Chapter 2 Correction LH
Chapter 2 Correction LH
“Thereby declare that this report is the result of my own work except for quotation
and summaries which have been duly acknowledge”
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SUPERVISOR’S CERTIFICATION
“Thereby declare that I have read this thesis and in my own opinion this project
report is sufficient in terms of scope and quality for the award of the Bachelor in
Chemical Engineering (Hons).”
Signature : ………………………………….
Name : Siti Fatimah Abdul Halim
Date : ………………………………….
2-ii
TABLE OF CONTENTS
TITLE PAGE
DECLERATION i
SUPERVISOR’S CERTIFICATION ii
TABLE OF CONTENTS iii
LIST OF TABLES iv
LIST OF FIGURES v
LIST OF ABBREVIATIONS vi
EXECUTIVE SUMMARY vii
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LIST OF TABLES
PAGE
Table 2.1: Summary of Total Fixed Capital Investment [4] ..........................................3
Table 2.2: Number of operator based on equipment for main process ........................5
Table 2.3: Number of operator based on equipment for utilities ..................................6
Table 2.4: List of the price and sale for raw material and product ...............................7
Table 2.5: Summary of Total Manufacturing Cost by using CAPCOST [4] ..................8
Table 2.6: Purchase Equipment................................................................................13
Table 2.7: List of Purchased Utilities Equipment .......................................................14
Table 2.8: List of Estimation of Operating Labor .......................................................15
Table 2.9: List of power used by main process equipment ........................................16
Table 2.10: List of power used by utilities equipment ................................................16
Table 2.11: Non-discounted Profitability Criteria .......................................................16
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LIST OF FIGURES
PAGE
Figure 2.1: World Consumption of Phthalic Anhydride [1] ...........................................1
Figure 2.2: World regional demand on Phthalic Anhydride on 2016 [1] .......................2
Figure 2.3: Malaysia demand on Phthalic Anhydride on 2012-2017 [2] ......................3
Figure 2.4:Cash Flow Diagram for Phthalic Anhydride Plant ....................................10
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LIST OF ABBREVIATIONS
MA Maleic Anhydride
PA Phthalic Anhydride
P Sale Price
Q Breakeven Point
VC Variable Cost
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EXECUTIVE SUMMARY
2-vii
CHAPTER 2
MARKET ANALYSIS
The demand for phthalic anhydride in industrial market has been driven by
strong global demand for phthalate plasticizers. The phthalate plasticizers market
dominated the demand for PA and accounted for 52% of the global volume consumed
in 2016. Asia is the largest consumer of phthalic anhydride for the production of
plasticizers, accounting for about 61% of consumption [1]. China is the world’s largest
consumer of phthalic anhydride for phthalate plasticizers. The next-largest markets for
phthalic anhydride outside of Asia are in Europe and North America. The growth of the
industries such as construction, automotive and marine in Asia make India, Taiwan,
South Korea and Malaysia to have the highest growth rate of phthalic anhydride.
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2.1.2 Global Demand and Supply for Phthalic Anhydride
In the recent year, the phthalate plasticizers and alkyd resins are among the
higher demand in Malaysia. Malaysia is one of a country in Asia Pacific as a Phthalic
Anhydride producer even though the production not too high compared to others Asia
countries including China, India, South Korea and Japan [1]. Based on Figure 2.3, at
the end of 2016, several markets started to improve and there was a significant
increase in demand in 2017. Phthalate plasticizers will continue to have the largest
market share and will drive refined phthalic anhydride consumption on a global scale.
Overall economic health will affect the phthalate plasticizers market because it is tied
to the plastic, construction, automotive and marine industries [2].
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MT
The capital cost pertains to the costs associated with construction of a new
plant of chemical manufacturing plant. The cost estimated to design the 100, 000
tonnes per annum of phthalic anhydride production. All the data generated by
CAPCOST by using (CEPCI 2018 = 609.28) [3] [4]
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iv. Electrical (5% PEC)
Typical values for the working capital are between 15% - 20% of the fixed capital
investment. Assume working capital is 15% of fixed capital investment;
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2.2.2 Estimation of Cost of Operating Labor
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b) The number of operator for utilities
*13 Operator for integer yield need to double up as a backup if the person in charge
have an emergency and need to replace by others operator in order to make sure the
operation run smoothly without any problem.
