Challenges and Prospects for the Development of China's Ethylene Industry

After more than half a century of development, my country's ethylene industry has made great progress and has strong scale strength. In 2021, the new ethylene production capacity will be nearly 7 million tons, a new record high of 41.68 million tons, accounting for 20% of the global proportion, surpassing the United States for the first time and becoming the world's largest ethylene producer. With the rapid growth of ethylene production capacity, the scale, base and park development of the ethylene industry has accelerated.

From 2000 to 2021, the average size of steam cracking units will increase from 220,000 tons/year to 810,000 tons/year, and the number of million-ton ethylene units will increase to 15 sets. The industrial layout has been continuously optimized, forming a petrochemical industry base in the northeast and northwest regions centered on domestic crude oil resources, mainly imported crude oil, and close to the coastal petrochemical industry clusters in the Bohai Bay, the Yangtze River Delta and the Pearl River Delta, which are the center of the market. Among them, the Bohai Bay Rim The total ethylene production capacity of Hangzhou Bay and Hangzhou Bay accounts for 37.5%, and the scale effect and aggregation effect are enhanced. my country's ethylene industry already has a solid foundation for high-quality development, but it also faces many challenges.

Challenges to the Development of China's Ethylene Industry

Challenge 1: The external environment is complex and severe

From the perspective of the international environment, the global order and pattern adjustment has become a major trend, and instability and uncertainty have increased significantly. The new round of scientific and technological revolution and industrial transformation is in-depth development. The rapid development of productive forces brings new growth momentum and opportunities, and also brings profound challenges to the original petrochemical and chemical industry structure. All countries hope to take the fourth industrial revolution as an opportunity to occupy the Highland for the development of advanced manufacturing.

From the perspective of the domestic environment, my country's economy has transformed from a development model that relies on the international cycle to a direction dominated by the domestic cycle. The kinetic energy of the international cycle in which the market and resources are "outside" has been significantly weakened, and the vitality of the domestic cycle has become increasingly strong. The new development concept of promoting green transformation in economic development and achieving greater development in green transformation is driving all walks of life in my country to undergo all-round and deep-level changes.

Challenge 2: Development must take into account carbon reduction

In 2021, my country's per capita ethylene equivalent consumption is 42 kg/person, which is still far behind the consumption levels of major developed countries and regions in the world such as the United States, Western Europe and Japan, and there is still a large room for growth, thereby promoting basic chemicals such as ethylene With the rapid expansion of raw material production capacity, it is expected that my country's ethylene capacity will nearly double to 80 million tons in 2030, and carbon emissions will also increase. Under the "double carbon" goal, low-carbon development of the ethylene industry is an inevitable choice.

It is expected that the petrochemical industry will also be included in the national carbon market by the end of the "14th Five-Year Plan". On June 22, 2022, the European Parliament voted to pass the world's first "Carbon Border Adjustment Mechanism" (CBAM) proposal. Carbon tariffs cover sectors such as electricity, cement, steel, oil refining, fertilizers, organic chemicals, plastics, hydrogen and ammonia. It will apply from January 1, 2023, with a transition period until the end of 2026, and phase-out of free quotas until 2032. This will have a certain impact on my country's petrochemical exports. Research shows that if a carbon tax is levied at US$30 per ton, the export of petrochemicals will drop by 12.4%. The development of the ethylene industry must accelerate the pace of carbon reduction.

In October 2021, the National Development and Reform Commission and other departments issued the Action Plan for Strict Energy Efficiency Constraints in Key Petrochemical and Chemical Industries to Promote Energy Conservation and Carbon Reduction (2021-2025) (hereinafter referred to as the Action Plan), requiring that by 2025, the implementation of energy conservation and carbon reduction actions will be implemented. , the energy consumption of petroleum-based ethylene reaches the benchmark level (590 kg of standard oil/ton), and the proportion of production capacity exceeds 30%, the carbon emission intensity is significantly reduced, and the green and low-carbon development capacity is significantly enhanced. At present, there is still a gap between the average level of domestic petroleum-based ethylene energy consumption and the benchmark level target (640 kg standard oil/ton). Therefore, the "Action Plan" requires to increase the disposal of idle production capacity and zombie production capacity, to promote the accelerated withdrawal of ethylene plants of 300,000 tons/year and below, and to strictly prohibit the construction of naphtha crackers below 800,000 tons/year. Promote the one-step synthesis of olefins from syngas and the direct cracking of crude oil to ethylene, the design and manufacture of large-scale ethylene cracking furnaces, compressors, high-efficiency heat exchangers, the preparation of special catalysts and additives, and the autonomous intelligent control system. Encourage the adoption of technologies such as heat pumps, thermal pinch points, and heat combination to strengthen the recovery of process waste heat and pressure to achieve cascaded utilization of energy. Explore the promotion of steam-driven to electric-driven transformation, etc.

