Soaring crude values boost DME

17 March 2008 09:24  [Source: ICIS news]

SHANGHAI (ICIS news)---Dimethyl ether (DME) is expected to become a major substitute for liquefied petroleum gas (LPG) in the next two years due to its lower price, and its environmentally-friendly properties, market participants said on Monday.

Producers and traders believe that DME will grow to become a new alternative source of clean energy on the back of climbing crude and LPG values. DME is priced lower than LPG at yuan (CNY) 200-300/tonne ($28-42/tonne).

 

Solving the current oil shortage problem will depend largely on the ability of producers to substitute crude oil with coal as a source of raw material to produce methanol and DME, they said.

 

DME, currently the most popular alternative fuel, can be used not only as motor fuel, but also as an alternative to LPG for household use. The China Petroleum and Chemical Industry Association approved DME as an alternative to LPG on 1 January, 2008, they added.

 

Taxi cabs in the city of Linyi in Shandong province, Lanzhou city in Gansu province and Xi’an city in Shaanxi province have been using DME fuel, following a series of experiments that showed that vehicles using DME produced a lower level of exhaust fumes, traders said.

 

“The main direction of DME in the next 10 years is as an alternative household fuel. China needs 5-10m tonnes/year of DME fuel to meet household demand in the next five years. The market outlook is very extensive,” said Yanglieke, CEO of China Coal Energy Company.

 

The country's overall production capacity of DME is estimated to be more than 15m tonnes/year by 2010, he said.

 

China, as a producer of the raw material used for olefin products cannot ignore the potential value of the DME market, with the country’s polyethylene (PE) demand set to grow annually by 5.9% over 2006-2010, to reach 14.54m tonnes/year by 2010, and polypropylene (PP) demand expected to grow by 7.2% to 12.6m tonnes/year by 2010, Yanglieke added.

 

($1=CNY7.09)

 

By: Dolly Wu
+65 6780 4359

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