The amount of power used by utilities equipment used were presented in Appendix
The amount of electricity for process equipment for major uses
= 19.75 hp
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i. Amount of electricity needed by utilities unit.
= 207.5 hp
Total Electricity used: 19.75 + 207.5 = 227.25
The amount of electricity needed for instrumentation purposes and control is estimated
at 10% of the need for process tools and utilities.
Then the need for electricity for instrumentation and control = 22.73
*Refer to the sample calculation.
Generate from CAPCOST. From the given information:
In this section, manufacturing cost will explain about the cost associated with
day-to-day operation of a chemical plant. There are many elements that influence the
manufacturing cost of chemical production plant especially in petrochemical industry.
There are three cost items need to be evaluate in order to general manufacturing cost
and total manufacturing cost per year. The three important items or categories for
manufacturing cost are direct manufacturing costs (DMC), fixed manufacturing costs
(FMC) and general manufacturing expenses (GME).
Price Flowrate
Material Name Classification ($/kg) (kg/h) Annual Cost
O-Xylene Raw Material $ 0.35 10828.93 $ 31,541,424
Vanadium
Oxide Raw Material $ 3.30 198.63 $ 5,742,096
Phthalic
Anhydride Product $ (1.20) 11537.49 $ (115,217,990)
Maleic
Anhydride Product $ (0.90) 594.55 $ (4,453,061)
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Table 2.5: Summary of Total Manufacturing Cost by using CAPCOST [4]
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Estimate Profit Margin = Product price – Raw Material Price
= $ 121,253, 256 - $ 37,283,520
= $ 83, 969,736 / year
$ 50,908,514/year
Total Variable Cost =
100 000 tonne/year
= $ 509.09 tonne
Breakeven analysis is one of the most common tools used in evaluating the
economic feasibility of a new enterprise or product. The breakeven point is where the
revenue is exactly equal to costs. Therefore,
TR = TC
PQ = FC +VC
Since VC = VQ then,
PQ - VQ = FC
Q(P-V) = FC
FC
Q = P−VC
Where;
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Thus, from the value achieved, the breakeven point can thus be calculated by using
equation below as follows;
FC
Q=
P−VC
25,622,601
$
year
= 1,212.53 509.09 = 36,424.71 tonne/year
$ −$
tonne tonne
From the analysis, the breakeven point occurs at the production of 36,424.71 tonne
per annum. The total production of phthalic anhydride plant is 100,000 tonne per
annum. Hence, it can be concluded that this project is feasible.
The cash flow was used to determine the timing of the cash flows in the plant.
It also the movement of money whether gives profit or loss of some production plant.
It is usually measures by using limited period of time or project life year. In the
construction of plant, 10,12 and 15 are commonly used. This project life year was
directly related to profitability. This is depending on the value of income earned during
the time the plant generated whether smaller or greater at the beginning of the project.
(Refer to Table 2.11 Appendix) for non-discounted cash flow table.
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2.2.9 Payback Period (PBP)
The payback period determined is within 2.2 years of operation. However, period may
be change due to the economic condition. This is because the price of raw materials
is cheaper, and the product price is higher and, taxes or equipment can be change
over years.
Discounted Cash Flow Rate of Return 31.31% Rate of Return on Investment 35.09%
Payback
Cumulative Cash Flow 3rd Year−(Cost of Land+Working Capital)
Period (PBP) = 2 +
Cumulative Cash Flow for 3rd year−Cumulative Cash for 4th Year
−$ 7,350,000−$ 4,193,390
=2+
−$ 7,350,000+$ 5,730,000
= 2 + 0.2
= 2.2 years
CONCLUSION
Break Even Point (BEP) is 36,424.71 tonne per annum, already in the
reasonable range is in the range of 40-60%. Moreover, Payback Period within 2.2 year
because of the cheaper the raw material and high sale price of product.
From the results of economic analysis above can be concluded that Phthalic
Plant Anhydride from o-xylene and air with a capacity of 100,000 tons / year feasible
and need to be studied further for other improvement.
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LIST OF REFERENCES
[1] ITA Conference, No Title, in: Phthalic Anhydride, ITA Conference, Prague,
2017.
