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CHAPTER 2
2.0
INTRODUCTION
Acrylonitrile was predominantly used for production of plastics such as acrylonitrilebutadiene-styrene (ABS) and styrene-acrylonitrile (SAN), nitrile rubbers, nitrile barrier
resins, adiponitrile and acrylamide. On the other hand, the by-products produced in the
production of Acrylonitrile which are Acetonitrile and Hydrogen Cyanide (HCN), were
also studied to be fully utilized. The demand of Acrylonitrile is rising over the years and
consume by various industries over the world. Therefore, in order to design an
Acrylonitrile chemical plant, thorough analysis on the market and the economic sector
must be properly done. The study is also consists of estimation of the lost and profit of
running the industry.
22
2.1
MARKET ANALYSIS
2.1.1
2500
2000
Demand
1500
Production
1000
500
0
Region
23
Table 2.1 Main country in Asia produces Acrylonitrile
COUNTRY
COMPANY/LOCATION
PRODUCTION
TOTAL
CAPACITIES
PRODUCTION
(TONS)
CAPACITIES
(TONS)
INDIA
Reliance, Gujerat
50 000
50 000
SOUTH KOREA
300 000
550 000
Tae Kwang
250 000
CPDC
200 000
Formosa Plastics
280 000
2203 000
2203 000
2415 000
2415 000
TAIWAN
THAILAND
480 000
Ltd
CHINA
Various company
In this section, the production as well as the demand will be studied together for further
understanding the likelihood of the market balance to develop in the coming years. The
acrylonitrile supply and demand balance is forecast to improve over the upcoming
years. Thus, production of Acrylonitrile shows potential in attaining a profitable market.
24
starts from a very low base. Total demand of acrylonitrile in 2018 was expected to be
6.516 million tonnes. (World Supply/ Demand report, 2009)
A market trend of acrylic fibre which is one of the main sources of demand was
observed. In 2004, acrylic fibre has lost market share mainly to polyester due to its
relatively high price. The extensive use of fabrics woven from polyester thread or yarn
in apparel and home furnishing were also the main concern. In 2008, a substantial
volume of 520 000 tonnes of acrylic fibre were lost. However, growth of 127 000 tonnes
was seen as the volume regained in 2009. Therefore, we are expecting of more
acquisition in years to come.
Below are the graphs that show the forecasted production and demand of
acrylonitrile in year 2013 and 2018 by various parts of the world. We can see clearly
from both the graphs, production of acrylonitrile in Asia / Far East countries are
overwhelming. The production is targeted to exceed the demand. Therefore, it is a wise
decision to build acrylonitrile plant in any part of Asia to satisfy the needs of the
demands.
25
103 tonnes
ACRYLONITRILE: PRODUCTION VS
DEMAND
2013
3500
3000
2500
2000
1500
1000
500
0
demand
production
103 tonnes
demand
production
26
2.1.2
Raw Material
2.1.2.1 Propane
Table 2.2 Propane pricing
Propane (US dollar / Gallon)
Year
Dec 2008
Dec 2009
Jul 2010
Prices
$0.603
$1.318
$1.080
Table 2.2 shows the propane pricing from December 2008 till July 2010. From
the observation, it shows inconsistent price of propane from 2008 to 2010. The rapid
increase of propane from December 2008 to December 2009 proves that the demands
of propane is getting higher but slowly decrease in July 2010.
Country
Xinao Gas
Hong Kong
Gail India
India
Indonesia
S-Oil Corp
South Korea
Pakistan
Pipeline
27
Petrochina Co.
