Liaoning Oxiranchem, Inc. In China Increases Its Margins By Licensing The Shell Master Ethylene Oxide Process
Business analysts suggest that agility and entrepreneurship are precursors for business success in today’s China, and Liaoning Oxiranchem, Inc., a producer of fine chemicals based on ethylene oxide (EO), is a successful example of this.
In recent years, the Liaoning-Province based company, which enjoyed a 64% increase in sales in 2010, has moved fast to capitalise on market opportunities. For instance, its leading product, a cutting fluid for polycrystalline silicon, facilitates the production of solar photovoltaic panels, which have seen a major increase in demand in recent years. Oxiranchem has a 70% share of this market.
Meanwhile, China’s booming infrastructure developments have provided the company with other opportunities. One of its EO derivatives, a water-reducing agent for high-performance cement, accelerates the curing time from days to hours and is being widely used in the building of high-speed rail links and roads.
Striving to become the world’s most competitive EO derivatives manufacturer, the company was also keen to develop margin improvement opportunities.
“In China there is a serious supply crunch for EO and that makes it one of the most expensive raw materials to buy,” explains Mr Liu Zhaobin, Vice President, Technology, Liaoning Oxiranchem, Inc.
“So, we worked with Shell Global Solutions to explore the feasibility of producing EO ourselves.
These analyses revealed that it could have a marked impact on our margins.
It would also reduce our reliance on suppliers, another key benefit, so we opted to license the Shell MASTER process to produce 50% of all of our EO.”
The Shell MASTER process is based on a high-selectivity catalyst that enables the reaction of ethylene with oxygen to produce EO. As well as the licence, Shell Global Solutions is supplying a basic engineering package so that Oxiranchem’s engineering contractor can build a new plant to Shell standards. Shell Global Solutions will also provide the necessary technical services to aid the plant’s long-running and stable operation.
Mr Liu says that becoming partly self-sufficient in EO will increase the company’s margins. “That was a key driver for us,” he says. “China’s EO derivatives market is highly competitive, and the innovative producers with cost-effective processes are those best positioned for long-term business strength.”
Ken Lai, Regional Licensing Manager, Shell Global Solutions, comments that Oxiranchem took decisive action as soon as it identified the opportunity. “The contract was signed less than three months after the initial deal,” he says. “That is almost unprecedented for a contract of this size and is a marker of Oxiranchem’s willingness to take rapid advantage of opportunities.”
For more information contact Ken Lai
For more details on Shell Global Solutions’ EO/EG technologies