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Ethylene Glycol Operations

The Ethylene glycol (EG) plant produces one of the two main raw materials required to produce polyester which is highly required by the Indonesians growing textile industries.

Production

The Companys two EG plants adopt a patented technology from Scientific Design Co. Inc., USA. And have an annual production capacity of 216,000 tons. Ethylene as a main raw material, is supplied from local and international suppliers.

Adjacent to its ethylene glycol facilities, in 2003 the Company completed the construction of the Indonesias first ethoxylate plant with licensed from Scientific Design Co. Inc., USA. With a total investment of USD 10 million, the plant has an annual production capacity of 45,000 tons. The main raw material use in producing ethoxylate, ethylene oxide, is an intermediate product from the Companys ethylene glycol plant. Other raw materials are fatty alcohol, which can be purchased locally, and nonyl phenol, which has to be imported.

Products

The ethylene glycol plants produce one main product, mono-ethylene glycol (MEG), and two by-products, di-ethylene glycol (DEG) and tri-ethylene glycol (TEG). About 27% of the MEG productions was consumed by the company
s polyester division. Other main consumers of MEG are polyester synthetic fiber manufacturers and polyester terephtalate (PET) resin producers. MEG is also used as a cooling agent and anti-freeze. DEG is used in the unsaturated polyester resin industry, brake fluid industry and additive oil industry, while TEG is used in gas dehydration process and chemical cleaning purposes.

Sales

During 2014, The EG product sales reached USD 211 million. The EG total sales represented 47% of the Company
s total consolidated sales in 2014. In term of value, 81% of the Companys ethylene glycol sales were made to the domestic market which some of them are in the form of long-term sales arrangements with a number of major Indonesias polyester producers. The Compans EG export, which represented 19% of the EG total sales, were mainly made to Asia and North America. Since 2000, the Company has started to sell ethoxylate to domestic and overseas detergent manufacturers.

Chemical Market Overview

The sales of MEG products are closely linked to the demand from the domestic polyester industry and currently Indonesia is net importer of MEG. This condition brings a big opportunity, especially if we look at the fact that the Company has sufficient economies of scale to compete against international EG producers from Saudi Arabia, United States, Japan and Singapore. With its total production capacity of 216,000 tons per year and its location advantage, the Company has a very big opportunity in the domestic market. In 2015, the demand of MEG in Asia is forecast to greatly exceed the total production capacity and the outlook of MEG industry, particularly in Asia, is still very promising in the long term.

The Companys ethoxylate business has a very big potential, for domestic and export market. Ethoxylate is a good and environmentally friendly substitute for alkyl benzene sulfonates. For that reason, the Company already increased its ethoxylate production capacity to more than 80,000 tons per annum starting from the                   beginning of thirds quarter year 2013. The Company believes that in the near future, there will not be any domestic competitors, as it is neither efficient nor practical to produce ethoxylate without integration with an ethylene oxide plant.

 

Polyester

Polyester Operations

The Companys polyester plants production technology were acquired from Zimmer Aktiengesellschaft of Germany. These plants are designed to produce short and long fiber polyester yarn to meet a requirement from textile industries. With its up stream integration, Companys polyester products are well positioned in the Indonesias polyester industry.

Production

The Total annual production capacity of two polyester plants owned by the Company is 194,400 tons for polymer/polymer pellets; 43,200 tons for polyester yarn per year; 86,400 tons of polyester fiber per year; and 21,600 tons of drawn textured yarn per year.

The polyester production process has two stages, the polymerization stage, which produces polymer; and spinning stage, which further process polymer into polyester yarn and polyester fiber. The polyester yarn and fiber are mostly produced through direct spinning method, this method gives an advantage in the form of lower production cost and consistent product quality.

The main raw materials used in polyester manufacturing are purified terephthalic acid (PTA) and MEG. MEG is obtained from the companys EG plant, while PTA is obtained from a number of suppliers in Indonesia.

Products

The Company produces pre-oriented polyester yarn (POY), polyester staple fiber (PSF), drawn texture yarn (DTY), and polyester chips. POY is an intermediate product, which can be further processed down stream into weaving and knitting polyester fabrics.

The PSF is the main raw material used by the textile industry to produce polyester spun yarn, which is widely used for apparel and house hold goods. PSF can be blended with others fibers. PSF is also used for manufacturing carpet pile, toy, sleeping bags, padding, sport shoes and diapers.

Sales

In 2014, the polyester division recorded sales of USD 182 million, consisting of sales of polyester yarn of USD 13 million, polyester fiber of USD 99 million and other polyester products of USD 70 million. Until now, PT. Polychem Indonesia Tbk is still one of the largest polyester yarn suppliers in Indonesia.

In 2014 the Company sold 89% of its polyester staple fiber to more than 20 companies in Indonesia, while the remaining 11% were exported to customers in Asia and Europe.

Polyester market overview

The largest and fastest growing demand amongst all man made fibers in the world is the demand for polyester fiber. The inherent functional characteristic of polyester, which combined with a steady stream on its technological advances, has triggered a rapid growing demand around the globe.

Indonesia, a country having the fourth biggest population in the world, still has a low per capita consumption of polyesters, even less than half of those of other more developed countries. This fact shows that domestic consumption will follow the trend and will keep increasing in the future. As an efficient and competitive polyester producer, the Company is ready to seize the opportunity from this increasing demand and to safeguard its dominant position in Indonesia.  

 

NYLON

The Company, through its subsidiary,   produces nylon yarn for the production of tire cord, nets, ropes, fabrics, and reinforcing materials in fan belts and hoses. In addition, the subsidiary also produces high quality nylon-6 chips used as the main raw material in yarn, mono filament and various other plastic industries.

The subsidiary’s equipment for the nylon yarn production is from Zimmer AG of Germany with total production capacity of 44,000 tons per year.

The Company produced 15,489 tons of nylon yarn in 2014. The total sales of nylon yarn reached USD 56 million in 2013, 97% of which was to tire cord plants and other domestic customers, while the other 3% was sold to foreign customers and the remaining 0.4% was sold to.

Nylon tire cord industry is closely related to the development of tire industry. Currently, as the only producer of nylon tire cord for the domestic market, the Company has a huge opportunity to increase its market share in the domestic market and in other countries with continuously growing economy in Asia.