Chemical Industry Summary
Lack of confidence in global chemical demand and weakness in the energy sector have spurred a generally gloomy outlook for global chemicals in 2016. The continuing weakness in the Chinese demand, especially for commodities, has resulted in weakness in global stock markets and especially on the Shanghai Exchange. Very high global inventories of crude oil and dim prospects for demand recovery in the near term have resulted in another downward adjustment in crude oil prices with Brent oil prices currently approaching US$30/Bbl for the first time in a decade.
Macroeconomics and Geopolitics
While the US economy continues to show strength, trends of stress are developing, particularly in the manufacturing sector. The December PMI Manufacturing Index came in at 51.2, still in expansion territory, but at the lowest level since October 2012. The US GDP grew 3.7% in Q2 but eased to only 2.0% growth in Q3. The first official estimate for Q4 has not been published by the US government, but it appears it will likely be near 0.5% growth.
The US employment numbers for December came in with 292,000 jobs added, the strongest result since 2014. Many of these jobs were seasonal and service economy related. In the US the energy sector is struggling with multiple companies announcing significantly-offs. Many US chemical companies are announcing restructuring and cost-cutting measures that will also result in layoffs. Wood McKenzie now lists 68 energy upstream projects that have been deferred, and capital spending by both E&P and mid-stream companies will significantly decline in 2016.
Sales of existing US houses dropped 10.9% in October. However, US housing starts for November remained firm at a seasonally adjusted rate of 1.289 million starts, up 10.3% from last year. The current 2015 forecast for US housing is near 1.1 million average starts, up 10% from 2014.
Europe’s economy continues to grow at a slow but positive rate, aided by a stimulus package provided by the ECB. For December, the Eurozone’s manufacturing PMI index was 53.2, the highest level of the year. Manufacturing growth was registered in countries. According to the IMF, Europe’s GDP is expected to grow by 1.5% this year.
The Shanghai stock market recently underwent a major correction. The market appears to anticipate that China may not be able to achieve its unofficial GDP growth target of 6.5% in 2016, following an anticipated growth of 6.8% in 2015. China’s manufacturing sector is in contraction mode with the December PMI index coming in at 48.2. This was the 10th consecutive month in contraction territory. Brazil is in a recession with GDP expected to shrink 3% in 2015, and only moderately recover to a range of negative 1.5% to negative 2% in 2016. Brazil’s PMI was at 45.6 in December.
Feedstock – Crude Oil
Both spot oil prices and oil futures recently sank to multi-year lows primarily due to pessimistic demand outlooks. On December 11th, the NYMEX futures price for December 2016 WTI dropped below USUS$40/Bbl. This is down 20% from mid-November’s price of over USUS$50.00. In December, OPEC concluded its December meeting in Vienna with no guidance given for targeted production levels, or a plan to achieve the current target of 31.5 million barrels per day. Consensus forecasts predict that oil prices will recover only to the low 50s by year-end 2016, and a major consultant is projecting that it will take until 2025 for crude oil prices to recover to USUS$70/Bbl.
The US has recently reversed its crude oil export ban and shipments of domestic crude oil began in the first week of January. Brent and WTI prices have nearly converged. However, with the global oil supply glut, it is unlikely that exports will provide price relief for US producers. The E&P sector is under stress as cash flow deficits are widespread and nearly all companies have drastically slashed projected cash outlays for 2016.
Feedstock – Natural Gas & NGLs
US Henry Hub natural gas cash prices thus far in January have shown modest seasonal improvement, with cash prices in theUS$2.30 to US$2.50 per million BTU area. Most significantly, the widely watched oil-to-gas price ratio is now in the area of 13:1 to 15:1 as oil prices have softened. The relative convergence of prices has moderated North America’s competitive advantage in the ethylene chain.
The EIA reports that on Jan 8, 2016, natural US gas inventories were 3,475 billion SCF, 20.3% above last year and slightly higher than the high end of the prior 5-year period. Inventories came down 168Bscf from the prior week, showing a typical seasonal decline. Current forecasts call for Q1 gas prices around USUS$2.50/MM BTU for Henry Hub. The current NYMEX forward price for December 2016 is near USUS$ 2.60/MM BTU. If forecast NYMEX gas and oil prices for December 2016 are achieved, the oil-to-gas ratio would be 15:1 at year’s end.
