July 9, 2018

BASF Announces Wholly Owned Verbund Site in China

July 9, 2018

Chinese Propylene Oxide Production Process Forecast

Is the Chlorohydrination Process Declining?

2018-07-09    [Source:PUdaily]

share:

PUdaily, Shanghai– With the deepening of the environmental inspection campaign of revisiting the previously inspected provinces, which was launched in May, the first round of special “revisit” inspection is coming to an end. Plus the introduction of environmental tax at the beginning of the year, 2018 is a milestone year for the chemical industry when environmental rectification is carried out.

Although the inspection has not had significant negative impact on upstream PO production, the new Environmental Protection Comprehensive Directory (2017 Edition) classified PO as high-pollution products （except for PO produced by direct oxidation process）. Today, PUdaily would like to talk about the challenges faced by chlorohydrination process and the corresponding possible solutions.

At present, the domestic PO facilities using chlorohydrination process account for 54% of the total PO production capacity. In the next few years, facilities using chlorohydrination process are expected to account for 33-37% of the total capacity (Fig. 1). From 2018 to 2021, more units using cooxidation process and direct oxidation proccess will be built. It is expected that four HPPO facilities and one or two PO/SM facilities will be built in 2019 alone. If all the units are put into production as planned, the additional capacity will amount to more than 1 million tons per year. This will undoubtedly have a great impact on PO producers using the traditional chlorohydrination process.

Fig.1 three PO production processes’ share of the total capacity over the next 3 years

Note: the forecast is based on the data collected by PUdaily

How to improve the process to solve pollution while maintaining the advantage of low cost is a problem faced by all PO producers adopting the chlorohydrination process.

As is known to all, the problem of “three wastes” is the main factor that makes the chlorohydrination process less competitive than the cooxidation process and the direct oxidation process. The large amounts of waste water, waste gas and waste residue make the chlorohydrination process an environmentally unfriendly process. However, thanks to the efforts of many PO manufacturers many new technologies and solutions emerge, providing new approaches to solve the problem.

1) Waste gas

The waste gases produced in the chlorohydrination process mainly include chlorohydrination tail gas and other tail gases (including tail gases produced in saponification, distillation and caustic washing systems). The main components of chlorohydrination tail gas are propane, propylene, oxygen, nitrogen and water. Of which oxygen has an amount of 40vol%, and propane and propylene has a combined amount of 20vol%. In order to avoid the safety hazards such as explosion caused by conventional oxidation treatment, the main treatment method in the industry is to mix the waste gas with a large amount of air and then pump them into the combustion furnace. In the combustion furnace, propylene and propane are combusted as fuels. The tail gases discharged from the furnace are mainly carbon dioxide and nitrogen, which completely meet the environmental standards in the testing.

Tail gases from other apparatus include propylene, propane, epoxy propane, dichloropropane, nitrogen, oxygen and water. All these tail gases will be pumped into the water scrubber after nitrogen blanketting. Propylene oxide and propylene dichloride dissolve in the water. Other water-insoluble gases are recovered for additional chlorohydrination. Propylene oxide dissolved in the water is recovered using the distillation column, thus increasing the output of the chemical. Other wastewater in which organics are dissolved is discharged into the sewage-treatment plant.

2) Waste water

45 tons of high-salinity wastewater are produced when producing 1 ton of propylene oxide. In China, this waste water is generally discharged into the wastewater treatment plant for treatment. However, the problem of high salinity (the content of calcium chloride is 4%) in the waste water has drawn the attention of domestic environmental authorities. For example, Shandong Department of Environmental Protection has proposed a technical specification aiming at restricting the discharge of high-salinity wastewater into inland rivers. In response, some enterprises discharge such waste water into the sea after it is treated to meet the standards. It is reported that desired results are achieved.

