Lianchuang Co., Ltd. terminated the integration project of polyether polyol and cyclopentane-type combined polyether

On June 27, Lianchuang issued three consecutive announcements, two of which were project termination announcements and one project investment announcement
.

Two projects terminated

Terminate project one

Project name: 45,000 tons/year polyether polyol expansion and 20,000 tons/year cyclopentane type combined polyether integration project

Reasons for investment: The 30,000-ton/year combined polyether and supporting polyether polyol project capacity of Lianchuang Polymer Phase I project has been fully released.
The product has a wide range of applications and has good technical and quality advantages.
The output can no longer fully meet the domestic requirements.
external customer needs
.
In order to meet the market demand and give full play to economies of scale, Lianchuang Polymer plans to increase the production capacity of the 30,000-ton/year polyether polyol project to 75,000 tons/year
.

With the development of rigid foam polyurethane and product upgrading at the same time, the second-generation blowing agent HCFC-141b is about to be phased out.
As an ideal environmental upgrade product, cyclopentane has been successfully used in refrigerators, freezers and other product fields.
And gradually to the water heater, composite insulation board and many other fields to promote the application
.
In order to meet the market demand, the subsidiary plans to invest in the construction of a 20,000-ton/year cyclopentane-type combined polyether project
.

Reasons for termination: At present, the demand growth in the downstream industry of polyether polyol products is sluggish, the industry competition is becoming increasingly fierce, the production capacity is overcapacity, and the gross profit rate of the product is less than 5%, resulting in a long return on investment of the project
.
After comprehensive consideration, combined with product strategy and existing business operations, the company has prudently decided to terminate the construction of this investment project, and plans to rebuild and upgrade the production end of basic polyether polyols with large profit margins and strong market demand as raw materials.
Amino polyether
.

On December 7, 2020, Lianchuang Co.
, Ltd.
announced to invest in the project, and announced the termination of the project on June 27, 2022.
In more than a year and a half, the market can be said to have undergone earth-shaking changes, which also reminds us to a certain extent.
We must always maintain a high acuity and keep pace with the times
.

Terminate project two

Project name: Project with an annual output of 60,000 tons of biodegradable polymers

Reasons for investment: China is currently the world's largest producer and consumer of plastics.
The fields of plastic packaging bags, disposable lunch boxes, and plastic films should be the first markets to break through in China's biodegradable plastics
.
According to statistics, China's annual consumption of plastic bags and agricultural mulch film is huge.
Once large-scale replacement is realized, it will provide a good market space for biodegradable plastics
.

Termination reason:

(1) The process route of this project is a new technology and a new process.
The process design steps are many, the process integration and connection are complex, and the industrialization risk is relatively large
.

(2) Although the degradable plastics market supports the intensive introduction of incentive policies, the implementation of policies is not as expected, the downstream application demand is far from being stimulated, the market is not yet mature, and its industry profitability is basically at a loss, and there is no sign of change in the short term
.

(3) The original planned investment of this project is 350 million yuan.
The company prioritizes and concentrates limited funds to develop the new energy-related industrial chain, which is difficult to meet the capital needs of this project
.
The company believes that there is a great risk of uncertainty in the continued implementation of the project.
After a prudent decision, it has decided to terminate this investment project and allocate funds and resources to give priority to the development of new energy materials related industry chains, such as PVDF
.

Nowadays, many projects have been launched in the degradable plastics market.
In 2020, the annual production capacity of PBAT and PLA in China will be about 300,000 tons and 100,000 tons respectively, accounting for about half of the global production capacity
.
It is estimated that by 2025, the annual domestic production capacity of PBAT and PLA will reach 7 million tons and 1 million tons respectively, accounting for more than two-thirds of the global production capacity
.
But another fact is that the operating rate of domestic biodegradable plastics in 2021 is only 40%
.
In other words, the grand blueprint on paper is not echoed in reality
.

In addition, on the grounds for termination, Lianchuang shares stated that it will allocate funds and resources to give priority to the development of new energy materials related industry chains, such as PVDF
.
It is worth mentioning that on June 27, an investor asked Lianchuang Shares whether the company’s 5,000 tons could be put into production at the end of the month.
The answer given by Lianchuang Shares was that the Shandong base planned to put into production at the end of the month, and the progress was smooth
.
Just last month, Lianchuang also announced that its holding subsidiary Inner Mongolia Lianhe Fluorocarbon New Materials Co.
, Ltd.
plans to invest in the construction of a 50,000-ton/year PVDF and supporting industrial chain in the Low-Carbon Industrial Park of Wuhai High-tech Industrial Development Zone, Inner Mongolia.
The first phase of the project includes: 25,000 tons/year PVDF and supporting 45,000 tons/year R142b co-production of 125,000 tons/year R152a
.
The construction investment of the first phase of the project is estimated to be approximately RMB 1.
6 billion
.

Project to be invested in

Project Name: Technical Transformation Project of 8,000 Ton-End Amino-Terminated Polyether Industrial Chain Extension

Implementation location: No.
219, Changguo East Road, Zhangdian District, Zibo City, Shandong Province (factory area)

Project construction content: After the company terminates the construction of the 45,000-ton/year polyether polyol expansion project and the 20,000-ton/year cyclopentane-type combined polyether integration project, it will build an annual output of 8,000 tons of amino-terminated polyether in the company's existing plant area.
Ether industry chain extension technical transformation project, carry out industrial chain extension technical transformation for the "30,000 tons/year combined polyether and its supporting polyether polyol project", add ethylene oxide on the basis of the original raw materials, and transport the original materials The pipeline is adjusted to continue the new amino-terminated polyether production line, and the construction period can be shortened by relying on the existing production plant, equipment and auxiliary facilities
.

Construction reasons: Amino-terminated polyether is an upgraded product with basic polyether polyol as raw material.
It is an extension of the industrial chain of polyether polyol, with mature technology and high product gross profit margin
.
At the same time, because the company's existing public works, some workshops, equipment, sites, etc.
can be used, the project investment is small, the construction period is short, the expected investment recovery period is short, and the investment risk is greatly reduced compared with the original planned project
.
Products are widely used in coatings, high-performance composite materials, potting adhesives, polyurea, epoxy resin curing agents and other fields.
It is expected that with the growth of the national economy, construction, shipbuilding, transportation, shale gas mining, Textile auxiliaries, fuel additives and other industries are growing rapidly, especially with the rapid development of the wind power industry.
As one of the important materials for wind turbine blades, the amino-terminated polyether market is growing rapidly and has broad prospects.
It is expected to become a new profit growth point for the company
.