CCM Data & Primary Intelligence
Benchmarking on PAP and Paracetamol Production in China - The second edition
Researched & Prepared by:
Guangzhou CCM Information Science and Technology Co., Ltd Guangzhou, P. R. China
Nov. 2008 Copyright by Guangzhou CCM Information Science and Technology Co., Ltd (P. R. China) Any publication, distribution or copying of the content in this report is prohibited. Website: http://www.cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968 Email: econtact@cnchemicals.com
Website: http://www.cnchemicals.com Tel: +86-20-3761 6606
Email: econtact@cnchemicals.com Fax: +86-20-3761 6968
CCM Data & Primary Intelligence Description: The consumption of paracetamol, which takes the most important position among NSAIDs, has kept growing worldwide, which promotes the production of PAP, the key raw material of paracetamol. As one of main paracetamol manufacturers in the world, China's paracetamol export has constituted 30%-40% of the total paracetamol consumed in the world. On the other hand, process of PAP and paracetamol in China is improving, largely attributable to the governmental environmental protection policy. However, China’s PAP manufacturers’ profit has been further squeezed by the growing investment in environmental protection and the global economic depression in 2008. To further penetrate into the industry, especially the production process, CCM has produced a report of Benchmarking on PAP and Paracetamol Production in China, which will provide you with the answers to the following questions: What are the developing status and trends of the production processes of PAP and paracetamol in China? What are the production costs of these process by theoretical model? What are the actual production cost and total profit of benchmark enterprises of PAP and paracetamol in this report in China? How are the total profit comparison between benchmark enterprises of PAP and paracetamol? What are the financial analysis of benchmark enterprises in 2007? What are the prospective technologies of PAP production in China till 2015?
Main content: No.
Content
Page
Executive Summary
4
Introduction and methodologies
8
I
Review of PAP & paracetamol industry
10
I-1
Brief introduction to paracetamol industry in China
10
I-2
Brief introduction to PAP industry in China
13
II
Brief introduction to various technologies of PAP and paracetamol
16
II-1
Introduction to processes for PAP production
16
II-1.1
Industralized technologies of PAP in China
17
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CCM Data & Primary Intelligence -
Iron reduction of p-nitrophenol
17
-
Catalytic hydrogenation of p-nitrophenol
18
-
Catalytic hydrogenation of nitrobenzene
20
II-1.2
Technologies under research
21
-
Electrolytic reduction of nitrobenzene
21
-
Other findings
25
II-1.3
Comparison among the above four technologies
26
II-2
Introduction to processes for paracetamol production
27
II-2.1
One-step method
27
II-2.2
Two-step method
28
III
Detailed introduction to most popular methods of PAP and paracetamol
30
III-1
Technology for PAP
30
III-1.1
Description of production process and theoretical model of raw materials by iron
30
III-1.2
Description of production process and theoretical model of raw materials by
33
III-2
Technology for paracetamol
37
III-2.1
Brief description of production process
37
III-2.2
Flow chart of paracetamol production
38
III-2.3
Theoretical model of raw materials
38
IV
Estimation on cost and profit of PAP and paracetamol
40
IV-1
In PAP enterprises
40
IV-1.1
Jiangsu Zhongming (adopting PNCB technology)
40
-
Basic situation in Jiangsu Zhongming
40
-
Financial analysis of Jiangsu Zhongming in 2007
42
-
Estimation on raw material cost
47
-
Estimation on manufacturing cost
47
-
Estimation on management cost
49
-
Estimation on total production cost
49
-
Estimation on profit
50
IV-1.2
Liaoning Tianbao (adopting PNCB technology)
52
-
Basic situation in Liaoning Tianbao
52
-
Financial analysis of Liaoning Tianbao in 2007
55
-
Estimation on raw material cost
60
-
Estimation on manufacturing cost
60
-
Estimation on management cost
61
-
Estimation on profit
61
IV-1.3
Liaoning Jinhua(adopting NB technology)
62
-
Basic situation in Huludao Jinhu