Challenge 3: International competitiveness still needs to be improved

Although my country's ethylene downstream product supply capacity has increased, it still faces problems such as unreasonable industrial layout, prominent product structure contradictions, and shortage of key core technologies. It is urgent to adjust and optimize, increase scientific and technological innovation and import substitution.

The industrial layout is unreasonable and needs to be continuously adjusted and optimized. Industrial layout is directly related to the development and economic benefits of the industry. Entering the 21st century, the layout of new petrochemical projects in my country has improved, especially since the "13th Five-Year Plan", the industrial concentration has increased, but there is still a big gap with the world's advanced level. At present, there are 43 sets of ethylene steam cracking units in my country, which are scattered in 33 locations in 27 cities. The costs of production and operation, public works, logistics transmission, safety and environmental protection and management services are high, and it is difficult to concentrate the utilization of cracking by-products, which affects the overall competitiveness.

The structural problems of downstream products are prominent. On the one hand, the production cost of homogeneous products is high, the competitiveness is not strong, and the operating rate is low. The resource endowment in the Middle East determines that the Middle East is the region with the lowest production cost of ethylene downstream products in the world. my country imports a large amount of ethylene downstream derivatives such as ethylene glycol and polyethylene from the Middle East every year. In the context of high oil prices, North America and the Middle East have the advantage of low cost. The impact of ethylene downstream products on the domestic chemical market is more prominent, and it also aggravates the operating pressure of domestic ethylene and downstream production enterprises. On the other hand, high-end products have a high degree of external dependence and weak independent guarantee capabilities. Due to the lack of research and development capabilities, and the technology owner does not transfer externally, my country's high-end polyolefin self-sufficiency rate in 2021 will be 58%, hexene copolymerized polyethylene, octene copolymerized polyethylene, ethylene-vinyl acetate copolymer (EVA) , The total imports of metal polyethylene, ultra-high molecular weight polyethylene and other products account for about half of my country's polyethylene imports.

There is a shortage of key core technologies, and the original innovation capability needs to be improved. Although my country's complete sets of ethylene technologies and equipment are basically independent, some key core technologies and downstream supporting technologies are lacking. Taking polyethylene as an example, the degree of external dependence on technology exceeds 90%. The industry is still in the catch-up period of relying on imported technology and large-scale investment and construction, and its original innovation capability is not strong. On the one hand, the R&D investment of enterprises is insufficient. The R&D investment of large international petrochemical companies accounts for about 3% of sales revenue, while that of petrochemical enterprises in my country only accounts for about 1%; Oriented to the enthusiasm of basic research, corporate R&D is basically limited to follow-up and digestion and absorption.

The ability of refined management is insufficient, and the integration of each link needs to be improved. The management level of an enterprise is directly related to the efficiency indicators such as the return on total assets, the turnover rate of working capital, and the labor productivity of all employees. Although many ethylene enterprises in my country have established a systematic management system, the coordination between various links and systems is difficult. The operational capacity is still insufficient, and the refined management of procurement, production, sales and R&D still lags behind that of the world's leading companies. European and American bulk chemical companies can basically achieve a return on investment (ROIC) higher than 10%, while Chinese companies are generally lower than 9%. Many bulk chemical companies have even lower ROI, and the potential for improving production efficiency is still very high. big. In addition, the shortage of professionals caused by the surge in ethylene production capacity in recent years is also one of the main reasons for the stagnant level of refined management in the industry.

The future development strategy of my country's ethylene industry

Strategy 1: Promoting the green and low-carbon development of the ethylene industry in an orderly manner

Steam cracking to produce ethylene is the most important production route of ethylene in my country, accounting for about 84% of my country's total ethylene production capacity. Carbon emission sources mainly include CO2 emissions from pyrolysis furnace fuel combustion, indirect emissions from heat and electricity consumption, and flare emissions, among which direct emissions from fuel combustion account for about 60%, and indirect emissions from heat and electricity consumption account for about 30%. CO2 emission source. Therefore, improving the thermal efficiency of cracking furnaces, adopting energy-saving equipment and high-efficiency separation technology, intelligent empowerment, energy system optimization and energy management and control, and the transition from steam drive to electric drive are the main means of saving energy and improving energy efficiency in the enhancement process of steam cracking units. In particular, the electrification technology of steam crackers has become the focus of major energy and chemical companies. Dow cooperates with Shell, BASF, Sabic and Linde, as well as large domestic petroleum and petrochemical companies are all conducting research on electric heating cracking furnaces, including long-life and high-power electric heating furnace design, new high-efficiency electric heating body material technology, Advanced control systems, etc.

