1. Introduction to the Project

1.1 Project Background

1.1.1 Product Introduction

Propylene oxide (hereinafter referred to as PO), also called Methyl ethylene oxide or propene oxide, is a colorless transparent liquid in the normal temperature and normal pressure, with the similar odor with ether and mutually soluble with some solvents such as acetone, carbon tetrachloride, diethylether and methanol, etc. PO, with the active chemical property, is easy to carry out ring-opening polymerization. It can react with water, ammonia, alcohol and carbon dioxide to generate the relevant compounds or polymers. It polymerizes with the compounds with more than 2 active hydrogens to generate the polymers generally called polyether glycol. 

PO is the third major propylene derivative in addition to polypropylene and acrylonitrile and the important basic organic chemical material. PO is widely applied and its main derivatives include some fine chemical products such as polyether glycol (PPG), propylene glycol, isopropanolamine, diisopropanol amine, allyl alcohol and non-polyether polyols, etc. PO is mainly used for production of polyether glycol; secondly for production of surface active agents, propylene carbonate and propylene glycol. In addition, it is applied in propylene glycol ether, hydroxypropyl methyl cellulose (HPMC), modified starch, hydroxypropyl methacrylate and other aspects. There are nearly a hundred varieties of derivatives of PO, which are the important materials of the fine chemical products and widely applied in some industries such as automobiles, building, food, tobacco, medicine and cosmetics, etc.

1.1.2 Market Prospects

1Supply and demand in the international market and forecasting

Viewed from the capacity, the average growth rate of the PO capacity in the world in 2005-2011 is 4.78% and has been 9.01 million tons by 2011, equal to the capacity of annual increased 0.37 million tons.

Viewed from producing areas and manufacturers, the main producing areas and enterprises of PO in the world in 2011 are mainly in some developed countries such as the US, Japan and West Europe, etc., accounting for about 70% of the total capacity in the world. The main producing areas of PO in the Asia-Pacific Region are Saudi Arab, Singapore and Thailand, which are also the main source countries of PO imported to China.

Viewed from the consumption, the consumption demand of PO was frustrated in 2008 and 2009 mainly because it was influenced by the automobile and building industries of the terminal users’ market of PO and the PO demand has been basically kept equal to the output in other years. Because the demand in the market of Asia including China has been sharply increased, the growth rate of the PO demand in the world in 2005-2011 is about 4.22%, roughly equal to 4.78%, the growth rate of the capacity.

Viewed from the consumption structures, the consumption of PO in the world is focused on production of polyether glycol, accounting for more than 60% of the total consumption and the second is propylene glycol, accounting for about 20%. The others are mainly used to produce propylene glycol ether, dipropylene glycol, fire retardants, synthetic lubricants, oilfield drilling chemicals, butanediol, propylene carbonate, allyl alcohol, isopropanolamine, modified starch and textile surface active agents, etc. Viewed from the comparison of the consumption structures of PO in the world in 2005 and 2008, polyether glycol still dominates the consumption of PO in the future and there will be no major change of the overall consumption structure of PO in the future.

It is predicted by the relevant authorities that the growth rate of PO demand in the world is 4% in 2015, there will be a little growth of the demand in North America and Europe and the region where the growth of the demand is the quickest is the Asia-Pacific Region, mainly China and the Middle East. It is predicted that the PO demand in the world will have been about 10.5 million tons by 2015.

2Supply and demand of the domestic market and forecasting

By the end of 2011, there have been about 17 major PO manufacturers, with the total capacity of 1.68 million tons/year in our country. Because of the environmental protection and cost pressures, most of the small devices cannot be normally started for production, with the output of 1.33 million tons at present. The major manufacturers are CNOOC Shell Co., Ltd., with the annual output of 0.29 million tons, Sinopec Zhenhai Co., Ltd., with the annual output of 0.285 million tons and Shandong Binzhou Chemical Co., Ltd., with the annual output of 0.195 million tons.

Viewed from the capacity, the average growth rate of the PO capacity of our country is 21%, equal to the annual increased capacity of about 0.18 million tons in 2005-2011, but it cannot meet the demand for development of the polyether glycol and propylene glycol industry yet, which brings about that our country has to import a large amount of polyether glycol, propylene glycol and PO and the consumption of PO tends to remarkably rise.

In 2005-2011, both the PO output and demand of our country are in the state of rapid growth, the annual average growth rate of the output is 18% and the growth rate of the consumption demand also reaches 18%, but the base number of the output is less than that of the consumption demand, PO has been in the state that the supply cannot meet the demand all the time and we need to import PO to meet the domestic demand.  

Viewed from the consumption structures, PO of our country is mainly used to produce polyether glycol, accounting for more than 80% (such a proportion is far more than the average level of the world). No major change has occurred to the consumption structures in recent years.

Viewed from the data by the end of 2012, there will be still the devices with the capacity of 1.41 million tons of PO successively put into production in our country in the future 3 years.

