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Honeywell's Technology for More Propylene in China

Zacks Equity Research

UOP LLC, a subsidiary of Honeywell International Inc. (HON), recently procured a contract from Fujian Meide Petrochemical Co. Ltd - a wholly-owned subsidiary of China Packing Group Company Ltd - to deploy UOP C3 Oleflex process technology for increased propylene production.

The UOP C3 Oleflex process technology will be used to convert propane to propylene, a substance used in the production of packaging and other similar types of materials. Additionally, Honeywell's UOP will also provide equipments, staff training and technical and other services to Fujian Meide’s facility.

Honeywell's UOP already has business ties with Fujian Meide. Earlier, in 2011, it licensed its C3 Oleflex process technology to Fujian Meide to produce 660,000 metric tons of propylene annually. The new unit is expected to produce the same annual quantity starting 2015.

The technology from Honeywell is well suited to meet the rising demand for propylene across the world. According to market projections, China accounts for more than 15% of the global demand. Domestic demand for propylene is further expected to grow 5% to 6% annually. As the demand for propylene increases, producers are on the look-out for ways to maximize product yield and reduce production costs. The excellent performance of Honeywellls’ UOP C3 Oleflex process technology is a likely solution to this as it reduces costs, generates high returns on investment and maximizes operational flexibility. UOP's combined Oleflex projects is expected to increase propylene production globally by more than 5 million metric tons in the next 3 years.

Honeywell is a global diversified technology and manufacturing company with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals and energy efficient products and solutions for homes, business and transportation.

The company faces intense competition from industry bigwigs like Crane Co. (CR) and Macquarie Infrastructure Company LLC (MIC). Honeywell currently has a Zacks Rank #3 (Hold). One of its competitors, United Technologies Corp (UTX) carries a Zacks Rank #2 (Buy).

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