contents · jovo wins significant r&d cr edits by using dme instead of freon and butane as...

Helen Zheng (Jovo Chemical Co.)16th IMPCA 2013 Asian Methanol Conference

LOGOLOGO

Present situation and trend of Chinese DME industryDME industry

JOVO GROUP Zheng Lining Oct. 2013

The overview of DME market in South China

Contents

The situation of Chinese DME plants

What will the policy influence DME industry if the blending standard comes out in 2013

DME market performance along with the development of LPG industry


Part one


DME factory in South China

Company Title Production Capacity（kta）

Operation rate

Jovo Chemical CO.LTD.,DONGGUAN 200 70%

Jiutai Energy Co. Ltd. 300 50%

H if H h N Y Xi C 100 40%Haifeng Huacheng Nengyuan You Xian Co. Ltd.

100 40%

Longyan lian run Co. Ltd. 100 50%

Zhangzhou lian run Co. Ltd. 100 70%

QuanZhou Aideli Trading Co., Ltd. 200 60%

Fu Gang Chemical Co., Ltd. Fujian 200 50%

Guangxi zhongyou energy Co. Ltd. 20 50%

ChaoZhou HuaFeng Incorporation Ltd. 200 50%

Total 1420


Analysis of Market Price:


1.JOVO and JIUTAI dominate the DME price in South China;

2.Tianmao Hubei SanNing and some plants in Henan Province influence the price of pearl river of Guangdong.

3.Fujian Aideli, Fujian Lianrun lead the price in Fujian Province and influence the delivery price in East Guangdong;

4 Guizhou Tianfu Yunnan JieHua influence the delivery Price in West4.Guizhou Tianfu, Yunnan JieHua influence the delivery Price in West Guangdong.

Company Brief of Jovo Chemical Co. Ltd.,Dongguan

JOVO dedicates to becoming the leading provider of clean energy in China and provides excellent DME products ,industrial material, civil-used or industrial fuel and full sets of services.


DME Capacity:200KTA, 240Km3 pressure tank space for DME 950K 3 t k f th l t

Company Brief of Jovo Chemical Co. Ltd.,Dongguan

business scope & production

capacity

What we want to gain from

DME

DME,950Km3 tank space for methanol storage.Methanol Sourcing:600ktMethanol Trading:300ktMethanol Storage Facility:200kt

Sharpen LPG competitiveness and maximize economic benefit for customerPromote Green Energy in the South China DME gyTo be a manufacturer with full set of MeOH-DME-LPG basic chemical energy supply chain.To be the pioneer and lead the downstream market in China

DME application-Pure Burning

Pure Burning: JOVO reforms the cooking room in the People’s Hospital of Huizhou for burning DME as fuel, save 20% fuel cost.


DME application-Forming Board

JOVO wins significant R&D credits by using DME instead of Freon and butane as forming medium, and gain the core technology.

DME application- aerosol propellant

DME is an excellent fine chemical, which can be used as aerosol propellant etc. Guangdong consumes about 50KT of DME every year, and JOVO offers 20K tones for this demand.


ceramic kiln firing DME application-

In October,2012 JOVO reformed a ceramic factory in HUIZHOU City successfully for pure burning DME as fuel, this has made a great help to save energy and reduce pollution.

Exploring overseas market

Target market: Southeast Asia, mainly Vietnam and ThailandTransport: through vessels (1KT-2KT )Qty:2KT-3KT per monthCore competitive: JOVO has the jetty that owns the facility to loading DME by vessels in China.


P t TPart Two

The situation of Chinese DME enterprises

Policy01 01

The situation of Chinese DME enterprises

y

Operation rate0102

The price trend0303


Policy

Negative Policy: Being inspected all yearThe exposure of DME blending with LPG by press in 2013 has strongly impacted DME marketstrongly impacted DME market.

Advantage Policy: Poor expectationChina almost finished the draft of LPG blending DME standard and it may be published in 2014.hi d d ill k lThis standard will promote DME market greatly.

山东：九丰能源山东公司45

Ningxia Shenhua 210kta

Inner Mongolia Tianhe200KTA

DME PLANTS DISTRIBUTION

Shandong:Jiutai 450kta

Hebei：

Kaiyue 600kta

Handanyutai 100kta

九丰能源山东公司45玉皇金宇化工25

江苏：

九丰能源张家港公司30

张家港新能公司20

湖南：

汉臣能源公司10

Hubei:Tianmao 300ktaHuaqiang 200ktaXiangchu 100kta

Shanxi

Weihua 100KTA

Xianyang 100KTA

J uta 50 taYuhuang jingyu 250kta

Jiangsu:

Jiuttai 300kta

Xingneng 200kta

Hunan:

Hanchen 100kta

Henan:

Xichuan:Luhua 100kta

浙江：中油石化公司10

Guangdong:JIUTAI 300ktaJOVO 200KTAHaifeng Huacheng 100kta

Guizhou:

Tianfu 150kta

Yihua 100kta福建：龙岩连润新能源科技公司8

漳州连润新能源有限公司8 泉州市泉港区爱德利贸易有限公司10

Yiwu Xingyuan 200kta

Yongmei 200kta

Zhejiang:

CNPC 100KTA

Fujian:Longyan Lianrun 80kta

Zhnagzhou Lianrun 80kta

Quanzhou Aideli 100kta


region Plants No.(including the plants under

construction)

Capacity (KTA)

Operation Rate

DME operation rate in 2012

South China 10 1520 45%East China 16 2200 43%North China 14 3700 32%

Areas along the Yangtze River

15 2100 38%

Northwest China 13 7230 30%Southwest China 14 2900 35%

Total: 81 19650 35%

Production overcapacity , which is far greater than the market demand

Analysis of DME low operation rate in 2012

The exposure of DME blending with LPG by CCTV in

Operation rate analysis

national-wide

Over-optimistic estimation of DME prospect causing high over- investment in DME project

The exposure of DME blending with LPG by CCTV in International Day for Consumers' Rights and Interests strongly impacted DME market

Lack of relative policy and standard, causing the large behind of DME downstream application explore.