3) Waste residue

For 1 ton of propylene oxide produced, 1.2-2.0 m³ of saponification waste residue will be produced. The waste residue, fly ash and attle can be used as raw materials to make standard bricks for building use, whose quality is even better than that of clay bricks. Presently, the production of solid clay bricks has been banned because of its heavy consumption of land resources. It is expected that there is a broad market for the bricks made using waste residue. In addition, the waste residue will probably be widely used in construction, roads building and other fields.

Here, we would like to express our gratitude to all the researchers who are devoted to studying the problem of “three wastes” produced in chlorohydrination process. It is their sustained efforts that have made it possible to improve this process.

At the same time, PUdaily holds that although the more environmental-friendly cooxidation process and direct oxidation proccess are the trend, considering the many limiting factors, the chlorohydrination process will not be eliminated in the short term. Manufacturers adopting this process should not stop their efforts in research and innovation, but actively solve the problems of safety and “three wastes”. But it must be admitted that the additional costs incurred may make the advantage of low price disappear. PUdaily will keep an eye on the developments of PO production processes. Also, we hope the researchers will make further progress in improving the chlorohydrination process, ensuring environmental protection and costs controlling.

http://www.pudaily.com/News/NewsView.aspx?nid=72590

July 9, 2018

Chinese Propylene Oxide Production Process Forecast

Is the Chlorohydrination Process Declining?

2018-07-09    [Source:PUdaily]

share:

PUdaily, Shanghai– With the deepening of the environmental inspection campaign of revisiting the previously inspected provinces, which was launched in May, the first round of special “revisit” inspection is coming to an end. Plus the introduction of environmental tax at the beginning of the year, 2018 is a milestone year for the chemical industry when environmental rectification is carried out.

Although the inspection has not had significant negative impact on upstream PO production, the new Environmental Protection Comprehensive Directory (2017 Edition) classified PO as high-pollution products （except for PO produced by direct oxidation process）. Today, PUdaily would like to talk about the challenges faced by chlorohydrination process and the corresponding possible solutions.

At present, the domestic PO facilities using chlorohydrination process account for 54% of the total PO production capacity. In the next few years, facilities using chlorohydrination process are expected to account for 33-37% of the total capacity (Fig. 1). From 2018 to 2021, more units using cooxidation process and direct oxidation proccess will be built. It is expected that four HPPO facilities and one or two PO/SM facilities will be built in 2019 alone. If all the units are put into production as planned, the additional capacity will amount to more than 1 million tons per year. This will undoubtedly have a great impact on PO producers using the traditional chlorohydrination process.

Fig.1 three PO production processes’ share of the total capacity over the next 3 years

Note: the forecast is based on the data collected by PUdaily

How to improve the process to solve pollution while maintaining the advantage of low cost is a problem faced by all PO producers adopting the chlorohydrination process.

As is known to all, the problem of “three wastes” is the main factor that makes the chlorohydrination process less competitive than the cooxidation process and the direct oxidation process. The large amounts of waste water, waste gas and waste residue make the chlorohydrination process an environmentally unfriendly process. However, thanks to the efforts of many PO manufacturers many new technologies and solutions emerge, providing new approaches to solve the problem.

1) Waste gas

The waste gases produced in the chlorohydrination process mainly include chlorohydrination tail gas and other tail gases (including tail gases produced in saponification, distillation and caustic washing systems). The main components of chlorohydrination tail gas are propane, propylene, oxygen, nitrogen and water. Of which oxygen has an amount of 40vol%, and propane and propylene has a combined amount of 20vol%. In order to avoid the safety hazards such as explosion caused by conventional oxidation treatment, the main treatment method in the industry is to mix the waste gas with a large amount of air and then pump them into the combustion furnace. In the combustion furnace, propylene and propane are combusted as fuels. The tail gases discharged from the furnace are mainly carbon dioxide and nitrogen, which completely meet the environmental standards in the testing.

