InterviewCelanese plans to pursue China’s fuel ethanol market

16 December 2010 00:40  [Source: ICIS news]

Celanese headquarters in Dallas TexasBy Doris de Guzman

NEW YORK (ICIS)--US chemical company Celanese plans to enter China’s fuel ethanol market to capitalise on the country’s goals in renewable fuels consumption, chief financial officer Steven Sterin said on Wednesday.

Celanese announced in November its plans to build one or two coal-based ethanol plants in China - each with capacity of 400,000 short tons/year. Each plant’s capacity could be expanded to 1m tons/year at a fraction of the original capital investment, said Sterin in an interview with ICIS.

The cost to build a 400,000 ton/year plant was expected to be around $300m (€225m), he added.

Once approved, the Chinese plants - whose locations were still to be decided - would take 30 months to build and would initially serve the domestic industrial ethanol market, which was growing 8-10%/year, as estimated by Celanese.

Current chemical applications demand for ethanol in China - for products including solvents, inks, lacquers, paints and coatings - was estimated at 3m tons/year, according to the company.

China’s fuel ethanol market is currently half the size at 1.5m tons/year but was expected to grow exponentially given China’s intention to see domestic ethanol production reaching 15m tons by 2020, said Sterin.

China is a big potential market for our coal-based fuel ethanol technology because of the country’s abundant coal feedstock, China’s growing demand for fuel, and the country’s desire to reduce foreign dependency on imported fuel without using subsidies,” he said.

China is currently importing 4m bbl/day of oil, which is expected to increase to 8m bbl/day by 2020, Sterin added.

Chinese fuel ethanol is currently selling at a slightly higher price compared with industrial ethanol because of tightening global supply and higher corn and sugar prices worldwide, according to Celanese. Fuel ethanol prices in China were assessed by ICIS at around $950/tonne, CFR (cost and freight).

“If we had production in place with our technology today, we would have a significant advantage and this business would be one of the most profitable in the company. Even at every price point in corn and sugarcane’s historical cycle, we still would have been able to offer a lower cost fuel ethanol alternative without any subsidies involved,” said Sterin.

He added that Celanese’s technology can also use biomass or waste-based feedstock in the future.

($1 = €0.75)

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