Lack of macroscopic guidance.


2012年二甲醚价格指数走势图

DME price trend in 2012

35003700390041004300450047004900510053005500 DME price trend in 2012

35001月 2月 3月 4月 5月 6月 7月 8月 9月 10月 11月 12月

华南华东沿江华北西北西南

South China

Areas along the Yangtze

River

East China

Northwest China

North China

Southwest China

Three Elements influence the Price

Feed stock MeOH Demand and supply

Market Participation’s

Mindset


Methanol influences the DME price

In 2012, the MeoH price slightly vibrated for a long time, the market keep bearish. EX-tank price was about

RMB2700-2950 per tone.

Demand and Supply

Jan.-Feb.: Downstream demand rising back and the CP price of LPG will go up, which proved to be a good news to the DME market ,the operation rates keep higher level.operation rates keep higher level.

Mar.-Apr. :Because of the repeated inspection by local authoritiesin China, the downstream distributor become very cautious.

May.- Jun.: On the background of reduced demand, some DME plants have to be shut down .

Jul.-Sep.: With the temperature rising, the demand of LPG in Southwest China had cut down; MeoH stay in low price at the sameSouthwest China had cut down; MeoH stay in low price at the same time, downstream market demand for DME slowed down as well.

Oct.-Dec.: It will be a boom season for LPG market, along with few inspections, the market would purchase more DME. This lead the operation rate higher though without nice price.


Market Participation’s Mindset

The specialty of blending market and policy uncertainty, repeated inspections department, make the downstream users control the storage in low level. This caused a stable in DME price and there was small room for speculations.p

Part ThreePart Three

The impact of the blending standards to the DME industry


1. Consumers (product recognition)

2. LPG suppliers and distributors (the third-level gas station production structure will be changed, enterprises’ hardware equipment and

lit ill b i dquality will be improved; Terminal supply will decrease due to the impact of DME, LPG price of refineries will be impacted, etc. )

5. Market supervision department (It is more

difficult to supervise, the regulatory system will be

improved)

3 DME Plant (quantity price

Five Elements

3. DME Plant (quantity, price, regulation)

4. Methanol manufacturers and importers (supply increases,

prices may be raised)

•For consumersThe release of the blending standard will eliminate the negativeThe release of the blending standard will eliminate the negative impact of DME which was reported by media and DME will be acknowledged by customers.

•For LPG distributorsAs price of LPG is higher than that of DME, if the blending of LPG and DME can be regulated and become legal that the malicious addition of DME competition behavior is expected tomalicious addition of DME competition behavior is expected to be contained. Some large gas supplier who refused to use DME due to its illegal is expected to be involved in the field. And thus, demand to DME will be boosted.


•For the DME PlantGood news can improve plant operating rate, and products can be Good e s ca p o e p a t ope at g ate, a d p oducts ca beon sales legally. But that will be based on standardized operation. Some DME manufacturers believe that once the standard issued, production qualification and management qualification of DME must be strictly approved by the relevant departments. Some illegal DME production and business enterprises could be rectified.

•For methanol manufacturers and import tradersDME is made of dehydration methanol .Once mixing standard come out, while releasing the DME production capacity and the overcapacity of methanol will be solved as well.

OverallOverall,the establishment of LPG and DME mixing standard will play significance role for the long-term healthy development of DME industry. Majority of DME plants and LPG distributors are looking forward for this.


Part FourDevelopment has been being influenced by LPG industry

throughout 2013throughout 2013

After the promulgation of the Policy for Unified Sale of LPG and the establishment of the price system, LPG price fluctuations and its fluctuation frequency will decrease. Price adjustment will be no longer so frequent and prices are likely to be gently. The domestic gas market will form ‘a situation of g y gtripartite confrontation’ by CNPC, SINOPEC and local refineries. The pattern of LPG market will undergo significant changes.

Effect Unified Sale of LPG by

SINOPEC In 2013

Domestic LPG prices are in high level that helps to enlarge the prices gap between LPG and DME. And thus, it will reduce the cost of fuel gas.


The European debt crisis has been continuing since 2012, but Europe's overall economic situation is pessimistic; Iran and Syria political issue will be terrible in 2013, even more serious;

The Diaoyu Islands Event between China and Japan will affect the economy development of these two countries. Preliminary estimates that in 2013 China's foreign trade to Japan and Japanese companies invested in China will go down.

Many factors will affect the trend of the crude oil in 2013. That is bound to affect the price of LPG. If these factors become worse, LPG price will swing significantly.

In 2013, more uncertain

factors in the international

situation

Domestic LPG prices are in high level that helps to enlarge the prices gap between LPG and DME. And thus,

it will reduce the cost of fuel gas.

situation

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contents · jovo wins significant r&d cr edits by using dme instead of freon and butane as...

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