Thoughts on the Development Strategy of China’s Petrochemical Industry in Recent Times

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This post was last edited by I am kind on 2017-2-12 at 13:16. Reflections on the Development Strategy of China’s Petrochemical Industry in Recent Times. Bai Yi, Deputy Director of the Petroleum and Chemical Industry Planning Institute. Abstract: An in-depth analysis is provided of the industrial context related to the relocation of activities within China’s petrochemical industry, as well as the strategies for petrochemical companies to expand overseas and the broader \"Belt and Road\" initiative； A focused analysis was conducted on the 13th Five-Year investment strategy for the petrochemical industry, taking into account the supply-side reform of such enterprises. At present, the main problems in China’s petrochemical and chemical industries are small enterprise sizes and a scattered layout ； With the development of cities, the original layouts of some enterprises have come into conflict with urban planning, resulting in restrictions on their production and development; these enterprises are faced with the need to relocate or undergo restructuring ； How to achieve the upgraded transfer and relocation of the petrochemical industry is an urgent issue facing the sector. This article aims to conduct an in-depth analysis on this topic. 1. The consolidation of the petrochemical industry into industrial parks and the urbanization of society: As of 2014, according to incomplete statistics, there were over 850 various petrochemical and chemical industrial parks in China. Of these, around 260 were approved for establishment by provincial or higher-level authorities, accounting for only about 30% of all such parks. Most enterprises have moved to operate within these industrial parks. However, the overall development level of petrochemical and chemical parks across the country is still low, especially the development of parks at the provincial level and below is highly irregular. During the 13th Five-Year Plan period, efforts should be accelerated to relocate those enterprises that are not yet located within these parks as soon as possible, while also working to improve the standardization level of China’s petrochemical and chemical parks. Industrialization and urbanization are the two main pathways for China’s modernization. The industrialization of petrochemical parks and social urbanization both promote each other as well as encounter conflicts, eventually achieving coordination through these interactions. 1.1 Overview of China’s urbanization process. Based on the urbanization rate of the permanent population, China’s urbanization rate was 10.64% in 1949, reached 17.92% in 1978, 36.22% in 2000, and 54.77% in 2014. According to the **New Urbanization Plan 2014–2020**, the urbanization rate is expected to exceed 60% by 2020. 1.2 The history of urbanization is also the history of the relocation and transformation of chemical enterprises. New-type urbanization is an important driving force for China’s economic development. Urbanization provides a vast market for raw material industries, including the petrochemical industry. However, as urban spaces expand and old suburbs turn into new urban areas, companies are forced to relocate from these old suburbs to the new ones. In this sense, China’s history of urbanization is also a history of the relocation and transformation of petrochemical enterprises. 1.3 It is necessary to strengthen the integration of planning for petrochemical and chemical industrial parks with urban planning, and ensure its effective implementation. At present, the standardization level of petrochemical and chemical parks below the provincial level in our country is generally low; even some parks at the provincial level and above are not fully standardized. There is a lack of sufficient safety distances between these parks and sensitive areas in the surrounding environment, and in some cases, villages exist within these parks. In recent years, the development of petrochemical industrial parks and urbanization have progressed rapidly. Both park planning and urban planning are constantly being revised, yet there are many conflicts at the implementation level. For example, residential areas scheduled for relocation are delayed indefinitely, and areas designated as green buffers have turned into zones of illegal construction that provide social services to the parks, posing safety risks. 1.4 Full-scale initiation of the relocation and renovation of hazardous chemicals enterprises, with the Beijing-Tianjin-Hebei region taking the lead. The relevant departments are studying the requirements and measures for advancing the relocation and renovation of hazardous chemical manufacturing enterprises in densely populated urban areas ； The Ministry of Industry and Information Technology has recently officially launched the formulation of a work plan for the relocation and transformation of chemical enterprises in the Beijing-Tianjin-Hebei region, outlining the working principles, key tasks, and implementation schedule. 1.5 It is necessary to strengthen science popularization efforts in the petrochemical industry, using science to guide public opinion and public sentiment in a correct manner. There is a widespread aversion in society towards such topics, and the safety and environmental issues associated with the petrochemical industry are often exaggerated or misinterpreted. A typical example is the public unrest caused by PX; it is necessary to enhance science-based outreach efforts to guide public opinion and public sentiment. 