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- Discussing measures to spread eco-friendly HPPO method to USD 113.5 billion PO market…Along with commencing the hydrogen peroxide business
SKC and EVONIK, which is possessing the original technology of eco-friendly PO production method ‘HPPO’, are discussing measures to cooperate in the global market
The HPPO method, which uses hydrogen peroxide as a catalyst, does not emit hazardous materials when producing propylene oxide (PO).
As it produces only PO and water, this method is more economical and eco-friendly than other methods that emit byproducts.
This discussion was resulted from the meet of two different necessities: SKC was exploring a new business model and EVONIK as the second largest hydrogen peroxide manufacturer in the world was seeking for measures to spread its HPPO methods. It is expected that substantial outline of measures will come out before the end of 2017.
SKC is considering two measures for the global cooperation. The first is to begin a business that provides HPPO technology and operation & maintenance of the HPPO factory.
Even though the HPPO method is attracting worldwide attention because of eco-friendly trend, it is hard to adopt the method.
The two companies which have the original technology may enter the market where they want to begin the business based on their own decision. PO producers would not be able to adopt this method, even if they want to.
EVONIK share this technology with other companies through license-out. However, because the application is very complicated and difficult that it is hard to commercialize. The operation rate of other companies which had adopted EVONIK’s HPPO method is less than 30%.
However, SKC succeeded in world’s first commercialization of the HPPO method two years after it had adopted this method in 2006. The operation rate of SKC is recording 100% for the past 10 years.
SKC is the only company that shows high operation rate among companies that had adopted the HPPO method. This is why SKC’s know-how is attracting market’s attention.
In particular, China is showing a special interest. The China government penalizes companies that emit large amount of pollutants and is encouraging eco-friendly methods.
Since 2018, the China government will enact ‘Environmental Protection Tax’, which is to impose tax discriminatorily in accordance with the emission amount. Currently, 60% of PO facilities in China is using a chlorine method which emits large amount of toxic waste.
These PO producers will need to pay the penalty and tax, or install additional eco-friendly facilities. Because of this situation, one PO producer demolished 80,000 tons of production facility this year.
SKC signed an MOU with a few companies among five companies in China, Middle East, and Europe, which requested a partnership. Currently, SKC and EVONIK are examining various cooperation measures.
They can commence HPPO facility O&M business or establish a joint venture with these companies to do business in those areas.
Discussions on Entering a Global Hydrogen Peroxide Market for HPPO…Basing on the Experience of SEPK, a Joint Venture between SKC and EVONIK
The second measure is to cooperate in the hydrogen peroxide business, which is used for the HPPO method. The HPPO method requires a stable provision of large amount of hydrogen peroxide.
When producing 300,000 tons of PO, 200,000 tons of hydrogen peroxide are required. At the same time, it has to be 70% pure hydrogen peroxide. Therefore, a high purity hydrogen peroxide production facility is required next to the HPPO production facility.
A hydrogen peroxide production facility SKC EVONIK Peroxide Korea (SEPK), which is a joint venture between SKC and EVONIK, is located next to SKC’s HPPO facility.
SKC with EVONIK is discussing measures to expand the hydrogen peroxide business, using its SEPK experience.
If a company adopts the HPPO method, there is a high possibility that the company cannot secure any facility that can provide highly purified hydrogen peroxide near the company.
The SEPK operation experience is a great help for constructing and operating hydrogen peroxide production facilities for HPPO. The profitability is more than 10%.
If the HPPO method is spread to the global market through the cooperation between the two companies, profit of both companies as well as sales revenue will greatly increase.
The current global PO production per year is 9 million tons, which is USD 13.5 billion and the HPPO method produces 1.5 million tons, 16.7% of the total PO production, which shows a high growth potential of the HPPO method.
In particular, it accompanies the drastic demand increase of hydrogen peroxide. When the half of the global PO production is made using the HPPO method, the necessity of hydrogen peroxide increases to 3 million tons, which reaches USD 2.1 billion.
An official of SKC said, “SKC and EVONIK are discussing measures to expand the HPPO business such as participating in the factory operation business or doing HPPO business by establishing a joint venture. We will try to find out the best measures for both companies.”
Meanwhile, PO is the basic material to produce polyurethane for automobile interior materials and propylene glycol for cosmetic products and pharmaceutical products. In accordance with the growth of the related industry, demand for PO is increasing by 300,000 ~ 400,000 tons every year.
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