The recently completed Cheniere Sabine Pass LNG export terminal is now scheduled to make its first liquefied natural gas shipment in late February, approximately a one-month delay from the expected timing. This is the first liquefaction train and the first LNG facility to be activated in the US. Eventually, the facility is slated to have 5 trains with a total capacity of 4 bcfd.
In Early January, US propane/propylene inventories were near 92 million barrels, down from the all-time record of 106 million barrels last November due to the start-up of new LPG shipment terminals in December. Inventories are 22% higher than a year ago. Propane prices have dropped roughly 7 cents/lb. into the mid-30 and ethylene cracking margins based on propane feedstock are advantaged over all other feeds.
US Olefins & Polyolefins
In early January, US contract ethylene prices for December settled down 2.75 cents/lb.to 26.25 cents/lb.on a net transaction price basis. This movement follows spot ethylene prices down, which have recently traded near USUS$0.18/lb. (USUS$400/MT). Propane-based cracking margins have been aided by a US$0.07/gal drop in propane prices since the first of the year that has provided a USUS$0.04/lb. reduction in the cost of production.
US propylene prices have been relatively steady compared to ethylene. With December’s settlement of US contract prices of up one-half cent per pound, propylene is up US$0.02 per pound in the last three months. Before October 2015, contract propylene prices fell 10 of the prior 12 months by a composite of US$0.46/lb.
January saw US butadiene contract prices down an additional US$0.02 per pound. Contract prices have slipped US$0.13 per pound since July of last year and now are at a level of US$0.26/lb. for January.
US polyethylene pricing rolled over for the third consecutive month in a row in December. PE producers had proposed increases of US$0.05-0.07/lb.in October and November, but failed to get traction in the market. However, with falling feedstock prices, CMR believes that holding prices steady was a positive development for the industry. For January, the early reports of a drop of USD$0.03/lb. might prove to be real. Net PE exports for US PE have been running 20% ahead of last year, and are on pace to be at the highest level in 6 years.
n December, US PP prices were up 2c/lb., ahead of the benchmark monomer price increase discussed above. Margins in December improved slightly. Homopolymer prices are near US$0.55/lb. For January, one producer has nominated an increase for PP of US$0.06/lb., but this may be defensive to counter feedstock softness. Dow Chemical started up its new 750,000 MTPY PDH unit in Freeport, TX on December 22.
European Olefins & Polyolefins
For January, European the contract ethylene price softened by €28/ton to a level of €900/ton. This decline was more than offset by recent prices in crude oil that result in lower naphtha pricing. Film grade HDPE is currently US$1,290 on a spot basis, down US$310 per ton from peak levels early this summer.
European contract polymer grade propylene settled at €620per ton for January, down at €620 per ton from December. Contract butadiene prices for January settled at€590per ton, down €35/MT from December. Contract European prices are down a cumulative €215 per ton from last August. Spot prices for butadiene in Europe peaked in July at over US$ 1,000 per ton, but are now below US$600/per ton.
Asian Olefins & Polyolefins
For 2016, Asian ethylene prices will be supported by permanent shutdowns including the Ashai Kasai plant in Mizushima. This shutdown is scheduled for February. In total, about 10% of Japanese capacity will be unavailable in 2016. Spot ethylene prices in Asia have eased and are approaching US$1,100/ton. This is up 35% from the July low of nearly US$ 800 per ton. The naphtha/ethylene spread has improved to just over US$600/ton, about 50% higher than the US$400-450/ton level seen in July. Helping this spread are naphtha prices that are only modestly over US$400 per ton.
Spot prices for LDPE in Asia are just belowUS$1,100 per ton, down from over US 1,400 this summer. The current spread for PE/naphtha is over US$600 per ton. Prices for HDPE are currently near US$1,000 per ton, down US$300 per ton from July levels.
Global Chlor-alkali
The Chlorine Institute reported that effective operating rates in November rebounded to 85% in November, up from a level of 76% in October, a month that was impacted by multiple turnarounds. Previously, US chlor-alkali producers announced a US$65/ST price increase for caustic for the fourth quarter. It appears that the industry was able to achieve a caustic price increase of between US$40 and US$40/ST between September and December. ECU margins for the industry have improved modestly from trough levels at near US$150 per ton at mid-year to closer to US$200/ST due to price improvement and lower gas prices.
European chlor-alkali operating rates in November were 79.1% of industry capacity, up 1.7% from last year. Industry-wide inventories of caustic in November were 216 thousand tons, flat a year ago.