2 Adjustment of the regional layout of petrochemical industries and regional economic development: Since the reform and opening up, against the backdrop of regional economic development, the adjustment of the regional layout of petrochemical industries has generally gone through three stages. Phase 1: From the reform and opening up to the end of the 20th century, the regional restructuring of the chemical industry was primarily characterized by a shift toward the east. During this period, the overall characteristic of regional economic development in our country was that the eastern coastal areas were the first to open up to the outside world and accelerated their development ； Large-scale industrial relocation is prominently reflected in the relocation and transformation of enterprises in the “third tier” areas. Against this backdrop, the chemical industry in the eastern region took the lead in accelerating its development ； At the same time, a large number of chemical enterprises and research institutions that were involved in military-related industries and had previously moved from the eastern regions to the \"third front\" areas underwent relocation and renovation. Some of these enterprises moved across different regions; for example, the Liming Research Institute was relocated from Qinghai to Henan. More organizations underwent relocation and renovation within the same province, such as the Second Film Factory of the Ministry of Chemical Industry, which was moved from the Funiu Mountains area to the suburbs of Nanyang City. Phase 2: Since the beginning of this century, the regional restructuring of China’s petrochemical industry has been characterized by an extensive expansion toward the west. Since the beginning of this century, China’s economy has entered a stage of development focused on heavy industry; resource constraints have become increasingly prominent, while environmental protection pressures have increased in the eastern regions, and labor costs have risen rapidly ； In the central and western regions of our country, there are relatively abundant untapped resources and lower labor costs; moreover, environmental enforcement is less strict in some western areas with low population density. In 2000, the strategy for the large-scale development of the western region was put forward, followed by strategies to revitalize the old industrial bases in the northeast and promote the development of the central region. Driven by both market forces and policies, resource-based industries, labor-intensive industries, and industries with high environmental impact have shifted on a large scale to the west. Resource-based chemical industries such as coal chemistry are moving on a large scale to the west, becoming key investment areas in the chemical industry ； Transfer of high-energy chemical products to western regions with lower energy prices ； Some chemical industries that generate a high environmental burden, such as those involving dyes, pesticides, and their intermediates, have also moved to areas in the west with lower population density and less stringent environmental enforcement, such as the Hexi Tanggula Desert region. The negative effects of the extensive \"westward expansion\" of the chemical industry are beginning to become apparent. (1) Under low oil prices, the competitiveness of coal chemical industries declines, and some projects face losses ； (2) In the extensive “westward expansion” of the resource-oriented chemical industry, local authorities **use the rate of local resource conversion as a prerequisite for resource allocation**. Investment enterprises are encouraged to prioritize the development of basic chemical products that involve a high degree of resource conversion, thereby exacerbating the overcapacity in the production of such products ； (3) In the resource-rich regions of the central and western parts of the country, the focus on producing basic chemical products derived from resources has further reduced the level of sophistication in the regional chemical industry. This has created a gap between the basic chemical industry and downstream industries such as those in the automotive and light manufacturing sectors within these regions. At present, basic chemical products are exported on a large scale from the central and western regions as well as the Northeastern region of China, while refined chemical products are imported in large quantities from the eastern regions. This increases the overall costs of China’s chemical industry, reduces economic efficiency, and raises the risks associated with the transportation of hazardous chemicals ； (4) The relocation of chemical industries with high environmental impact, such as those using outdated processes for dyes, pesticides, and their intermediates, to areas in the west with low population density and lax environmental enforcement not only causes local environmental pollution but also hinders the adoption of cleaner production methods in these industries. Phase 3: The chemical industry is entering a \"new normal\" of coordinated and balanced development between the east and west. Low oil prices have caused a rapid decline in investment in resource-based chemical industries such as coal chemistry. At the same time, the conditions for accelerating the development of fine chemical industries in China’s central and western regions as well as the Northeast are now ripe, and the shift of the chemical industry westward and northward will see a transition from an extensive to a more refined model. China’s oil resources are mainly concentrated in the northeast and northwest, while coal resources are found primarily in the southwest and central