Large-scale petrochemical projects have long construction cycles, especially overseas petrochemical projects, and the overall progress is likely to be delayed. The petrochemical industry’s driving effect on the national economy is indescribable. A petrochemical project involves project design, construction, equipment manufacturing, catalyst and process route selection, etc. At the same time, petrochemical projects are also crucial to the extension of the downstream industrial chain.
Take the ethylene project as an example. The core equipment is the cracking furnace and the cracking gas compressor. At the same time, there are many kinds of fine chemical products downstream of ethylene. If C4, C5, etc. are deeply processed, Application, an ethylene project can drive several times more investment. Therefore, large-scale petrochemical projects are capital-intensive and technology-intensive industries, and the start-up progress of the project is generally delayed than expected; from the construction of the project to the final start-up, it often takes as little as 3-5 years and as many as 10 years. Compared with overseas petrochemical projects, domestic supporting facilities are more complete, investment costs are low, project construction is fast, and competitiveness is significantly enhanced.
It is expected that the upstream will operate with low inventory, actively increase the proportion of contracts, and reduce the proportion of spot goods. The marginal impact of future demand on petrochemicals will increase. As the focus of production costs shifts downward, projects with growth potential and competitiveness will win out. Since 2020, the petrochemical industry has entered the peak period of equipment commissioning, and market supply has increased.
Looking forward to 2020-2021, there will still be multiple refining and ethylene projects put into production, but we believe that the current market price has already reflected future market expectations in advance, and many projects are still There is a possibility of postponement.
Because, we believe that the petrochemical industry as a whole will enter an era of low profits in the future, but large-scale refining and chemical plants will stand out in the market competition with their cost advantages and growth potential.
The top ten petrochemical projects that will be put into production in 2020-2021
1. A 50% joint venture project (PIC project) between Petronas and Saudi Aramco .
Pengerang Refining Company Sdn. Bhd. has an oil refining capacity of 15 million tons/year, and Pengerang Petrochemical Company Sdn. Bhd. has an ethylene capacity of 1.3 million tons/year. The project was originally planned to be put into operation in early 2019, but in April 2019, an atmospheric residual hydrodesulfurization (ARDS) unit of the project was shut down after an explosion. Petronas announced that both ARDS units of the refinery needed to be upgraded. The first set of ARDS is expected to be put into use in June 2020. And according to the Saudi Aramco prospectus, the project is planned to be operated at full capacity in the second half of 2020. We predict that the project will most likely be delayed and will have less impact on the market in the first half of 2020.
2. Saudi Aramco Jazan petrochemical project.
The project has a 20 million tons/year oil refining capacity and is equipped with 1 million tons/year PX. The project investment is approximately US$6 billion. Saudi Aramco announced in the second quarter of 2019 that the utility systems at its refinery in Jazan had become operational, approximately a year later than originally planned. However, Jazan is geographically close to the Yemeni border. Considering the safety issues of the refinery, it is expected that it will be difficult to put it into operation smoothly in the short term. According to Saudi Aramco’s latest prospectus, we expect to be operating at full capacity in the second half of 2020.
3. Zhejiang Petrochemical Refining and Chemical Integration Project.
The trial operation was carried out in May 2019. On October 4, the cracked gas compressor unit of Zhejiang Petrochemical’s 1.4 million tons/year ethylene unit was successfully tested for the first time, marking that the project entered the start-up and feeding stage. Zhejiang Petrochemical is a large-scale refining and chemical integration project that is completely put into operation at one time. After the hydrogen production link of the project is opened, gasoline and diesel refining and naphtha refining can be carried out. The follow-up will accelerate the progress of catalytic reforming, catalytic cracking and related Device load. We believe Zhejiang Petrochemical is expected to be fully operational in the first half of 2020.
4. Hengli Petrochemical produces 1.5 million tons/year of ethylene.
The 20 million tons/year oil refining link achieved full load throughout the entire process in May 2019; in the ethylene link, the ethylene glycol line 1 achieved central delivery on November 25, 2019. We expect 1.5 million tons/year ethylene to be put into production in the first half of 2020.
5. Hengyi Petrochemical Brunei 8 million tons/year oil refining project.
On November 3, 2019, the “PMB Petrochemical Project” realized the entire process of the factory and was put into full production, successfully producing gasoline, diesel, aviation kerosene, PX, benzene and other products. The Brunei refining and chemical project completed the handover of public works in March this year; the main unit was fully handed over in July, and all units entered the linkage commissioning stage that month; the atmospheric and vacuum units produced qualified intermediate products in September.
6. Turkey STAR petrochemical project.
A 10 million ton/year oil refining project invested by Azerbaijan State Oil Company (SOCAR) with a US$6.3 billion investment. The STAR refinery is the largest new refinery built in Europe in the past few decades and the first new refinery in Turkey in the past 30 years. All equipment at the STAR refinery was put into operation at the end of March 2019. The STAR refinery delivered its first batch of Petkim naphtha to the market in January, and its diesel and jet fuel entered the market in February. On the downstream side, BP and Socar Turkey plan to build a new PX/PTA plant. The project plans to invest US$1.8 billion to build 840,000 tons/year PX and 1.25 million tons/year PTA. The project construction is scheduled to be completed in 2023.