On the whole, for the domestic supply, the domestic capacity is 1.68 million tons and the output is 1.33 million tons in 2011, the total domestic capacity will have been 3.1 million tons by 2015. Calculated according to the utilization of capacity of 80%, the output will have been 2.48 million tons by 2015. Compared with that in 2011, the growth rate will be 16.2%; for the domestic consumption, the apparent consumption is 1.625 million tons in 2011, the annual average consumption growth rate should be about 10% except that in the special years. Therefore, calculated according to the above, the domestic PO consumption will have been about 2.4 million tons and the domestic output and demand should have been kept in the balanced state by 2015.

3Analysis and forecasting of the PO market prices

It can be seen from the table above that although the domestic market price of PO falls a little in 2012, there still exists the fact that the supply cannot meet the demand in the PO market of our country at present and the annual average price is still kept to be more than 12000 yuan/ton because the domestic PO capacity is not enough. Similar to the situation in 2011, according to the changes of the market situation and the balancing of supply and demand, the fluctuating range of the price difference of PO is about 600-1800 yuan/ton. Although the material market is greatly influenced by some negative factors such as European Debt Crisis, American Debt Crisis and domestic tightened financial and monetary policy, etc. this year, with the opening of the 18th National Congress of the Communist Party of China and promulgation of a series of new policies, the keynotes of the macro-economic policy will gradually become clear, which will bring more opportunities and market for PO.

1.1.3 Technical Analysis

The PO production technologies in the world at present mainly include: chlorhydrin method, ethylbenzene oxidation process (PO/SM method), isobutene oxidation process (PO/TAB method), isopropyl benzene oxidation process (CHP method), hydrogen peroxide direct-oxidation process (HPPO method) and oxygen direct-oxidation process. Industrialization has been realized in the chlorhydrin method, PO/SM method, PO/TAB method, CHP method and HPPO method; the oxygen direct-oxidation process is in the experimental phase. 

The project plans to take the hydrogen peroxide direct-oxidation process (HPPO). At present, Dow/BASF and Evonik/Uhde have the most mature industrialized production technologies of HPPO. The two technologies have no essential difference and their main differences are the different reactors and catalyzers.

The advantages of the HPPO method are only PO and water generated in the production, simple process flow, small covering area; high yield rate of product, without other products; less three types of wastes, basically no pollution, and it is the environment-friendly clean production system. The selectivity of the HPPO method is high, with the low material consumption relative to the traditional process. It is definitely pointed out in the “12th Five-Year” Development Plan of the Petrochemical and Chemical Industry promulgated by the Ministry of Industry and Information Technology in February that the PO direct-oxidation technology (hereinafter referred to as HPPO) will become the key technological innovation project during the “12th Five-Year” Plan.

The disadvantages of the HPPO method are (1) short industrialization time, with the process to be perfected; (2) relatively high prices of H2O2 and catalyzer; (3) difficult storage and transport of H2O2 solution, high on-site production cost, and it should be jointly laid with the H2O2 device or have the business cooperation with the domestic surplus H2O2 device without business prospect.

1.1.4 Advantageous Conditions of Project Construction

1Policy conditions and technical advantages

With the economic development of our country, the environmental protection problem has attracted more and more attention and the environmental protection work has also become one of the key problems in the National 12th Five-Year Plan. Because the PO production flow of the traditional chlorhydrin method seriously pollutes the environment, the capacity control of PO produced by the chlorhydrin method is made in the environmental protection policy of our country in 2011. It is also pointed out in the limiting articles of the Catalogue of Guidance of Industrial Structural Adjustment (2011) that the new built PO production devices of the chlorhydrin method and saponification method should be limited to less than 1 million tons/year. By 2011, our country has stopped the approval of the new PO production device of the chlorhydrin method. In the future, the possible increased capacities of the chlorhydrin method will be the plans approved in the previous period. Therefore, the HPPO method taken to produce PO meets the national industrial policy.

Songyuan Municipal Government has attached great importance to the invitation of investments from overseas and established a series of relevant policies of attracting the investments from overseas. It is mainly to give some preferences in some aspects such as tax collection, land leasing and good-quality service, etc. and keep the continuity and stability of the policies. And especially for the gas and chemical industrial projects, the Opinions of Songyuan Municipal People’s Government on Accelerating the Development of the Petrochemical Industry (SZF (2011) No. 15) has been promulgated, giving more preferences and supports in some aspects such as land and tax collection, etc. 

2Resource advantages

In Songyuan, there are sufficient materials to develop the lower-stream products of propylene. There are also rich oil and natural gas resources. The prospective reserve of oil is 2.7 billion tons and the explored reserve now is 1.42 billion tons, the reserve of natural gas is 1.4 trillion m3 and the explored reserve is 300 billion m3, the annual oil gas output of Songyuan City is 5 million tons. Depending on the oil resources of our city and the 1.5-million-ton/year refining device of the original Qianguo Oil Refinery of PetroChina Jilin Oilfield Co., Ltd., Songyuan City has introduced the 1 million tons propylene project of Changchun Zhongcheng Investment Group has been carried out steadily.