Tail gases from other apparatus include propylene, propane, epoxy propane, dichloropropane, nitrogen, oxygen and water. All these tail gases will be pumped into the water scrubber after nitrogen blanketting. Propylene oxide and propylene dichloride dissolve in the water. Other water-insoluble gases are recovered for additional chlorohydrination. Propylene oxide dissolved in the water is recovered using the distillation column, thus increasing the output of the chemical. Other wastewater in which organics are dissolved is discharged into the sewage-treatment plant.

2) Waste water

45 tons of high-salinity wastewater are produced when producing 1 ton of propylene oxide. In China, this waste water is generally discharged into the wastewater treatment plant for treatment. However, the problem of high salinity (the content of calcium chloride is 4%) in the waste water has drawn the attention of domestic environmental authorities. For example, Shandong Department of Environmental Protection has proposed a technical specification aiming at restricting the discharge of high-salinity wastewater into inland rivers. In response, some enterprises discharge such waste water into the sea after it is treated to meet the standards. It is reported that desired results are achieved.

3) Waste residue

For 1 ton of propylene oxide produced, 1.2-2.0 m³ of saponification waste residue will be produced. The waste residue, fly ash and attle can be used as raw materials to make standard bricks for building use, whose quality is even better than that of clay bricks. Presently, the production of solid clay bricks has been banned because of its heavy consumption of land resources. It is expected that there is a broad market for the bricks made using waste residue. In addition, the waste residue will probably be widely used in construction, roads building and other fields.

Here, we would like to express our gratitude to all the researchers who are devoted to studying the problem of “three wastes” produced in chlorohydrination process. It is their sustained efforts that have made it possible to improve this process.

At the same time, PUdaily holds that although the more environmental-friendly cooxidation process and direct oxidation proccess are the trend, considering the many limiting factors, the chlorohydrination process will not be eliminated in the short term. Manufacturers adopting this process should not stop their efforts in research and innovation, but actively solve the problems of safety and “three wastes”. But it must be admitted that the additional costs incurred may make the advantage of low price disappear. PUdaily will keep an eye on the developments of PO production processes. Also, we hope the researchers will make further progress in improving the chlorohydrination process, ensuring environmental protection and costs controlling.

http://www.pudaily.com/News/NewsView.aspx?nid=72590

June 21, 2018

Chinese Sourcing Issues

This is from last fall but still applies in places . . .

 

 

 

 

 

 

 

 

 

 

 

By Gary Huang

 

If your company is sourcing products from China then there is a major disruption that may be flying under your radar.  Since June of 2017, China’s new Ministry of Environment is taking a hard stance against Chinese factories that are “heavy polluters’.  In fact in the most recent round of factory audits, China’s environmental crackdown has shut down tens of thousands of Chinese factories with no end in sight.

The effects of decades of massive manufacturing growth has taken its toll on the environment.  Now China has some of the most polluted cities in the world.  Air purifying equipment and anti-pollution masks sell out often. Groundwater is polluted making safe drinking water a big concern.  Now the government is doing something about it.

What’s different this time is that a hard stance is being taken in making sure that factories are compliant with environmental laws.  Previously when policies were passed there was little to no compliance.  Many factories were unaware or unwilling to comply so they continued operating in their old polluting ways.

Now some factories are being forced to cease their production immediately and indefinitely.   And if they don’t comply their power could be shut off leaving them in the dark.

Power trumps Guanxi

And in this case power trumps “guanxi”.  Decisions are coming directly from the top levels of government so it overrides any relationships factory owners may have at the municipal levels.  If they are noncompliant they will definitely face the consequences if they are audited.

Lack of transparency with no end in sight

One of the issues the factories face is a lack of transparency.  Government policy details are quite opaque and many factories are not aware of the exact policies that they must abide by so they may unknowingly continue to operate in noncompliant ways and risk being shut down.

So they face an unpredictable and ongoing risk of being suddenly told to shut down.  And there is no clear timeline which means the factories don’t know when or if they can resume production.

So all of this makes it a very challenging time if you are sourcing products from China.

Who’s affected?

