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Coal MEG Glycol China Strategy Report Coal to MEG - Strategic Issues

Subject to the competitiveness of coal based MEG, there could be a paradigm shift in the structure of the global MEG industry especially as regards future trade flows beyond 2015.

Ethylene glycol is an 18.9 million ton global market growing at on average 3.7 percent per year.  China accounts for 43 percent of global demand, and over 60 percent of global growth.   Today China imports over 5.0 million tons of ethylene glycol, much of which is supplied by the highly competitive ethane-based producers in the Middle East.   Most regions have substantial MEG capacity of their own, and Canada, South Korea and Taiwan are the other major exporters.

GLOBAL MEG TRADE

MEG Trade Review

Henan Coal Chemical Group and Tongliao Jinmei Chemical Industry have announced a joint commercialisation effort to convert coal into MEG via oxalic acid. So far plans have been announced for circa 1.8 million tons per year of new capacity in China. Four projects, each of 200 000 tons per year are already under construction with planned start up in Q3/2011. Some sources in the Chinese market indicate that plans are in place to realise all the 1.8 millions of new capacity by end 2015. 

Subject to the competitiveness of coal based MEG, there could be a paradigm shift in the structure of the global MEG industry especially as regards future trade flows beyond 2015.  This technology could drive further restructuring of the global MEG supply base.

GLOBAL MEG DELIVERED CHINA

Cost Competitiveness

Nexant is planning a dedicated multiclient report to explore analysis the strategic impact on the global MEG market of this new development from the perspective of opportunities and threats.

Threat Considerations

  1. Subject to the competitiveness of coal based MEG, what will be the impact of a major loss of Chinese import volumes?  
  2. Where will the Middle East ethane-based producers seek to place their MEG exports in future if China is no longer the target market?  
  3. What are the implications for other MEG exporting countries based on higher cost olefin platforms?
Opportunities for New investment
  1. If the technology is widely developed or becomes available outside China, can it be married with alternative syngas sources such as natural gas reforming and even biomass gasification?
  2. If so, if stranded gas can be converted at very large scale, as seen with methanol, into MEG, then does this provide a new investment opportunity for countries in the Middle East?

For more details on how this new analysis please contact chemsystems@nexant.com.

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