regions such as Shanxi. The petrochemical industry is well-developed in the northeast, and the coal chemical industry in the central and western regions has seen rapid progress over the past decade or so; the conditions for producing raw materials used in the fine chemical industry have improved significantly ； In the central and western regions as well as the northeast region of our country, thanks to more than 30 years of development since the reform and opening up, and particularly the accelerated progress in the past 15 years of this century, related downstream industries have reached a considerable scale, and the market conditions for the development of fine chemicals are now in place ； Local authorities have made precision manufacturing a priority for industrial upgrading during the 13th Five-Year Plan period. Liaoning Province took the lead in identifying the development of precision manufacturing as the key direction for the growth of its chemical industry, while Ningxia aims to focus on the development of precision coal chemical industries. Xinjiang, on its part, seeks to accelerate the development of advanced petrochemical processing industries. In summary, the central and western regions as well as the northeastern region possess all the necessary conditions in terms of raw materials, market prospects, and policies for developing the fine chemical industry. In the future, efforts should be made to attract the relocation of fine chemical industries there, fill any gaps in this sector, facilitate effective integration between local resources and consumer markets, and raise the industrial level and economic efficiency of the petrochemical industry. The eastern region of our country will further optimize and develop large-scale petrochemical bases, continuing to lead the fine chemicals industry. The increase in China’s oil consumption relies mainly on imports, with sea transport being the primary method for importing oil. **The seven planned petrochemical industry bases are all located in the eastern coastal port areas; these regions make use of overseas resources to accelerate the development and construction of petrochemical bases, thereby improving the quality of the industry as well as its capacity to secure chemical raw materials. The eastern coastal regions have large market bases, the strongest foundation in the chemical industry, and the greatest concentration of high-level technical talent. The focus of their future development will be on the utilization of low-carbon resources, new chemical materials, and high-end specialty chemicals, thereby continuing to drive the transformation and upgrading of China’s chemical industry. The coastal areas of East and South China are densely populated; therefore, the petrochemical industry should be concentrated there, an integrated industrial ecosystem covering upstream and downstream processes should be established, and a circular economy should be developed. 3 The Overseas Expansion of Petrochemical Enterprises and the Belt and Road Initiative 3.1 The Current Situation of Chinese Petrochemical Enterprises’ Overseas Expansion 3.1.1 Access to Resources China relies heavily on imports for products such as oil, natural rubber, and potash fertilizer. The output from China’s overseas oil and gas interests has exceeded 130 million tons of oil equivalent ； Domestic companies have invested in or taken stakes in overseas natural rubber plantations covering over 1.6 million mu; the vast majority of this production is supplied to the domestic market, accounting for around 30% of China’s total natural rubber consumption ； Overseas potassium mines and large-scale potassium fertilizer projects are under construction. 3.1.2 Acquisition of Technologies In recent years, through overseas mergers and acquisitions, China has acquired a range of key technologies such as methionine, commercial dyes, and special silicone materials. This has enabled rapid development in certain sub-sectors of new chemical materials and high-end specialty chemicals, bringing these fields to international advanced levels. 3.1.3 Market expansion: Over one-third of China’s tire supply is exported, but it faces trade barriers such as anti-dumping and countervailing measures. Many domestic tire manufacturers are building tire production facilities in Southeast Asia; on the one hand, this takes advantage of the region’s natural rubber resources and lower labor costs, and on the other hand, by exporting products from Southeast Asia to Europe and the United States, they can avoid the trade barriers associated with exports from China. 3.2 The degree of connection between the countries along the \"Belt and Road\" initiative and Sinopec’s chemical industry: There are 65 such countries along the \"Belt and Road\" initiative, primarily located in Southeast Asia, South Asia, Central Asia, West Asia, and Central and Eastern Europe. These countries are mainly emerging markets; they account for approximately 62.5% of the world’s population and 28.6% of its economic output. Some of these countries possess abundant natural resources – they account for around 30% of the world’s crude oil production and 43% of its natural gas production. 3.2.1 The countries along the **Belt and Road Initiative** are the main sources of imported resources for China’s petroleum and chemical industries. Approximately 2/3 of China’s oil imports come from these countries along the Belt and Road Initiative, mainly in the Middle East, Russia, and Central Asia ； Almost all of our country’s natural gas imports come from countries along the Belt and Road Initiative**, primarily Russia, Central Asia, and Southeast Asia ； Almost all of our country’s natural rubber imports come from Southeast Asia. 3.2.2 The countries along the **Belt and Road Initiative** are important export markets for China’s chemical products. These countries account for about one-third of China’s total exports of chemical products, with the main export items including fertilizers, pesticides, synthetic fibers, rubber products, inorganic chemical raw materials, and fine chemical products. 