62
-
Estimation on raw material cost
63
-
Estimation on manufacturing cost
64
-
Estimation on management cost
64
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CCM Data & Primary Intelligence -
Estimation on profit
65
IV-1.4
Comparison among above three manufacturers
66
IV-2
In paracetamol enterprises
69
IV-2.1
Hebei Jiheng
69
-
Basic situation in Hebei Jiheng
69
-
Actual flowchart in Hebei Jiheng
70
-
Financial analysis of Hebei Jiheng in 2007
72
-
Estimation on raw material cost
77
-
Estimation on manufacturing cost
78
-
Estimation on management cost
79
-
Estimation on total production cost
80
-
Estimation on profit
80
IV-2.2 Lu'an Pharm
82
-
Basic situation in Lu'an Pharm
82
-
Financial analysis of Lu'an Pharm in 2007
83
-
Estimation on raw material cost
83
-
Estimation on manufacturing cost
89
-
Estimation on management cost
89
-
Estimation on total production cost
90
-
Estimation on profit
91
IV-2.3
Comparison between Hebei Jiheng and Lu'an Pharm in profit
93
V
Forecast on PAP & paracetamol industry in China
95
V-1
Forecast on market
95
V-2
Forecast on technology
95
V-3
Competitive power of Chinese paracetamol
97
VI
Site visit reports
101
Executive summary: (Note: The following summary is based on the situation in 2008 and maybe different to what it is nowadays. Please be noted.) - Technologies of Chinese enterprises In the past decade, China’s paracetamol and PAP industry has boomed quickly, and both of their output grows with CAGR of more than xx%. Chinese manufacturers mainly adopt iron reduction method and catalytic hydrogenation of p-nitrophenol to produce PAP, among which iron reduction method accounts for xx% of the total capacity currently. XXX Co., Ltd. is the largest PAP producer in China, with PAP capacity of xxxxt/a in 2008. XXX Co., Ltd. is the only Chinese PAP producer that adopts catalytic hydrogenation of p-nitrophenol, and its capacity
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CCM Data & Primary Intelligence of PAP is xxxxt/a in 2008. Though overseas PAP manufacturers mostly adopt more advanced technologies including catalytic hydrogenation of nitrobenzene and electrolytic reduction of nitrobenzene, these technologies are still under research now in China. - Cost and profit of Chinese enterprises Production cost of PAP of Chinese enterprises ranges from USDxxxx/t to USDxxxx/t in November 2008. It is noted that cost of raw materials constitutes more than XX% of the total production cost. It even approaches xx% in XXX Chemical Plant and xx% in XXX Co., Ltd., two companies CCM has visited and investigated. CCM estimates that the profit level of Chinese PAP manufacturers is actually very low. Profit of PAP in XXX reaches USDxxxx/t, which it is only USDxxxx/t in XXX in November 2008. During the corresponding period, their quoted price of PAP is USDxxxx/t and USDxxxx/t respectively, whereas, Chinese paracetamol producers disclosed that they were often able to purchase domestic PAP at a price of about USDxxxx/t. Paracetamol production is mature in China and the production cost among different manufacturers is nearly the same. To those armed with complete equipment such as XXX, though they have heavy burden on paying for interest and amortization and the production cost is high, they can gain more profit for higher price and larger production scale. - Forecast on PAP and paracetamol production Motivated by demands from both domestic and international markets, Chinese paracetamol will keep on developing relatively rapidly in the coming several years. It is estimated by CCM that the annual growth rate of paracetamol output will amount to nearly xx% in the coming five years.
Character of CCM' Report: The aim of this report is to provide powerful assistance to the strategy group and the management team in making correct decision as how to penetrate the ever-increasing China market and how to catch the maximum commercial opportunities. The report is formulated independently by CCM’s professional market researchers, based on the first-hand and primary data which are analyzed by scientific methodology, confirmed with both manufacturers/end users/traders and legal authorities, and presented in a logic way.