According to my research, affected industries include but may not be limited to the following industries.

Affected Industries

• Textiles
• Rubber
• Leather
• Chemicals
• Carbon
• Metal
• Coating
• Plastic
• Dying, Painting, and Printing processes

 

The environmental audits have been implemented in rollouts that have begun in certain regions mostly centralized in and around Northern China.  The later phases will reach other regions.  Again it’s difficult to pinpoint exact areas due to lack of transparency.

So far we understand that factories in these regions have been affected

• Shandong
• Henan
• Hebei
• Tianjin
• Beijing
• Zhejiang
• Jilin
• Jiangsu
• Sichuan
• Guangdong

 

Why is the clampdown happening now?

In 2013, China passed the “10 Measures for Environmental Protection” which outlined measures to improve China’s environment.  This was monumental as China began addressing admitting the environmental problems head-on while in the past China was more focused on developing its economy with manufacturing while paying a huge expense in air, water, and ground waste pollution.  My sources tell me that the newly appointed Minister of Environment is demanding stricter compliance from the factories thus the extensive auditing and review of these tens of thousands of factories.

Moreover if we look at the macro level, China has an important government meeting in the 19th Plenum, the most important government meeting which takes place every five years.  Taking place on Oct 18th, 2017, the main objectives are to select the top leaders and policies to put in place as a road map for the country going forward.

Environmental Protection is one of the key issues to be examined.  It would make sense to do a bit of cleaning before the meeting to drum up the numbers and also product some blue skies for them to take credit for.

Similar supply chain disruptions in China related to major economic, political, and social events have happened in 2016 in the months preceding the G-20 meetings in Hangzhou as well as in 2008 before the Beijing Olympics.

Other speculators say that another reason is because of a major sporting event and competition at the national level happening in north China in the fall.  In my opinion this is a less probable cause than the 19th Plenum which is the most important event that will set the stage for the future of China in the next five years.

What do you do if you are sourcing from China and risk being affected?

If you’re factory has not been affected (yet) then now is the time to check with them to ask if they will be affected.

It’d be smart to ask if their component suppliers are being or will be affected as well.

Note that even if your factories themselves have been audited and approved for production, their component subcontractors may not be so lucky.  If their component suppliers get shutdown then your factory will not be able to follow the normal production process and your product may get delayed as they are left scrambling to find a replacement.  This makes it more difficult to predict delivery lead times as these external factors may be out of their direct control.

For example if you are manufacturing a mason jar and your glass factory passed inspection but their metal lid subcontractor gets shut down then your factory will have a hard time delivering your product on time as they will need to search for a replacement.  Remember you’re only as strong as your weakest link!

Best practice: Be proactive in communicating with your suppliers!

It’s important understand that Chinese culture doesn’t encourage people to reveal bad news until it happens.  Often bad news is swept under the carpet until it absolutely has to be revealed.  So it pays for you to be proactive to communicate with your supplier and learn about and minimize the disruption to your supply chain.

What if your factories are being affected now?

“Our production scheduling is in total disarray and our suppliers literarily have no idea when they can re-start production.”

Case in point – A friend of mine who has 20+ years experience in China sourcing from a deep base of suppliers is facing a huge headache.  He sources from Chinese suppliers who’s products fall under one of the monitored industries and are based in the Shandong province.  Even though they are compliant, several of his suppliers have been shut down and they have not received any word about the next steps nor when production can resume.  This makes it next to impossible to plan purchase orders for the 4th quarter and pre-Chinese New Year period.  His company headquarters is giving him a lot heat for this.  What can he do?

Going out of China

One solution is to go out of China.  Since my friend’s industry is one of the targeted ones in the new environmental policy regulations, he’s shifting his production to India where their production has not been impacted by environmental policies.

Depending on your industry, some products can be manufactured in other countries such as India, Thailand, Vietnam, etc.  This will circumvent the problem until the the disruption passes.  Also a general rule of thumb, it’s a good idea to diversify your risk by not putting all your eggs in one basket in China.

