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Honeywell International Inc.’s (HON - Analyst Report) group company, UOP LLC, has been chosen by Zhejiang Shaoxing Sanjin Petrochemical Co. Ltd to offer its key technology for producing propylene to the Chinese company. The deal provides a good opportunity for Honeywell’s UOP Oleflex™ technology in China, as the country’s propylene producer increases production to meet the demands.

This is the sixth contract bagged by Honeywell for its UOP technology from petrochemicals producers to produce propylene in 2011. Four of the prior contracts were in China and one in Abu Dhabi. The technique is used to produce materials,such as films and packaging.

In the current Chinese project, Honeywell’s UOP C3 Oleflex process technology will be used by a new propane dehydrogenation unit to produce 450,000 metric tons of propylene annually. The unit will be built at Zhejiang’s facility in Shaoxing City, Zhejiang Province, China and is expected to be established by 2013.

As per the deal, apart from the license for the technology, engineering design, catalysts, adsorbents, equipment, staff training and technical service will be provided by Honeywell’s UOP.

In Oleflex technique, propane is converted to propylene through catalytic dehydrogenation. The technique is quite economic and boosts production rate.

Based in Morris Township, N.J., Honeywell International Inc. is a Fortune 100 company, providing technical and manufacturing support to customers worldwide. It also provides aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Major competitors of Honeywell are BorgWarner Inc. (BWA - Analyst Report), United Technologies Corp. (UTX - Analyst Report) and Johnson Controls Inc. (JCI - Analyst Report).

We currently maintain our Neutral rating on Honeywell, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

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