7. Zhanjiang Zhongke Refining and Chemicals.
The total investment of the project is 38.55 billion yuan, and the construction of 10 million tons/year oil refining and 800,000 tons/year ethylene will mainly produce National VI gasoline, diesel,Oil products such as aviation kerosene and chemical products such as polyethylene, polypropylene, and ethylene oxide. The project has a total of 31 main units. On November 30, Zhongke Refining and Chemical Co., Ltd. opened 7 production units including a 200,000 tons/year polypropylene unit, a 350,000 tons/year polypropylene unit, and a 350,000 tons/year high-density polyethylene unit. As well as a number of production auxiliary projects to achieve project handover, the project is planned to be fully completed by CCCC by the end of 2019. We believe that the project is expected to be launched in the second half of 2020, and the main impact on the market will be in 2021.
8. Gulei refining and chemical integration project.
The total project investment estimate is 27.838 billion yuan, including 800,000 tons/year ethylene steam cracking, 300,000 tons/year pyrolysis gasoline hydrogenation, 250,000 tons/year aromatics extraction, 90,000 tons/year butadiene extraction, 300,000 tons/year ethylene-vinyl acetate resin (EVA), 27/500,000 tons/year ethylene oxide/ethylene glycol (EO/EG), 600,000 tons/year Annual styrene (EBSM), 350,000 tons/year polypropylene (PP) and other chemical plants as well as supporting public auxiliary projects. On October 10, 2019, the first large-scale equipment of the Gulei refining and chemical integration project, the 800,000 tons/year ethylene unit quench water tower, arrived at the port near Gulei, marking the start of the modular construction and hoisting work of the project’s large-scale equipment. We expect the project to impact the market after 2021.
9. Satellite Petrochemical Lianyungang 1.25 million tons/year ethylene project.
The project uses ethane and light hydrocarbon cracking, and is equipped with downstream supporting products such as polyethylene, EO/EG, and acrylonitrile. At present, the project storage tank area has entered installation, the dock is under construction, and the main device area has entered the comprehensive civil construction stage. It is expected to enter the trial production stage after completion in the third quarter of 2020. The project needs to be synchronized with the construction of U.S. ethane export facilities, and we expect to be fully operational in the first half of 2021.
10. Lianyungang Shenghong Refining.
The project includes 16 million tons/year oil refining, 2.8 million tons/year paraxylene, 1.1 million tons/year ethylene and downstream derivatives, supporting 300,000 tons crude oil terminal and public engineering island wait. On November 18, 2019, the 1 million tons of ethylene glycol project broke ground. The Shenghong Refining and Chemical Integration Project was listed as a major project in Jiangsu Province. Construction started on December 14, 2018. It is currently in the early stages of construction and is expected to be It will be completed and put into production in 2021. We expect the impact on the market to be in 2022 or beyond.
PX industry impact: short-term weakness, long-term production capacity impact may weaken
China’s domestic PX demand will be relatively high in 2018 In 2017, it increased by 4.4 million tons to 27.4 million tons, of which 15.9 million tons were imported. In 2018, the global PX production capacity was approximately 56.5 million tons, and China’s production capacity was 14.63 million tons, accounting for approximately 26% of global production capacity.
The PX production process in large-scale refining and chemical projects mainly includes extractive distillation unit, disproportionation and transalkylation unit, benzene/toluene separation unit, xylene distillation unit, adsorption separation unit and Isomerization unit etc. The non-refining integrated unit mainly purchases naphtha (condensate, fuel oil), mixed aromatics, etc. from outside for production. The main production routes of PX include: 1) Extraction of mixed aromatics in catalytic reforming of naphtha (or fuel oil); or extraction of crude cracked gasoline (Raw Pygas) from naphtha cracking ethylene; 2) Toluene disproportionation (TDP) ) or selective disproportionation (STDP); 3) isomerization and other processes. The most direct raw material of PX is mixed aromatics, which usually come from naphtha, and the most original raw material is crude oil.
In 2018, three new PX units were added to the world, namely PetroRabigh in Saudi Arabia with a capacity of 1.34 million tons/year, Nghison in Vietnam with a capacity of 680,000 tons/year, and Fuhai Chuang with a capacity of 1.6 million tons/year. However, due to the progress of construction, reasons, contributing at least half of the production growth in 2019. With the addition of Hengli Petrochemical’s 4 million tons/year, Sinochem Hongrun’s 800,000 tons/year, and Hainan Refining and Chemical’s second phase 1 million tons/year installation in 2019, the market supply has increased significantly. 2020 will be the year with the largest PX production output in history, mainly including Hengyi Petrochemical Brunei’s 1.5 million tons/year (or put into production at the end of 2019), Zhejiang Petrochemical’s first phase 4 million tons/year, and Saudi Aramco Jazan’s 1 million tons/year. 2 million tons/year installations of Dongying Weilian Chemical. Considering that global demand is about 50 million tons per year, even if the demand growth rate is maintained at 10%, it will not be able to absorb the increase in new production capacity. However, new projects will slow down after 2021, and the long-term supply pressure of PX may be alleviated.
PX’s short-term pressure is increasing, and it is expected that production units that do not have economies of scale and short-process outsourced naphtha will gradually exit. Since a large amount of hydrogen and waste heat will be by-produced during the reforming process of aromatic hydrocarbons, large-scale refining and chemical integrated units comprehensively utilize materials to reduce costs. At the same time, the price of pure benzene will also affect the profits of the PX overall unit (or reforming unit). In the near future, An increase in the price of pure benzene will also improve the industry’s profitability.
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