of coal-to-ethylene glycol? Coal-to-ethylene glycol is a process route of coal-dimethyl oxalate DMO-hydrogenation-ethylene glycol.
The devices are mostly distributed in the northwest region where coal resources are rich.
It is the product of the era of high oil prices and low coal prices.
The production cost is high, and the process is still in the process of continuous optimization and exploration.
Since ethylene glycol needs to travel long distances to the chemical fiber consumption center Xiaoshao area through logistics methods such as container tanks, the logistics cost should not be underestimated
.
Based on the above reasons, in the past year and a half, the operating rate of China's coal-to-ethylene glycol industry is less than 40%.
Under this operating level, the complete cost of ethylene glycol is as high as 980 US dollars / ton, and the loss per ton is nearly 300 US dollars
.
The coal-to-ethylene glycol industry, which has expanded dramatically in the past few years, has now cooled down rapidly
.

From the perspective of the demand structure of ethylene glycol, the consumption is mainly concentrated in the polyester industry (polyester filament, polyester chips, polyester staple fibers, polyester bottle chips), accounting for more than 95% of the total demand for ethylene glycol, and the others are mainly not Saturated resin and antifreeze
.
In 2021, China's consumption of ethylene glycol is about 22 million tons, and 10 million tons of ethylene glycol still need to be imported, mainly from the Middle East, Southeast Asia, Japan and South Korea
.
With the expansion of China's ethylene glycol production capacity, especially the ethane cracking-ethylene glycol process route with strong cost competitiveness, while constantly filling the import gap, the operating level of other routes has also declined to a certain extent
.

Although the ethylene glycol plant explosion accident has little impact on the production capacity of ethylene glycol, it is the safe production month in 2022, and the whole ethylene glycol industry may face stricter self-inspection and rectification and production suspension for rectification.
The approval of projects to increase ethylene oxide and ethylene glycol may also lag behind.
At the same time, with the gradual strengthening of the polyester industry, the price of ethylene glycol may rise significantly
.