[2] Merchant Research and Consulting, Phthalic Anhydride Market, (2016).
[3] Matche.com, Chemical Engineering Equipment Cost, (n.d.). matche.com
(accessed January 1, 2017).
[4] J. Richard Turton, Bailie, Wallace, Analysis, Synthesis and Design of Chemical
Process, Fourth Edi, Pearson, United States, 2014.
[5] P. Anhydride, J. Co, P.A. Produced, P.E. Cost, A.U. Cost, A. Cost, R. Materials,
A. Revenue, A. Credit, F. Gas, Reactors and Separations Design Project
Phthalic Anhydride Production, (n.d.).
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APPENDICES
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Table 2.7: List of Purchased Utilities Equipment
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Table 2.8: List of Estimation of Operating Labor
No of
Position US$/Month Total US$/Year
Worker
CEO 1 6,000 72,000
COO 1 5,000 60,000
HR
Manager 1 2,000 24,000
Assistance 2 1,600 19,200
Sales, Marketing & Finance
Manager 1 1,100 13,200
Assistance 2 1,600 19,200
Business Development &
Admin 1 1,100 13,200
Manager 1 800 9,600
Assistance
QC & QA
Supervisor 1 700 8,400
Technician 2 1,200 14,400
Operation
Manager 1 3,500 42,000
Engineer 2 4,000 48,000
Operator 118 35,400 424,800
HSE
Manager 1 3,000 36,000
Assistance 3 3,000 36,000
Maintenance
Engineer 1 2,000 24,000
Technician 3 1,500 18,000
Logistic
Manager 1 1,400 16,800
Assistance 3 2,400 28,800
Lab
Engineer 1 2,000 24,000
Chemist 2 1,600 19,200
Assistance 2 1,200 14,400
Security Guard 3 750 9,000
994,200
TOTAL
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Table 2.9: List of power used by main process equipment
Power (Hp)
No. Equipment Amount
Power/Unit Total Power
1. Pump (P-701) 1 5.00 5.00
2. Pump (P-702) 1 1.50 1.50
3. Reflux Pump (T-701) 1 0.25 0.25
4. Reflux Pump (T-702) 1 0.25 0.25
5. Reflux Pump (T-703) 1 0.75 0.75
6. Compressor (C-701) 1 7.50 7.50
7. Discharge Pump 1 1.50 1.50
8. Belt Conveyor 1 1.75 1.75
9. Bucket Elevator 1 0.25 0.25
10. Recycle Pump 1 1.00 1.00
Total 19.75
No Equipment Power, hp
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SAMPLE CALCULATION
Utilities cost:
Electricity requirements for Laboratory, Household, Office and others are estimated at
25% of the need for process tools and utilities [5].
Then the need for electricity = 56.81 hp
Total power requirement = (207.5 + 19.75 + 22.73 + 56.81) hp
= 306.79 hp
Power factor (cos ) = 0.8
Total Power = (306.79/0.8) = 383.49 hp
383.49 hp = 285.97 kW
*Electrical Tariff Rate Price (For the first 200 kWh (1 - 200 kWh) per month
0.2180/kWh
*For the next 100 kWh (201 - 300 kWh) per month 33.40sen/kWh
Electrical needs are met from Tenaga Nasional Berhad (TNB) and as a reserve used
electric generator.
Assume: Diesel backup power = 1000 Kw
Net Heating Value (NHV) diesel = 43100 kJ / kg
Fuel Density = 832 kg/m3
Power raised = 285.97 kW (1kW = 3600 kJ/hr) = 1,029,492 kJ/hour
Combustion efficiency = 0.4
Fuel Requirement = (1,029,492 kJ / hour) / [(43,100 kJ/kg) * 0.4]
= 59.72 kg / hour
Fuel volume = (59.72 kg/hr) / (832 kg/m3)
= 0.072 m3 / hr
Fuel Price = $ 0.5 /litre =
(72 litre/hr) * ($ 0.5/litre) = $ 36/hr * (24 hr/day) = $ 864/day
Fuel is prepared for the need if electricity from TNB shutdown for 3 days (maximum
and continuous), then the fuel should always be there are:
3 days x 24 hours x 0.072 m3 / hr = 5.184 m3
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