AMERICAS
Celanese to expand UHMWPE capacity
Celanese plans to increase the capacity of GUR®ultra-high molecular weight polyethylene (UHMWPE) at Bishop, Texas facility by 8KTAto 38KTAwith expected completion in May 2016. The expansion project is associated with plans to extend medical grades of UHMWPE for the pharmaceutical industry. These new grades will target applications such as filtering, purification of liquid drug formulations, and medical devices used in drug contact and delivery.
Comments: UHMWPEis a specialty material with a combination of excellent mechanical properties that include superior impact strength, outstanding abrasive resistance, a wide range of service temperatures, high chemical resistance, and non-sticking &self-lubricating properties which are due to a much higher molecular weight over standard PE. Ticona, a subsidiary of Celanese, is the largest producer of UHMWPE with products sold under the tradename of GUR®across all main applications, such as sheet & profile, fiber, battery separator, and medical. Sheet & profile is the major application for UHMWPE, with all players participating; while UHMWPEfiber and medical applications are niche markets for certain producers. For example, the European DSM is mainly specialized in fiber applications used widely in ballistic projection. In recent years, the usage of UHMWPE in medical applications has been growing as its excellent properties for making artificial joints, drug delivery devices, and medical supplies. With capacity expansion, Celanese would be able to further leverage its capability in the medical segment and keep its leading position in the UHMWPE market.
Axiall and Lotte Chemical proceed with the Louisiana ethylene project
US chlor-alkali player Axiall and South Korea-based Lotte Chemical have decided to set up a shale gas-based ethane cracker in Lake Charles, Louisiana. The planned cracker will have an ethylene capacity of 1,000KTA and is scheduled to begin construction in Q2 of 2016 with the anticipated start-up in early 2019.
Comments: The Shale gas boom has changed the competitive landscape for ethylene-derivative producers in North America. Ethylene is an important raw material for manufacturing vinyl chloride, which is the monomer of PVC polymer. PVC producers in this region have announced several shale gas-fed cracker projects to be built mainly in Louisiana. Shintech has a US$1.4 billion ethane cracker project in Iberville Parrish, Louisiana. Occidental Petroleum has a 544KTAethane cracker in Ingleside, Texas being constructed to complete by 2017 and Formosa Plastic is currently conducting a feasibility study for an ethylene facility in Baton Rouge, Louisiana. These shale gas-fed ethylene projects allow US PVC players to take advantage of cheap resources and stay competitive over oversea players. Once Axiall and Lotte Chemical’s cracker become operational, the ethylene output will meet 50% of Axiall’s ethylene need at advantaged costs and offers feedstock to Lotte’s nearby whole-owned mono ethylene glycol facility.
Dow launches Texas on-purpose propylene facility
Dow Chemical has begun commercial production of its new propane dehydrogenation unit (DHP) in Freeport, Texas. The DHP unit can produce 750KTA of propylene using UOP Oleflex technology, which is the largest of its kind ever built.
Comments: The amount of propylene produced from ethylene crackers in North America has been decreasing due to the increasing percentage of ethane in the feedstock mix. This trend has led to increased imports or requiring other domestic sources of propylene. The low cost of propane in North America due to shale gas abundance favored the production of propylene by other methods referred to as on-purpose propylene, which will ease the limited availability of propylene. The most prevalent technology removes part of the hydrogen in the molecule in a process called propane dehydrogenation (PDH). Dow Chemical’s PDH plant is one of the several on-purpose propylene plants (PDH and MTP) planned in North America, four of which are planned to start in the 2016-17 period. The announced investments in the on-purpose production of propylene via propane dehydrogenation (PDH) and methane-to-propylene (MTP) will compensate for the declining supply from ethylene crackers.
Shell mulls capacity expansion at Deer Park olefins facility in Texas
Shell Chemical is evaluating an expansion project at its olefins facility in Deer Park, Texas, to increase ethylene capacity. No details on the size of capacity expansion or timeframe have been disclosed.
Comments: Plummeting oil prices over the last few months have meant lower naphtha costs for producers in Europe, Asia, and Latin America. However, ethylene producers in North America will still have a cost advantage using natural gas liquids. The first wave of new plants planned in North America will be starting in 2017. Some of these projects include Sasol, Chevron Phillips, and ExxonMobil. Shell has recently announced that it will increase alpha olefins capacity at its Geismar, Louisiana location. The ethylene feedstock for this plant will be supplied from the Deer Park site.