3.3 Key Directions for China’s Petrochemical Enterprises to Expand Overseas in the Future 3.3.1 Securing Resources In the future, China will still rely heavily on imports for resources such as oil, natural gas, natural rubber, and potash fertilizer. The deep-processing facilities for such resource-based industries represent key areas of focus in the strategy for expanding overseas; the relevant regions include those along the \"Belt and Road\" initiative**, with attention also given to Africa, Central and South America, and North America. 3.3.2 Market Development: The countries along the \"Belt and Road\" are **emerging markets** with rapid growing demand, and they represent the main source of growth for expanding China’s exports of chemical products. At the same time, expanding overseas markets should be combined with making use of advantageous resources abroad and shifting excess domestic production capacity; for example, some companies are exploring the possibility of moving natural gas chemical production facilities to Central Asia, while others are considering transferring caustic soda production facilities to regions in Southeast Asia where electricity costs are low. However, attention should be paid to issues such as the product value in the local market and the potential for market growth. 3.3.3 Obtaining technologies: In the future, overseas M&A will remain one of the important ways for China to acquire production technologies for high-end chemical products. The main regions where chemical companies seek such technologies are the developed countries in Europe and the United States, with Japan also being a key target. 4. Considerations regarding regional economic characteristics in the process of industrial transfer 4.1 Characteristics of structural adjustments in the petrochemical and chemical industries in the central and western regions sowie in the Northeast 4.1.1 Filling the gap in the fine chemicals industry by enabling effective integration between resource-based chemical industries and related downstream industries. The development of resource-based chemical industries provides raw materials for the fine chemicals industry, while strategies such as the development of the western regions, the growth of the central regions, and the revitalization of the old industrial bases in the Northeast have increased the demand for fine chemicals from downstream industries. In the future, it is necessary to accelerate the development of the fine chemicals industry in order to fill this gap, thereby allowing the resource advantages of the central and western regions and the Northeast, along with their advantages as emerging markets, to work together synergistically. 4.1.2 Scientific planning and steady progress in the development of resource-based petrochemical industries: In accordance with the **petrochemical industry development plan, efforts are made to enhance the capabilities of existing petrochemical enterprises, build petrochemical facilities that make use of energy import pipelines, and leverage oil transport pipelines between China and Russia, China and Myanmar, as well as China and Kazakhstan to promote the development of petrochemical industries in regions such as the Northeast, Yunnan, and Xinjiang ； Upgrade and demonstrate coal resource areas with favorable comprehensive supporting conditions, and advance the coal chemical industry steadily. 4.2 Key Points for Adjusting the Industrial Structure of the Petrochemical Sector in the Developed Areas of the East 4.2.1 Accelerating the Development of Petrochemical Industry Bases According to the **Petrochemical Industry Planning Scheme**, all seven planned petrochemical industry bases are located in the coastal port areas of the east, which will play a leading role in driving the development of the chemical industry in these regions. Accelerating the development of petrochemical industry bases is therefore a key task in adjusting the industrial structure of the chemical industry in the eastern areas. At present, the phase evaluation of this work has been completed. Due to various reasons, the progress of implementation varies significantly among the different bases. 4.2.2 Driving the development of new chemical materials and high-end specialty chemicals: The developed regions in the east have a solid foundation in the fine chemicals industry, an abundance of high-level technical talent, as well as both the necessary upstream raw materials and downstream market demand. In the future, these regions will continue to focus on the development of new chemical materials and high-end specialty chemicals, thereby continuing to play a leading role in the transformation and upgrading of China’s petrochemical industry. However, to raise the technical barriers for this work, efforts should be made to promote openness and diversified development. 