In summary, China can be a non-transparent place for doing business.  Social-economic and political events can and will affect your business here.  So it’s your responsibility to have a backup plan to reduce the impacts of these events on your supply chain.  Now would be a good time to talk to your suppliers to find out the extend of the problem and work out solutions.  And if you’re facing the impact of these problems head-on, it may be time to consider other countries so you don’t put all your eggs in one basket and have them all break with one sudden jolt.

Have your suppliers been affected by the environmental audits in China?  If so, hit reply and let me know what happened and what you’re doing about it.

-Gary

---

Gary Huang is an American based in Shanghai, China, and working in sourcing since 2008. He is the creator of 80/20 Sourcing, which helps small business importers quickly and efficiently source from China. Gary also serves as the Co-Chair of the American Chamber of Commerce in Shanghai’s Supply Chain Committee. You may contact him at www.8020sourcing.com/contact.

http://www.smartchinasourcing.com/china-epa-crackdown-shuts-tens-thousands-factories-end-sight/

June 21, 2018

Chinese Sourcing Issues

This is from last fall but still applies in places . . .

 

 

 

 

 

 

 

 

 

 

 

By Gary Huang

 

If your company is sourcing products from China then there is a major disruption that may be flying under your radar.  Since June of 2017, China’s new Ministry of Environment is taking a hard stance against Chinese factories that are “heavy polluters’.  In fact in the most recent round of factory audits, China’s environmental crackdown has shut down tens of thousands of Chinese factories with no end in sight.

The effects of decades of massive manufacturing growth has taken its toll on the environment.  Now China has some of the most polluted cities in the world.  Air purifying equipment and anti-pollution masks sell out often. Groundwater is polluted making safe drinking water a big concern.  Now the government is doing something about it.

What’s different this time is that a hard stance is being taken in making sure that factories are compliant with environmental laws.  Previously when policies were passed there was little to no compliance.  Many factories were unaware or unwilling to comply so they continued operating in their old polluting ways.

Now some factories are being forced to cease their production immediately and indefinitely.   And if they don’t comply their power could be shut off leaving them in the dark.

Power trumps Guanxi

And in this case power trumps “guanxi”.  Decisions are coming directly from the top levels of government so it overrides any relationships factory owners may have at the municipal levels.  If they are noncompliant they will definitely face the consequences if they are audited.

Lack of transparency with no end in sight

One of the issues the factories face is a lack of transparency.  Government policy details are quite opaque and many factories are not aware of the exact policies that they must abide by so they may unknowingly continue to operate in noncompliant ways and risk being shut down.

So they face an unpredictable and ongoing risk of being suddenly told to shut down.  And there is no clear timeline which means the factories don’t know when or if they can resume production.

So all of this makes it a very challenging time if you are sourcing products from China.

Who’s affected?

According to my research, affected industries include but may not be limited to the following industries.

Affected Industries

• Textiles
• Rubber
• Leather
• Chemicals
• Carbon
• Metal
• Coating
• Plastic
• Dying, Painting, and Printing processes

 

The environmental audits have been implemented in rollouts that have begun in certain regions mostly centralized in and around Northern China.  The later phases will reach other regions.  Again it’s difficult to pinpoint exact areas due to lack of transparency.

So far we understand that factories in these regions have been affected

• Shandong
• Henan
• Hebei
• Tianjin
• Beijing
• Zhejiang
• Jilin
• Jiangsu
• Sichuan
• Guangdong

 

Why is the clampdown happening now?

In 2013, China passed the “10 Measures for Environmental Protection” which outlined measures to improve China’s environment.  This was monumental as China began addressing admitting the environmental problems head-on while in the past China was more focused on developing its economy with manufacturing while paying a huge expense in air, water, and ground waste pollution.  My sources tell me that the newly appointed Minister of Environment is demanding stricter compliance from the factories thus the extensive auditing and review of these tens of thousands of factories.