MIDDLE EAST & AFRICA
Dow’s Sadara starts upLLPDE plant
Sadara Chemical Company has launched linear low-density polyethylene (LLDPE) plant at the complex in Jubail, Saudi Arabia, which will ultimately have 26 new downstream petrochemical units of naphtha cracker. The LLDPE plant is the first of these production units to become operational and the rest are scheduled to gradually come online throughout 2016.
Comments: Sadara Chemical Company is a joint venture between Dow Chemical and Saudi Aramco in which Dow Chemical provides proprietary technology and market network while Saudi Aramco offers feedstock and expertise to the mega project. Saudi Aramco is known as the world’s most valuable company with the largest oil production on daily basis. The heavyweight has been making an effort to integrate vertically toward downstream petrochemical production since its JV with Sumitomo, PetroRabign established in 2005. Besides the Sadara project, Aramco has the PetroRabigh Phase II projects scheduled to commence in 2017, which will add 12 more downstream units and a 50:50 JV formed with German synthetic rubber producer Lanxess. These projects will help Aramco diversify its downstream portfolio and solidify its market position both at home and aboard against SABIC and other foreign rivals.
PetroRabigh delays completion of Phase II expansion
Due to raising construction costs, Saudi Arabia’s PetroRabigh has postponed the completion of Phase II expansion by 9 months to year-end. The Phase II project includes capacity expansion of ethane cracker by 300KTA, one aromatics complex to process more naphtha, and at least 12 downstream facilities.
Comments: With RabighPhase II Project, the complex of the Company will be capable of producing 5 million tons per year of petrochemical products and 15 million tons per year of refined petroleum products. Each plant will be brought on stream as it becomes available for operation, with the first product expected in the first half of 2016. Rabigh Phase II Project involves a major expansion of the existing facilities of Petro Rabigh with the production of high-value products from petrochemical feedstock provided by the existing facilities and the introduction of new specialty petrochemical products to Saudi Arabia. Rabigh Phase II Project entails the expansion of the existing ethane cracker to process an additional 30 million cubic feet per day of ethane and the addition of a new naphtha reformer/aromatics complex processing more than net 2.7 million tons per year of naphtha. In addition to producing over 1.3 million tons per year of paraxylene. Rabigh Phase II Project will produce a diverse slate of other petrochemical products such as ethylene propylene diene monomer rubber (EPDM), thermoplastic olefin (TPO), methyl methacrylate (MMA), and poly methyl methacrylate (PMMA). With the delay of the project, the impact on the financial aspect will be higher leading to more funds rising from stakeholders.
Kuwait to form a downstream company for the Al-Zour project
Kuwait Petroleum Corporation will soon establish a subsidiary called Kuwait Petrochemicals and Refining Company to manage a US$28 billion of Al-Zour vertically-integrated petrochemical project. US$16 billion of total expenditure on the project is estimated for the Al-Zour refinery, while the balance is for gas supply facilities and the downstream petrochemical complex. The complex is currently under construction with anticipated completion after 2019
Comments: The Kuwait National Petroleum Company (KNPC) first released plans to build what would have been the country’s fourth oil refinery in May 2008 but it canceled construction in March 2008 due to political opposition. Two years later, however, the government re-approved the construction and KNPC anticipated the completion of the project to be around 2017. Fluor Corporation was awarded the EPC package which includes the design of a variety of key process units, utilities, and infrastructure for the new Al-Zour oil refinery project in Kuwait that is expected to produce 615,000 barrels per day. Fluor booked its $2.6 billion portion of the contract in the third quarter of 2015. The Al-Zour refinery complex will be built on a Greenfield site located south of Kuwait City. When completed, the new complex is expected to be one of the largest refineries in the world.
ASIA PACIFIC
Hanwha Total Petrochemical moves EVA business toward high-value addition
Hanwha Total Petrochemical Co. is investing approximately US$1.28 billion in its EVA business over the next five years toward the high value-added market, especially in EVA solar encapsulant segment. The investment includes commercial production of EVA using a tubular reactor polymerization process for the first time in the world as well as a 240KTA of EVA facility which was completed in early 2015.
