UOP LLC, a subsidiary of Honeywell International Inc. (HON), recently secured a contract from Chinese petrochemical producer Guangdong Peng Zun Energy Development Co., Ltd. for an undisclosed amount. The deal aims to meet the growing demand for high value propylene in Southeast Asia by leveraging Honeywell's UOP C3 Oleflex process technology. The contract win seemed to have a positive effect on share prices, which were marginally up on Friday, May 23.
The UOP C3 Oleflex process technology is a propane dehydrogenation (PDH) process that converts propane to propylene. Propylene is widely used in the production of packaging and other similar types of materials like nylon. It will be used by a facility in the Donghai Island Port Chemical Industrial Zone in Zhanjiang, China to produce 450,000 metric tons of propylene annually starting from 2016.
This project is the 16th Oleflex project of Honeywell’s UOP since 2011. Additionally, UOP will provide training, technical services, catalysts, adsorbents, and equipment for the project.
The demand for propylene is expected to rise over threefold by 2020 in China. The technology from Honeywell is well suited to meet this rising demand. As the demand for petrochemicals is increasing, producers are on the look out for ways to maximize product yield and reduce production costs. Honeywell’s’ UOP C3 Oleflex process technology is a likely solution to this, as it reduces costs to yield high returns on investment and maximizes operational flexibility. The combined Oleflex projects of UOP are expected to increase propylene production by 8 million metric tons globally in about three years.
Honeywell is a global diversified technology and manufacturing firm with a wide range of products and services. These include 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.
Honeywell currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include CLARCOR Inc (CLC), Icahn Enterprises, L.P. (IEP) and Noble Group Limited (NOBGY), each carrying a Zacks Rank #1 (Strong Buy).
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