Sample pagesďźš
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II-1 Introduction to processes for PAP production PAP was prepared firstly by Bayer and Caro in 1874, with p-nitrosophenol as the raw material, by reducing p-nitrosophenol in acid agent (HCl) with tin as the reducer. Table II-1-1 Major PAP production technologies in China, 2008 Starting Technology
Advantage
Disadvantage
Status in China,2008
material High product cost, Iron reduction
Lower investment, mature
serious pollution,
Mainstream production
method
technology
small-scale
technology in China.
production p-nitrophenol
Only Anhui Bengbu Bayi Catalytic
High product cost, Good product quality,
Chemical Industry Co., Ltd
hydrogenation
catalyst tends to high yield, little pollution
adopts this process, with capacity
method
lose activity. 20,000t/a in 2008 Low product cost, good
Electrolytic
High energy quality of production, high
No application.
reduction method
consumption yield, little pollution Only Liaoning Huludao Jinhua
Catalytic High yield, high quality,
Fine Chemical Co., Ltd. once
hydrogenation
High cost in catalyst little pollutant
adopted this process, but it has
method (NB) nitrobenzene
stopped it since 2004. No application, but being under Low product cost, little Electrolytic
High energy
study by universities like Peking
consumption
University and Hebei University
pollutant, short production reduction method process of Technology
Table II-1-3 Production situation of Chinese PAP producers, Nov- 2008
Number of users
Current capacity(t/a) Output in 2007(t)
Iron reduction
Catalytic
of
hydrogenation
p-nitrophenol
p-nitrophenol 9
Catalytic of
Electrolytic
hydrogenation
of
reduction
of nitrobenzene
nitrobenzene 1
0
0
(Bengbu Bayi)
(Liaoning Jinhua
(Dongzhitaong
has stopped this
Pharmaceutical(Anhui)
process since
Co., Ltd. is inviting
2004.)
investment)
107,700
20,000
0
0
76,000
15,000
0
0
Table II-1.3 -1 Comparison among different technologies, Oct- 2008 Investment calculated Production Technology
Government’s by 10,000t/a,
Characteristic
cost (USD/t)
attitude thousand toward it USD
Iron reduction method
2,482~
3,210
Limit
2,628
Higher
material
consumption,
high
pollution, high iron content, easy operation, low cost
Catalytic hydrogenation of
2,628
Encourage
~2,774
9,780
3,212
21,900
Low pollution,
low iron content, high cost
in catalyst
p-nitrophenol Catalytic hydrogenation of
Encourage
~3,504
Low pollution, high quality of product, hard to operate,
high cost in catalyst
nitrobenzene Electrolytic
2,336
reduction of
~2,628
Encourage 3,650
Low pollution, high quality of product, high cost in electricity, hard to operate
nitrobenzene
II-2.3 Technology under research in China For one step method, there are two ways of producing paracetamol under research in China now. One is started from nitrobenzene as “a” pathway and the other is started from phenol as “c” pathway described in chapter II-2.1. Table II-2.3-1 Key researchers on one-step technology of paracetamol production in China Status of the Researcher
Institute or University
Study Topic
Achievement research
Total yield is around 55%. The process of catalytic Boron trifluoride ether hydrogenation of solution is adopted instead of nitrobenzene, which is sulfuric acid as medium for Yanji Wang
Hebei University of
similar to the two-step
Technology
method mentioned
hydrogenation. Then
No industrial
ammonia isn’t involved in
application.
previously, but it doesn’t acetylation, and thus the purify PAP, the waste water can be reduced. intermediate of The researcher got patent paracetamol. CN1569819 in 2005.
The production of
Xingquan
Xi’an Modern Chemistry
Chen
Research Institute
paracetamol after
The yield is improved to 60%
acetylation, oximation
by adopting To adopt efficient
and rearrangement
catalyst and control pH of
reaction based on
oximation.
Terminated
phenol.