At the same time, accelerate the industrial promotion of crude oil direct cracking to olefins technology; strengthen forward-looking, strategic and basic research and technical research, do a good job in the reserve of new ethylene production processes, and provide innovation leadership. Pay attention to the high value-added utilization of natural gas, strengthen investment in research and development of methane to ethylene and synthesis gas to olefins, strive to make breakthroughs in core technologies such as catalysts and solve engineering technical problems, and realize industrial application as soon as possible. Accelerate the research and development of waste plastic pyrolysis oil purification technology and carbon dioxide to ethylene technology to realize low-cost resource utilization of waste. Deploy the third-generation biomass ethylene technology and ethane oxidative dehydrogenation (ODH) technology, the former focuses on improving ethanol conversion rate and selectivity; the latter focuses on breakthroughs in high-efficiency catalysts.

Strategy 2: Continuously improve the supply capacity and competitiveness of the industrial chain

Continue to improve the ability of scientific and technological innovation, and strive to become the main scientific center and innovation highland of the world petrochemical industry. Therefore, it is particularly important to improve the innovation mechanism, open up channels for scientific and technological investment, promote the deep integration of production, education and research, form a collaborative innovation system, and provide and reserve scientific and technological resources for the country's current and future development needs. On the one hand, it is necessary to attach importance to application-oriented basic research, establish a platform for understanding petroleum and other raw materials at the molecular level, form a systematic theory of the structural characteristics and core chemical reaction laws of hydrocarbons in the raw materials, and develop highly targeted high-efficiency catalysts and chemical reactions. Separation and reaction process to achieve directional and efficient conversion of hydrocarbon molecules; breakthroughs in the manufacturing technology of important equipment and parts such as special structure reactors and high-power electric heating furnaces, as well as core technologies such as sensing technology and control technology, to enhance the driving force for innovation and development and improve the industry Chain stability and competitiveness.

On the other hand, focusing on strategic emerging industries and market segments, through catalysts, process innovation or post-modification, etc., we will accelerate the high-end, differentiation and greening of the three major downstream synthetic materials to form a full range of product solutions. User-centered customized production means that on the premise of meeting the diverse needs of customers, reducing production costs, improving production efficiency, and ensuring product quality can achieve high user satisfaction. The focus of deepening supply-side structural reforms.

Strategy 3: Optimizing the industrial structure to promote high-level agglomeration development

Existing petrochemical plants should speed up structural adjustment and upgrading. On the one hand, with the goal of maximizing the creation of value for the society, digital and intelligent technologies are used to further improve resource utilization, refine raw material processing paths, efficiently separate and utilize by-products, reduce energy consumption and material consumption, improve the operation level of equipment, and expand and extend The chemical industry chain, accelerate the reform process of improving quality and efficiency, and enhance the ability to flexibly match market demand. On the other hand, based on the principle of overall planning and systematic saving, a reasonable indicator system should be established by synthesizing various factors, and scientific assessment should be made to promote the withdrawal of inefficient and backward production capacity and the relocation of production enterprises.

For new petrochemical projects, strict access conditions and overall layout are required. Establish a high-quality development standard system at the national level, conduct comprehensive and systematic evaluations from the aspects of intrinsic safety, low-carbon environmental protection reliability, logistics and transportation convenience, product structure and technological advancement, as well as innovation capabilities, economic benefits, and international competitiveness. entry conditions. The layout should comprehensively consider the conditions of resources, market, environmental capacity and logistics, maximize the cluster development advantages of upstream and downstream coordination, the integration of public auxiliary projects, the integration of safety, environmental protection and emergency response, and the integration of management, service and finance, and promote the integration of industrialization and industrialization. Deep integration, improve operational efficiency, enhance professional management and anti-risk capabilities, and form a world-leading petrochemical industry base.

In addition, the petrochemical power generally recognized in the world has an absolute advantage in management level, in addition to its huge scale, relatively complete industrial chain, and strong technological innovation capabilities. We should continue to work hard on the refined management of planning, price, production, research and development, sales and other links, so as to achieve continuous reduction of costs, energy consumption and material consumption, loss and loss, and continuous optimization and improvement of product structure and quality.