Singapore
Malaysia
Table 2.3 show the supplier of propane market in Asian. Primary suppliers in the
propane market include Xinao Gas (China), Gail India (India), Perusahaan Gas Negara
(Indonesia), S-Oil Corp (South Korea), SUI Northern Gas Pipeline (Pakistan),
Petrochina Co. (Singapore) and Petronas Gas Malaysia (Malaysia). (Petronas Gas
Berhad, 2010)
2.1.2.2 Ammonia
Unit Size
Ammonium Hydroxide
500 ml
110.459
(2010)
2.5 L
157.607
2.5 L
284.846
25 L
1,714.86
(Year)
reagent grade
(2008)
(Chem Supply Price List 2008 and Integra Chemical Catalog 2010)
28
Since the general economis crisis which heavily affected the downstream
fertilizer sector, as well as the reduces in industrial sector demand, ammonia prices has
drop $700-800/tonne from the peaks achieved in September 2008. In 2009, this
ammonia market is expected to change shape as a result of the dramatic fall in prices.
(The Market- Fertilizer News and Analysis, 2008)
Country
Malaysia
Indonesia
Jiangsu, China
Shanghai, China
Manus Aktteva
Gujarat, India
Jiangsu, China
Shandong, China
(www.chemicalregister.com, 2010)
From the Table 2.5, it shows that China is the largest ammonia manufacturer.
But, Pt. Kaltim Pasifik Amoniak which is located at Indonesia is one of the biggest
ammonia manufactures in the world.
29
2.1.2.3 Sulphuric acid
January 2010
Prices
RM 97.09
Table 2.6 shows the sulphuric acid pricing for years of 2010. According to ICIS
website, about 50 million tones of sulphuric acid was produced globally in 2009 over
90% being used in the production of sulphuric acid. It state that global prices of sulphur
and sulphuric was not stable starts in 2007 until 2008 driven by high demand in
industry. However, prices began to drop in the second half of 2008 in-line with the
global economic crisis and in late 2009, the demand in end use sectors improved
causing prices to rebound continuing into 2010. Compared to historical level prior to the
spike in 2007 and 2008, prices are currently at stable levels. At January 2010, the
prices start with the prices of RM 95.09 or US$ 30.34. (www.icis.com., 2009)
Major Importer
Middle East
China
Canada
North Africa
Soviet Union
India
United State
30
Table 2.7 show the major exporter and importer of sulphuric acid around the
world. The major exporters were to Middle East, Canada and Soviet Union while the
major importer was India, United State, North Africa and China with 25% majority.
2.1.3
Catalyst
January 2010
Prices
RM 259.884
Table 2.8 shows the vanadium catalyst pricing for year of 2010. Over the last 20
years, vanadium prices have shown a high degree of volatility. As experienced between
1998 and 2003, the price fall to the low but this does not happen in the economic
downturn in 2009. Many producers cut output and limited the fall in price. In mid 2010,
the recovery in price stalled for ferrovanadium. In long term forecast, the price will rise
reaching RM234.675/kg by 2015. Over the last decade, China has become both the
main producer and main consumer of vanadium. In terms of supply, it now accounts for
almost 50% of the global total and planned expansion over the next two years will
consolidate this position. Chinese demand for vanadium grew at 13%pa between 2003
and 2009.(www.roskill.com, 2009)
Country
China
31
International Trading (IT) Limited
United Kingdom
Angara Enterprise
Ukraine
(www.alibaba.com)
Table 2.9 shows the supplier of vanadium catalyst around the world. Countries
with mature economies have much higher intensity of use of vanadium and in 2008,
intensity of use in USA was more than three times as great as that in China. Over the
next decade one of the main drivers for growth in vanadium demand will be a
combination of strong growth in steel output in Brazil, Russia, India and Canada
countries and an increasing emphasis n these countries on production of high strength
low alloy steels with their higher vanadium content. (www.roskill.com.,2009)
2.1.4
2.1.4.1 Acetonitrile
32
2.1.4.2 Hydrogen Cyanide (HCN)
The market for hydrogen cyanide is expected to grow slightly slower than the
GDP growth rate (Chemical Market Reporter January 10, 2005 and February 26, 2001;
Mannsville Chemical Product Synopsis July 1999). This analysis assumes that future
hydrogen cyanide supply will be within the range of 0.75 to 1 million tonnes per year.