Moreover if we look at the macro level, China has an important government meeting in the 19th Plenum, the most important government meeting which takes place every five years.  Taking place on Oct 18th, 2017, the main objectives are to select the top leaders and policies to put in place as a road map for the country going forward.

Environmental Protection is one of the key issues to be examined.  It would make sense to do a bit of cleaning before the meeting to drum up the numbers and also product some blue skies for them to take credit for.

Similar supply chain disruptions in China related to major economic, political, and social events have happened in 2016 in the months preceding the G-20 meetings in Hangzhou as well as in 2008 before the Beijing Olympics.

Other speculators say that another reason is because of a major sporting event and competition at the national level happening in north China in the fall.  In my opinion this is a less probable cause than the 19th Plenum which is the most important event that will set the stage for the future of China in the next five years.

What do you do if you are sourcing from China and risk being affected?

If you’re factory has not been affected (yet) then now is the time to check with them to ask if they will be affected.

It’d be smart to ask if their component suppliers are being or will be affected as well.

Note that even if your factories themselves have been audited and approved for production, their component subcontractors may not be so lucky.  If their component suppliers get shutdown then your factory will not be able to follow the normal production process and your product may get delayed as they are left scrambling to find a replacement.  This makes it more difficult to predict delivery lead times as these external factors may be out of their direct control.

For example if you are manufacturing a mason jar and your glass factory passed inspection but their metal lid subcontractor gets shut down then your factory will have a hard time delivering your product on time as they will need to search for a replacement.  Remember you’re only as strong as your weakest link!

Best practice: Be proactive in communicating with your suppliers!

It’s important understand that Chinese culture doesn’t encourage people to reveal bad news until it happens.  Often bad news is swept under the carpet until it absolutely has to be revealed.  So it pays for you to be proactive to communicate with your supplier and learn about and minimize the disruption to your supply chain.

What if your factories are being affected now?

“Our production scheduling is in total disarray and our suppliers literarily have no idea when they can re-start production.”

Case in point – A friend of mine who has 20+ years experience in China sourcing from a deep base of suppliers is facing a huge headache.  He sources from Chinese suppliers who’s products fall under one of the monitored industries and are based in the Shandong province.  Even though they are compliant, several of his suppliers have been shut down and they have not received any word about the next steps nor when production can resume.  This makes it next to impossible to plan purchase orders for the 4th quarter and pre-Chinese New Year period.  His company headquarters is giving him a lot heat for this.  What can he do?

Going out of China

One solution is to go out of China.  Since my friend’s industry is one of the targeted ones in the new environmental policy regulations, he’s shifting his production to India where their production has not been impacted by environmental policies.

Depending on your industry, some products can be manufactured in other countries such as India, Thailand, Vietnam, etc.  This will circumvent the problem until the the disruption passes.  Also a general rule of thumb, it’s a good idea to diversify your risk by not putting all your eggs in one basket in China.

In summary, China can be a non-transparent place for doing business.  Social-economic and political events can and will affect your business here.  So it’s your responsibility to have a backup plan to reduce the impacts of these events on your supply chain.  Now would be a good time to talk to your suppliers to find out the extend of the problem and work out solutions.  And if you’re facing the impact of these problems head-on, it may be time to consider other countries so you don’t put all your eggs in one basket and have them all break with one sudden jolt.

Have your suppliers been affected by the environmental audits in China?  If so, hit reply and let me know what happened and what you’re doing about it.

-Gary

---

Gary Huang is an American based in Shanghai, China, and working in sourcing since 2008. He is the creator of 80/20 Sourcing, which helps small business importers quickly and efficiently source from China. Gary also serves as the Co-Chair of the American Chamber of Commerce in Shanghai’s Supply Chain Committee. You may contact him at www.8020sourcing.com/contact.

http://www.smartchinasourcing.com/china-epa-crackdown-shuts-tens-thousands-factories-end-sight/