Comments: Korea-based Hanwha Total, formerly known as Samsung Total, came to be part of Hanwha Group after Samsung’s corporate strategy to withdraw from the chemical industry in 2015, which makes Hanwha Group one of the largest EVA manufacturers by production capacity both domestically and internationally. Like many other Eastern Asian producers, Hanwha Group is targeting China as a major export market for EVA resins, especially for hot-melt adhesives (HMA) grade and solar encapsulant grade. However, China is making an effort to increase self-sufficiency in premium EVA grades. Four new EVA facilities with a focus on fast-growing applications are expected to come on-stream in China within three years. The solar encapsulant segment has a higher technical threshold due to high vinyl acetate content(>28%). China lacks the capability to reach the technical threshold in the short term, which allows Hanwha to stay out of intense competition with Chinese suppliers. In CMR’s estimation, EVA solar encapsulant segment is expected to witness double-digit growth over the next five years in China. This is due to strong growth in the installation of photovoltaic modules worldwide.
Sinopec acquires 10% stake in Russia’s Sibur Group
China state-ran Sinopec has completed the acquisition of a 10% stake in Sibur, becoming a strategic investor of the Russian petrochemical group. The deal is meant to create synergy for both companies in terms of expertise, resources, and market position.
Comments: Sinopec has recently looked to invest in overseas companies to diversify its feedstock sources. The current 10% stake in Sibur with an option to purchase an additional 10% within three years, gives Sinopec access to Russia’s flagship vertically integrated petrochemical company that contains the country’s largest gas processing business. Sibur gets crucial financing from this deal to continue its aggressive investment in world-scale petrochemical plants in today’s environment of Western sanctions against Russia and low oil prices. Sinopec may collaborate with Sibur directly on the Amur Gas Chemical Complex, which is currently slated to include a 49 billion cubic meters/year gas processing facility and 2.4 million tons of petrochemicals capacity.
Shell, CNOOC to expand the capacity of their JV in Southern China
Royal Dutch Shell and China National Offshore Oil Corp. (CNOOC) have announced the extension of their partnership in an existing joint venture in Guangdong, China. Under the renewed partnership agreement, Shell and CNOOC will double ethylene production capacity to 2,000KTA and establish other chemical units. These new facilities are expected to begin production in two years. No total expenditure on the expansion project has been disclosed.
Comments: Low crude oil prices have put a damper on ethylene capacity additions in China as less attractive economics for coal to olefins and methanol to olefins projects have forced producers to delay or cancel upcoming plants. Naphtha-based ethylene production, especially vertically integrated with a refinery and downstream petrochemical derivatives has become more competitive. CNOOC and Shell have planned the complex expansion for several years and the relative project economics have recently gotten only more favorable. The downstream capacity additions will include polyethylene, styrene monomer, and ethylene glycol units.
Hebei Haiwei to set up a facility
China’s Hebei HaiweiGroup has selected CB&I’s Novolen Polypropylene technology for the 200KTA PP facility in Jingxian, Hebei province. The planned PP plant will allow Hebei Haiwei Group to increase PP capacity to 500KTA once completed.
Comments: Hebei HaiweiGroup is one of the major BOPP film producers in China with a portfolio mainly of capacitor films, packaging films, and metalized films. The Chinese BOPP film industry has expanded dramatically in the past few years, now featuring over 80 BOPP manufacturers with approximately 5,000 KT in total capacity. However, overcapacity due to rapid expansion has caused a significant reduction in margins. To stay competitive, BOPP film manufacturers either integrate vertically into feedstock production, develop specialty films, or a combination of both. Hebei Haiwei Group integrated upstream to the production of propylene and polypropylene for improvement of cost structure while developing capacitor films and tobacco packaging films for higher margins. Premium grades of polypropylene required in manufacturing these specialty films are highly reliant on imports. Haiwei’s planned PP facility and its existing 300KTAPP facility both are designed to mainly produce capacitor film grades of polypropylene, which is part of the corporate strategy to support development toward higher margin applications.
CB&I to license C3/C4 technology to China’s Hengli Petrochemical
Hengli Petrochemical refinery Co. is scheduled to commence its 400KTA of mixed C3/C4 dehydrogenation plant in Dongying, Shandong, which was originally scheduled for commercial production in July 2015. The plant will produce 200KTA of propylene for the merchant market and 200KTA of isobutylene. The company is preparing to secure raw material feed.