III-1.1 Description of production process and theoretical mode of raw materials by iron reduction technology Table III-1.1-1 Theoretical consumption of raw material of PAP in China, Oct- 2008 Oct-2008 Raw materials
Unit consumption (kg/kg)
p-Nitrochlorobenzene
*
May-2006
Price,
Unit cost,
Price,
Unit cost,
USD/kg
USD/kg
USD/kg
USD/kg
1.60
0.88
1.41
0.69
1.10
Caustic soda (30%)
3.00
0.10
0.31
0.06
0.19
Iron powder (technical )
1.50
0.55
0.83
0.31
0.47
(30%,technical)
0.30
0.06
0.02
0.08
0.02
Magnesium oxide
0.01
0.12
0.00
1.25
0.01
Sodium metabisulfite
0.02
0.31
0.01
0.25
0.01
**
Hydrochloric acid
Total
2.58
IV-1.1 Jiangsu Zhongming Pharm-Chemical Co., Ltd. Table IV-1.1-1 Main equipment in Jiangsu Zhongming Name of equipment
Number
Unit capacity (Liter)
Total capacity (Liter)
Hydrolization reactor
6
10,000
60,000
Acidification reactor
6
10,000
60,000
Reduction reactor
9
10,000
90,000
36
10,000
360,000
Crystallization reactor
1.80
Table IV-1.1-2 General situation of Jiangsu Zhongming, Nov-2008 Technology improvement
Employees
Waste treatment
Distribution
Maintenance
Transportation
Debt
cost
Management
Raw
equipment
materials supplier
-Jiangsu Zhongming plans to
-300 employees in
-It has invested
invest about USD0.73 million
total, among who 20
USD0.44 million in
to upgrade its production lines,
are technicians.
waste treatment
-At least
Pharm, Hebei Jiheng etc
USD0.15
–It owns self-support import & million per
telephone in
Chemical
freight to Shanghai
office
Group
port is USD29.20 per
hydrogenation to produce
and administrators are
then sends them to
tonne of PAP
PAP.
USD146/month and
special waste water
USD292/month,
treatment plant nearby
and will possibly launch production in March 2009.
- Jiangsu
highway and the
water by itself , and
from bank.
-Very simple,
Yangnong
ordinary operators
technology mentioned above,
-Little loan
only a
-Average salaries of
respectively.
year
products through
technology of sulphur
production which adopts the
export right
-Mainly transports its
and it is going to adopt
-It has finished the trial
- it firstly disposes waste
-It sells PAP mainly to Lu’an
Table IV-1.1-4 Income statement of Jiangsu Zhongming in 2007 31-Dec-07
31-Dec-06
Unit: thousand USD
Unit: thousand USD
ITEM Sales
11,512.53
10,615.47
9,597.11
8,889.72
190.29
159.15
0.00
175.44
Selling and distribution expenses
258.53
90.23
Administrative expenses
122.05
181.70
23.03
0.18
Impairment loss
0.00
0.00
Add: Gain(loss) from investment
0.00
0.00
1,321.52
1,119.05
14.44
18.80
1,402.89
36.35
-66.93
1,101.50
Less :Profit taxes
0.00
73.93
Net profit / (loss)
-66.93
1,027.57
Less: Cost of sales Interest expenses Taxes and associate charges
Financial expenses
Operating profit / ( loss) Add: Non－operating income Less: Non－operating expenses Total profit / (loss)
Source: CCM International Ltd.
Table IV-1.1-12 Estimation on profit of Jiangsu Zhongming, Oct-2008 Item
PAP, USD / kg
Remark
1. Total income
3.13 Price + Return of VAT + Income for selling wastes
Price
3.07 FOB Shanghai in Oct-2008
Return of VAT
0.00 This is not an export price, so no return of VAT.
Other income after tax
0.06 From selling iron mud to steel factory
2. Expense
2.90
Total production costs + VAT+ EAT & CT + House tax+ Land holding tax + Others tax Total production costs
2.80
VAT
0.08
EAT & CT
0.008
House tax
0.0003
Land holding tax
0.003 Land area x Land holding tax
Others tax (Pollutant discharge fee, stamp tax 0.01 and tax on vehicles and vessels use) 3. Gross Profit
0.23 Income - Expense
4. Profit tax
0.06 Gross profit×25％
5. Profit after tax
0.17 Gross Profit - Profits Tax