Creating a New Blue Sea by Customization

The COVID-19 has been raging around the world since the beginning of 2020, resulting in shrinking consumer demand and disrupting supply chain. According to the IMF, the global economic growth rate in 2020 was about -4.9%. International oil prices were also affected. WTI price fell from US$60~70 a barrel before the epidemic to US$30~40 a barrel, and the price of ethylene glycol EG fell below $500. Oriental Union Chemical Corporation (OUCC) is positioned in the middle of petrochemical industry chain. It produces ethylene oxide (EO) from ethylene, and then produces EG and ethylene oxide derivatives (EOD). The cover story of this issue introduces how OUCC continuously improves its competitiveness with high-value products under the changing environment.

Focus On Cost Reduction To Build Strength

        

        When the market is in turmoil and the petrochemical industry is in a downturn, only by reducing the cost of the core raw material (EO), can we keep the profit margin of the main product of EG. Therefore, OUCC continues to expand production capacity, improve process efficiency, and reduce the transportation and storage costs of ethylene raw materials import, so as to ensure the competitiveness of core raw materials. In addition, OUCC also uses high-efficiency catalyst to improve production efficiency to reduce raw material costs such as ethylene and oxygen and energy consumption; furthermore, it builds large-scale shore side ethylene raw material storage tank in the form of joint venture to increase the scheduling flexibility of imported ethylene to reduce the transportation and storage costs, and strengthen the overall competitiveness. It is expected to be completed in 2022 The cost competitiveness of the Company will be further improved.

        

       Expand Niche with Customized Products 

In order to slow down the vulnerability of traditional bulk petrochemicals to business cycles, OUCC since 2002 has stepped into the production of ethylene oxide derivatives (EOD). So far, Kaohsiung and Yangzhou two special chemical production bases have produced ethanolamine (EA), ethylene glycol butyl ether (EB), ethylene carbonate (EC), a variety of non-ionic interfacial active agents derived from ethylene oxide, etc., with a total annual production capacity of 330000 tons.

        

In addition to selling raw materials, OUCC restructured its sales team in 2020 according to customer demand, it is divided into four categories: solvent chemicals, daily chemicals, construction chemicals and fine chemicals, providing customized and one-stop service for customers.

For daily chemicals, OUCC has developed a series of functional detergents by virtue of its knowledge and manufacturing advantages in non-ionic interfacial active agents, and provides customized detergent formula package, everything from cleaning, antibacterial, cloth protection, deodorization, etc…After purchasing the formula, customers only need to add the fragrance and adjust the color or concentration, and it can be sold on the shelves. OUCC is out of the red sea battlefield of selling single raw materials and customers can directly use formula products, reduce the process of compounding and this creates a win-win situation!

In the construction chemicals sector, OUCC is the largest and only supplier of concrete admixture "monomer" in Taiwan. However, the Company is not complacent and is still committed to adding value to its products. Considering the concrete admixtures require mother liquor of concrete to make a concrete admixture in low concentration according to customer requirements. Therefore, OUCC has further processed the monomer to provide concrete admixtures and mother liquor products required by customers. This year, it has been adopted by affiliated companies of the group.

Circular Economy Turns Wastes to Gold

 In addition to actively developing various high-value EOD products, OUCC is also committed to improving the process and investing advanced equipment, continuously promoting the innovation of circular economy and layout of green production, so as to reduce the impact of business operation on the environment.

        

  

In order to establish the circular economy business model, OUCC invested NT$19.2 million in developing a "potassium iodide (KI) recovery technology". In the ethylene carbonate (EC) plant, the waste liquid containing potassium iodide is concentrated and then put into other product processes to shape the product cycle of "resource - product - renewable resources". In addition to saving the cost of waste liquid treatment, the by-products generated in the process also boost the company's revenue. This innovative business model, from basic design, equipment procurement and production, civil construction, equipment installation to testing, was completed by OUCC itself. It was officially put into operation in 2018, transforming the waste liquid of potassium iodide from "waste" to " renewable resources", and changed the traditional linear economy into circular economy. In this mode, resources can be used "from cradle to cradle", and materials are constantly circulating. OUCC becomes a practitioner of circular economy from petrochemical industry.

In addition, OUCC has also accelerated the development of environmentally friendly green products. With the assistance of Far Eastern New Century Corporation’s dyeing factory, OUCC developed a number of "low foam and high bio dyeing and finishing auxiliaries" by combining bio materials, including scouring agents, soaping agents, reducing detergents, and disperse dyeing agents. The bio contents of scouring agents, soaping agents and reducing detergents are 34%, 43% and 54%, respectively. This marks an important milestone for the Company stepping into the bio industry from petrochemical industry.

    Continuous Transformation to Meet New Heights

        

COVID-19 is a touchstone of business transformation and operation capability for OUCC. Although it brings shock, the Company is more determined to move forward. OUCC will continue to integrate the advantages of ethylene oxide (EO) and develop into a diversified chemical company with EG core commodities and specialty chemicals as its main axis. It will steadily pursue profit and growth and achieve the vision of sustainable operation!