The 2 million tons PDH project in Fujian has made new progress. What is the future of PDH under the pressure of outsourcing raw materials?

It was learned from the Putian Municipal People's Government Network today that the Fujian Provincial Department of Industry and Information Technology has approved the "Fujian Yongrong New Material Co.
, Ltd.
2 million tons/year propane-to-propylene and downstream new material project energy saving report"
.
This is the first project approved by the Provincial Department of Industry and Information Technology among similar key energy-using projects in Fujian Province this year, and also the first project approved among the key energy-using projects in Putian City
.

Fujian Yongrong New Materials Co.
, Ltd.
has a 2 million tons/year propane-to-propylene and downstream new material project with a total investment of 39.
6 billion yuan
.
The first phase of the project will build a propane dehydrogenation and polypropylene plant with an annual output of 900,000 tons, and it is planned to be put into operation in 2024
; After the project is completed, it will add an annual production capacity of 2 million tons of propylene and 2 million tons of polypropylene.
The project has already started
.

In fact, as early as June 9, 2020, Fujian Yongrong Holding Group and Shandong Refinery Energy Group held an investment cooperation signing ceremony for the project
.
Witnessed by the Putian Municipal Government, Shandong Refinery Energy Group and Fujian Yongrong Holding Group have joined forces, and the 2 million tons/year propane-to-propylene and downstream new material project with a total investment of 39.
6 billion yuan has officially landed in Shimen Macao, Xiuyu, Putian Chemical Park
.

100 billion industrial development plan

Fujian Yongrong New Materials Co.
, Ltd.
is a subsidiary of Yongrong Holding Group.
It was established in 2017 and focuses on the construction of the 2 million tons/year propane-to-propylene and downstream new material projects
.
Yongrong Holdings is a large-scale industrial group focusing on new petrochemical nylon materials and integrating supply chain services
.
Founded in 2009, its predecessor was a village-run fiber factory established in 1979
.
Yongrong Holdings has jurisdiction over aromatics business, caprolactam business, nylon new material business, supply chain business and other business sectors, and has nearly 30 wholly-owned and holding companies
.
It is understood that the group's sales revenue in 2021 will exceed 68 billion yuan, a year-on-year increase of 22%
.

In 2012, Yongrong Holdings officially settled in Putian Shimen Macao Industrial Park, focusing on the main planning and functional layout of new chemical materials.
Yongrong Holdings proposed an industrial development plan with a total investment of over 85 billion yuan and an annual output value of over 100 billion yuan
.
Ten years later, Yongrong Holdings has put into operation and projects under construction in Putian include:

1.
Functional new material project (investment 7 billion yuan, output value 15 billion yuan);

2.
Yongrong Technology CPL integration project (investment 15 billion yuan, output value 20 billion yuan, planned 600,000 tons/year production capacity) The first phase of 200,000 tons/year CPL has been put into operation in January 2019, and the second phase will be at the end of 2022 Put into operation;

3.
The 6#, 9#, and 11# berth engineering projects in the Shimen Macao operating area (investment 3 billion yuan);

4.
2 million tons/year propane-to-propylene and downstream new material projects (investment 39.
8 billion yuan, output value 30 billion yuan);

5.
Fujian Dongrong Warehouse Terminal Project (investment 3.
5 billion yuan, output value 20 billion yuan);

6.
The adiponitrile integration project (investment 16.
5 billion yuan, output value 18.
5 billion yuan) is planned to be basically completed in 2023 (the specific production capacity scale and other information have not been disclosed yet)
.

PDH enters the centralized release period

Due to its simple reaction process, high product yield, small footprint, and low investment, PDH is favored by investors
.
In 2021 alone, the PDH process route will account for more than 50% of the newly added propylene production capacity
.
However, starting from the second half of 2021, this process route will lose the halo of high profitability, and the pace of investors' entry into the PDH field will be suspended
.

In 2021, the propylene production capacity will continue to expand rapidly and exceed the 50 million tons mark.
Excluding some of the obsolete production capacity, the newly added production capacity will reach 5.
44 million tons
.
Among them, the new propylene production capacity of the PDH process route is 2.
91 million tons, accounting for more than 50% of the new production capacity
.
The reason why the PDH project is popular is that it has obvious superiority among many propylene production process routes, which has attracted the attention of a large number of investors, and the projects under construction are planned one after another
.
According to the disclosed information, there will be more than 35 million tons of PDH projects under construction, proposed construction and planning in China in the next ten years
.
If it is put into production as scheduled, the production capacity of PDH will increase by nearly 20%, and the scale of a single unit will also increase compared to the current one
.

Future direction

Because the raw material propane needs to be imported in large quantities, the market has a low right to speak and the bargaining power is not strong
.
In addition, the global energy crisis has pushed up propane prices sharply, and PDH's profits have continued to shrink, especially in the second half of 2021, causing industry players to worry about the future competitiveness and development space of PDH
.

Industry experts believe that PDH still has room for development! In the future, on the PDH route, enterprises can make efforts in process optimization, changing transportation methods, and enhancing the added value of the industrial chain to enhance market competitiveness
.

1.
Focus on process optimization
.
The processing cost of PDH units put into operation in previous years was 1200-1500 yuan.
With the increase in scale and process optimization, the cost of PDH industry has a downward trend
.
The current and future production cost of some PDH can be controlled within 1,000 yuan, so even if the raw material price remains high, there are still some devices that can survive and develop well in the fierce competition
.

2.
Change the mode of transportation to reduce the cost
.
Enterprises can be equipped with propane freezing tanks to save raw material logistics costs, or effectively shorten the transportation radius, or optimize their own procurement channels to reduce costs
.

3.
Increase the added value of the industrial chain
.
Propane is known as one of the cleanest energy sources
.
With the full advancement of China's "two-carbon" goal, propane, which has obvious environmental advantages and cost advantages compared to oil-based and coal-based products, has a better development prospect
.
The industry should vigorously tap the utilization value of the by-product high-purity hydrogen to improve the profitability of the project
.

4.
The structure of the downstream device is relatively simple, and there is no need for a large number of auxiliary devices to balance the material in the plant.
At present, in China, there is still a relatively broad development space in the downstream direction of propylene
.
Therefore, large-scale, intensive, and integrated upstream and downstream industrial chain PDH projects are expected to develop well in the fierce market competition, and their future position in the propylene industry should not be underestimated
.