3Industrial advantages

The oil gas chemical industry is one of the pillar industries in the key development of Songyuan City. The 0.2-million-ton/year EVA project, the 2.5-million-ton integrated oil refining project and the 2-million-ton/year LNG project have been successively settled in Songyuan, which has laid a solid foundation for Songyuan City to develop the oil gas chemical industrial projects.

4Personnel advantages

Songyuan College of Vocational Technology can cultivate 8000 technicians every year. There are a lot of colleges and universities in some cities around Songyuan City such as Changchun, Harbin and Dalian, etc., which can provide more than 0.5 million personnel. Songyuan Municipal Government has signed the personnel and scientific and technological cooperation framework agreement with Beijing Branch, Shenyang Branch and Changchun Branch of the Chinese Academy of Sciences, which has provided the scientific and technological support for the development of the enterprises. In addition, the original Qianguo Petrochemical Co., Ltd. and Songyuan Petrochemical Co., Ltd. have the rich reserves of oil gas chemical personnel.

1.2 Content and Scale of Project Construction

1.2.1 Product scale

The project takes the H2O2 method to produce PO and the scale of the device is determined to be 0.1 million tons/year, and at the same time, produce 2000-ton propylene glycol, the by-product. The annual operating time is 8000 hours. 

1.2.2 Project Construction Content

The project builds a HPPO device and auxiliary facilities. The device covers an area of 100000m2, with 150 staff members.

1.3 Total Investment and Funds Raising of the Project

The total investment of the project is 800 million yuan, of which the fixed-assets investment is 650 million yuan.

Table 8: Summary Table of the Total Investment of the Project

Unit: 10 thousand yuan RMB


Expense Name

Amount of Investment

Proportion in the Total Investment %



Construction investment





Interest in the construction period





Current fund





Total investment of the project1+2+3




1.4 Financial analysis and social evaluation

1.4.1 Main financial indexes

After the project reaches the output, the annual sales income will be 1260 million yuan, the profit will be 154 million yuan and the investment recovery period will be 7.2 years (after the tax, including the construction period of 2 years) and the investment profit rate will be 19.2%.

Table 9: List of the Main Financial Benefits Forecasting Indexes         







Sales income

10 thousand yuan/a


Normal years


Total profit

10 thousand yuan /a


Normal years


Internal financial yield rate of the total investment



After the income tax


Net financial present value Ic=10%

10 thousand yuan


After the income tax (operating period: 10 years)


Recovery period of the total investment (after the tax)



Including the construction period of 2 years


Investment profit rate




Note: “10 thousand yuan” in the table refers to RMB.

1.4.2 Social evaluation

After the project is built, it will be favorable to build the complete industrial chain, promote the industrial upgrading, promote the lower-stream industry to develop and increase the local employment, play the good role of promoting the local social development and also promote the progress of the pillar industry of Jilin City.

1.5 Ways of Cooperation

Sole investment of the investor

1.6 What to be Invested by Foreign Party

Funds, equipment and technology

1.7 Construction Site of the Project

Jilin Songyuan Oil Chemical Industry Circulating Economic Park

1.8 The On-going Condition of Project

The cooperative proposal of the project has been established.

2. Brief Introduction of the Cooperator

2.1 Basic Conditions

Name: Songyuan Oil Chemical Industry Circulating Economic Park

Address: Songyuan Oil Chemical Industry Circulating Economic Park

Legal representative: Li Yan

2.2 Overview

Songyuan Oil Chemical Industrial Circulating Economic Park is a provincial-level industrial development zone, with the total planned area of 4.64 km2, is now planned to be expanded to 28 km2. As one of the two special chemical industrial parks of Jilin Province, depending on the local rich oil, natural gas and biomass resources, the park orients the dominant industries into the three industrial blocks, that is, oil and gas chemical engineering, biological chemical engineering and fine chemical engineering. During the “13th Five-Year Plan”, the park, focusing on the building of the three major industrial blocks, implements the strategy of the leading projects for promotion, makes efforts to promote the businessmen invitation ,capital attraction and project construction and try to establish the 30-50 billion output value scale. By now, the 0.1-million-ton propylene project, of Zhongcheng Group and the 0.2-million-ton biomass synthetic oil project of Yangguang Group have settled in the development zone and the investment construction has been started. 

2.3 Contact modes:

Postal code: 138000

Contact person: Yu Zhengyang

Tel: 0438—2960097

Fax: 0438—2960098


Contact person of the city (prefecture) of the project: Han Baidong

Tel: 0438-2706617   13514384757

Fax: 0438-2706617


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