2.4
ECONOMIC ANALYSIS
2.4.1
Fixed capital investment is amount of money needed to make the plat operable. Fixed
capital investment includes total cost of equipments, land cost, equipment installation
cost, etc. Table 2.3 shows the list of equipment needed for plant and estimation of its
cost.
33
Table 2.10 Number of major equipment according to type
Type of Equipment
Number of
equipment
(RM)
459,773
459,773
Pump
200,000
1,000,000
Scrubber
119,504
119,504
Quench Column
282,744
282,744
Cooler
282,744
282,744
Heater
280,028
280,028
Distillation Column
1,650,000.00
4,950,000
Storage Tank
37,884
189,420
Compressor
214,368
214,368
Mixer
27,000
27,000
Total Equipment
20
Fluidized Bed
Price (RM)
Reactor
7,805,581
Cost
Fixed capital investment consists of direct and indirect cost. Direct cost is cost
needed to install all the plant equipments and also for the surrounding of the plant but
for the indirect cost, it consists of all the legal activities and fees for contractors. Details
are shown in Table 2.4.
34
Table 2.11 Fixed Capital Investment of the Acrylonitrile Plant
Component
Estimation
Cost (RM)
TOTAL
Direct Cost
Total Equipment Costs
Equipment Installation (includes
7,805,581
40% of total equipment cost
3,122,232.40
3,902,790.50
1,561,116.20
1,170,837.15
Service facilities
3,902,790.50
3,122,232.40
Land
Yard Improvement
9,712,464.00
936,669.72
TOTAL
35,236,714.00
Indirect Costs
Engineering and supervision
3,523,671.40
Construction expenses
3,523,671.40
Legal expenses
3,523,671.40
Contractors fee
1,761,835.70
Contingencies
4,228,405.68
TOTAL
16,561,225.58
2.4.2
51,797,939.58
Raw materials, labor cost, catalyst cost, and Utilities cost plus fixed capital cost are the
needed for operating capital cost. Whereas, raw materials, labor, catalyst, and utilities
cost are the ingredients to make variable cost. All the calculations are shown below.
35
2.4.2.1
Reactant
RM per tonne
RM per year
Propane
96,360.00
1,409.09
135,779,912.40
Ammonia
74,460.00
915.39
68,159,939.40
Sulphuric Acid
185.84
TOTAL
203,939,851.80
2.4.2.2.1
Operation Team
2.4.2.2.1.1
Shift Worker
Table 2.13 Shift Worker Cost
Position
Quantity
Salary/Month (RM)
Total
Chemical Engineer
2,400.00
2,400.00
1,750.00
1,750.00
Panel Boardmen
1,300.00
5,200.00
1,300.00
10,400.00
TOTAL
19,750.00
Non-Shift Worker
Table 2.14 Non-Shift Worker Cost
Position
Safety Officer
Quantity
Salary/Month (RM)
Total
2,200.00
4,400.00 (B)
36
2.4.2.2.2
Maintenance Team
Table 2.15 Maintenance Labor Cost
Position
Quantity
Salary/Month (RM)
Total
Engineer
2,400.00
9,600.00
Technician
11
1,300.00
14,300.00
TOTAL
2.4.2.2.3
23,900.00 (C)
Additional Worker
Table 2.16 Additional Worker Cost
Position
Quantity
Salary/Month (RM)
Total
20
900.00
18,000.00
3 x 4 shifts
600.00
7,200.00
Contractor
Guard
TOTAL
2.4.2.2.4
25,200.00 (D)
Administration Team
Table 2.17 Administration Worker Cost
Position
Quantity
Salary/Month (RM)
Total
1,750.00
1,750.00
1,000.00
6,000.00
TOTAL
7,750.00 (E)
RM per tonne
RM per year
37
Vanadium
16.06
631.00
10,133.86
Rate
Quantity
TOTAL
Used
Water
Water price :RM 1.15 /m3
a) Industrial
103 m3/day
RM 118.45 /day
Total