Comments: Besides Hengli Petrochemical Refinery Co., Dongming Petrochemical Group and Dongying Liyuan both have C3/C4 coproduction facilities under construction and will have a combined capacity of 265KTA and 220KTA, respectively. The setup of these propylene/isobutylene coproduction units is in response to the increasing consumption of transportation fuel and propylene as China’s economy continues to grow. According to US Energy Information Agency (EIA), China counts for more than 15% of world propylene consumption and the demand for propylene is expected to grow at 4% annually. Isobutylene is a main component of making transportation fuel additives -polyisobutylene.
Sinopec and Taiwanese consortium break ground on JV complex
Sinopec and Taiwanese consortium Dynamic Ever Investments Ltd, have begun construction of their equally-owned petrochemical complex on Guleipeninsula in Fujian, China. The petrochemical complex will consist of 1,000KTAethane crackers and 16 vertically-integrated downstream facilities with a partial start-up in 2018.
Comments: Under the 13thFive-Years Plan, the latest China’s national economic development plan, the Gulei peninsula along with six other locations (Changxing Island, Caofeidian, Lianyungang, Caojing, Ningbo, Huizhou) have been selected to developing vertically-integrated petrochemical cluster with national funding. China currently is facing an oversupply of petrochemical commodities, but still highly relies on imports for high-end products. China plans to restructure its petrochemical industry by enhancing vertical integration and upgrading obsolete capacity, moving domestic production toward high-adding-value markets. On the flip side, Taiwan is China’s major import partner for petrochemicals. The investment in the Gulei peninsula allows Taiwanese petrochemical producers to avoid custom tariff and stay competitive compared to other foreign rivals in the Chinese market. After the Kaohsiung Kaohsiung petrochemical pipeline explosion in 2014, Taiwan’s restrictions on the petrochemical industry become even stricter, which limits large-scale development and accelerates Dynamic Ever Investment to proceed with the JV opportunity with Sinopec.
SHALE GAS DEVELOPMENT
Dow, YPF to expand shale gas production in Argentina
Argentina state-owned YPF and Dow Chemical plan to triple the production of shale gas at an existing Argentinian joint venture in 2016. Dow and YPF budgeted US$500 million for the new investment to increase from a current 750,000 m3/day to 2 million m3/day by the end of 2016.
Comments: Argentina is thought to have the second-largest recoverable shale gas reserves in the world after China. Dow had already invested US$350 million jointly with Argentina’s state-run oil company, YPF SA in gas exploration. The new investment is a result of the country’s recently formed government’s efforts to transform the country into a net exporter of natural gas as opposed to a net importer.
USA is on schedule to export the country’s first LNG from shale gas
Houston-Headquartered Cheniere Energy Inc. has begun production of LNG from shale gas at the Sabine Pass export terminal in Louisiana. The company is on schedule to export the country’s first-ever LNG produced in U.S. shale gas formation.
Comments: This marks a milestone in the global energy market signaling the beginning of the US as a supplier of gas to the world. This project made good economic sense four or five years ago when crude oil and LNG prices were still high. Since both have been moving downward, the prospect of exporting LNG from the US to Asian countries has somewhat lost its appeal. The LNG market is currently oversupplied and the upcoming LNG projects in the US will add to the oversupply situation.
COAL-TO-CHEMICAL
China’s LUXI Chemical to build coal-based MTO facility
Chinese fertilizer LUXI Chemical Group has selected HoneywellUOP’s technology for its methanol-to-olefin (MTO)facility using coal-based methanol. The planned olefins unit will be located in Liaocheng, Shandong province, and will produce 293KTA of ethylene and propylene once completed.
Comments: The announcement comes at a time of peak uncertainty for Chinese coal-to-olefins projects. Several projects have been delayed or suspended after the dramatic plunge in crude prices that eroded their economic advantage over naphtha crackers. Despite the situation, all projects that have licensed UOP technology are either currently producing olefins or appear to be moving forward. Prior to LUXI Chemical, UOP had already licensed its MTO technology to 5 methanol-to-olefin plants, with Wison Clean Energy and Shandong Shenda Chemical already in successful operation. UOP’s technology allows producers to vary propylene-to-ethylene product ratios between 1.2 and 1.8 for increased flexibility. The Chinese coal-to-chemical industry might not be as bright as it used to be before due to low crude prices. However, with China’s goal to be self-sufficient in petrochemicals still in place under the 13th Five Years Plan, the industry will develop in more steady steps with a comprehensive strategy tied to economical reality and environmental concerns.