Electricity
electricity price :Tariff E1 Medium Voltage
General 6.6kV 66kV
RM 0.203
/kWh
5514.29 kWh
RM 1119.40 /day
supply
Total power required
RM 408,581.32 /year
Total utilities
RM 450,986.32 / year
38
2.4.3
Start-Up Costs
Start-up costs are the cost for the plant to start operating. Start-up costs will cover
process modifications, start-up labor, and loss in production. Estimation of start-up cost
is usually 10% from the fixed capital investment
Start-up Costs
2.4.4
Total Investment
2.4.5
Total Revenue
Table 2.20 Total Sales
Product
Acrylonitrile
2.4.6
RM per tonne
RM per year
112,679.88
6,043.06
680,931,275.60
Break-Even Analysis
Contribution
Breakeven Point
RM 680,931,275.60 RM 206,083,972.00
RM 474,847,303.60
RM 74,278,271.78 /year
39
2.4.7
Value (RM)
Cost Of Land
9,712,464.00
FCI
51,797,939.58
FCI1
25,898,969.79
FCI2
25,898,969.79
Working Capital
5,179,793.96
680,931,275.60
Cost Of Manufacturing
257,881,911.60
9,712,464.00
FCI
= total investment
FCI1
25,898,969.79
9,945,204.40
5,967,122.64
5,967,122.64
2,983,561.31
680,931,275.60 206,083,972.00
680,931,275.60 206,083,972.00
680,931,275.60 206,083,972.00
680,931,275.60 206,083,972.00
10
11
12
680,931,275.60 206,083,972.00
680,931,275.60 206,083,972.00
680,931,275.60 206,083,972.00
0.00
2,983,561.31
8,950,683.95
51,797,939.58
51,797,939.58
-14,892,257.96
25,898,969.79
-25,898,969.79
405174146.2
406106509.2
405111988.7
404515276.5
404515276.5
404067742.3
403620208.1
403620208.1
403620208.1
388727950.10
405174146.2
406106509.2
405111988.7
404515276.5
404515276.5
404067742.3
403620208.1
403620208.1
403620208.1
403620208.1
-25,898,969.79
-9,712,464.00
Cash Flow
0.00
0.00
0.00
51,797,939.58
9,712,464.00
COMd
dk)*(1-t)+dk
FCI-dk
Investment
(K)
Dk
(R-COMd-
Year
Of
End
3,967,569,109.00
3,578,841,159.90
3,175,220,951.84
2,771,600,743.78
2,367,980,535.72
1,963,912,793.46
1,559,397,517.00
1,154,882,240.55
749,770,251.83
343,663,742.67
-61,510,403.58
-35,611,433.79
-9,712,464.00
Cash Flow
Cumulative
40
41
=
0 343,663,742.67
3
=
749,770,251.83 343,663,742.67 4 3
= 2.15 !
600,000,000.00
500,000,000.00
400,000,000.00
300,000,000.00
200,000,000.00
100,000,000.00
0.00
-100,000,000.00
10 11 12 13 14 15 16 17 18 19 20
Year
2.5
CONCLUSION
From the research done, it is clear that, the demand of acrylonitrile is relatively high
especially in Asia countries. Therefore, the production of acrylonitrile will focus on
the Asia/Far East market.
This chemical plant producing acrylonitrile will be the first plant built in Asia.
Asia is the largest consuming region of acrylonitrile which accounts 39% of world
42
consumption. Therefore, it is a wise idea to produce acrylonitrile in order to cater the
demand of acrylonitrile.
As for the breakeven point, the sale that has to be made in one year is
actually lower that what the plant expected to sale. Hence it is clear that, the plant is
making profit every year.
From the market analysis, we know that, it takes about 2.15 years for the
company to get back its investment, which is generally very fast for a chemical
plant. Hence this is one of the advantages of this plant as it is very profitable.