4.3 When importing resources and expanding industries overseas, attention should be paid to resource conditions and the development environment, as well as the trend toward lighter chemical raw materials and the impact of crude oil price changes on product competitiveness. With the development of shale gas in North America and natural gas in the Middle East, along with the resulting increase in production of low-cost, low-carbon hydrocarbons, this has had a significant impact on the raw material structure of the traditional ethylene industry ； The low prices of crude oil further increase the complexity of the development of the petrochemical industry, and will also drive significant changes within it; elements such as the diversification of raw materials and the development of products with distinct characteristics and differences become even more prominent. Focusing on imported resources increases the risks associated with input-output dynamics. Many enterprises pay close attention to industries such as the deep processing of imported resources, but they overlook risks such as high investment costs, difficulties in securing the necessary resources, and sensitivity to economic factors. These enterprises lack an adequate understanding of the uncertainties in the international market, and the lack of stable resource supply channels as well as volatile prices have an impact on production and operations. Overseas investments should fully consider national conditions and the characteristics of regional markets. The local investment environment, policies, target markets, differences in investment costs, and logistics expenses should be thoroughly studied, and the uncertainties in investment and product costs need to be analyzed. 5 Investment Strategy for Emerging Petrochemical Industries: During the 13th Five-Year Plan period, the development strategy for the petrochemical industry focuses on optimizing the petrochemical sector, improving traditional chemical manufacturing, developing new chemical materials, and advancing the use of new energy sources in the chemical industry. The main approaches to development include making the industrial system more efficient, concentrating industrial operations, promoting environmental protection and sustainability, and integrating technological innovation. Enterprise structure and institutional innovation serve as the key drivers to facilitate the transformation and upgrading of China’s petrochemical industry, with the goal of laying the foundation for China to become a strong nation in this field by 2020. 5.1 Address the discrepancy between industry capacity development and market demand by focusing on resolving the mismatch between the industrial structure and the needs of market development. Mainly: reduced product competitiveness, low quality levels of the products, a low proportion of high-end and specialized products; there are also some inefficient, high-risk, and highly polluting products that urgently require new alternative manufacturing processes and products. Among these are reasons such as excessive homogenized construction and rapid growth in production capacity, as well as the failure to eliminate inefficient and outdated production capacities, inadequate measures for handling waste gases, wastewater, and solid waste, and low productivity within the industry. Statistics on some chemically produced goods with overcapacity in our country are shown in Table 1. Table 1 Statistics on Some Chemically Related Products with Overcapacity in China Product Name Capacity (10,000 tons) Overcapacity Rate (%) Reasons for Overcapacity Nitrogen fertilizers (synthetic ammonia): 741 71.9 Rapid capacity expansion and slowing demand growth Phosphorus fertilizers: 235 22 Rapid capacity expansion Caustic soda: 389 28 Excessive investment Soda ash: 303 17 Slowing demand growth PVC: 2500 44 Excessive investment Methanol: 6400 40 A certain proportion of inefficient capacity, resulting in temporary overcapacity Silicon monomers: 260 30 Temporary overcapacity Acetic acid: 980 55 Excessive investment Synthetic rubber: 520 20 Excessive investment and products that do not match market demand; low product quality, limited differentiation, and similar performance characteristics. Many of these products compete in the mid-to-low end of the market, targeting the same consumer segments and regions, which leads to price competition, raw material shortages, and declining profitability for enterprises. Such problems occur frequently in the mid- and downstream industries, especially in chemical materials, monomers, and specialty chemicals. The statistics on the self-sufficiency rate of key chemical products in China in 2015 are shown in Table 2. Table 2 Statistical Analysis of the Self-sufficiency Rate of Key Chemical Products in China in 2015 Product Name Consumption Volume (10,000 tons) Self-sufficiency Rate (%) Reasons for Insufficient Self-sufficiency Ethylene (equivalent) 403 50 Insufficient production capacity, reliance on certain raw materials, and a predominance of low-end downstream products Ethylene glycol 130 73 33 Insufficient production capacity and weak product competitiveness p-Xylene 208 82 45 Insufficient production capacity Polyethylene 234 659 Insufficient production capacity and unreasonable product structure Polycarbonate 167 27 Insufficient production capacity due to technical reasons Polyoxymethylene 485 8 Insufficient production capacity in China, resulting in only the supply of mid-to-low grade products PMMA 717 1 Insufficient production capacity and weak product competitiveness due to technical reasons Engineering plastics such as polyamides 724 2 Insufficient production capacity due to technical reasons Polyphenylene sulfide 3.7 27 Product performance does not meet requirements Polyphenylene oxide 4.8 19 Insufficient production capacity due to technical reasons Carbon fiber 1.4 29 Outdated technology and high production costs Special engineering plastics (including polyimides, polyarylates, etc.) 3.3 28 Insufficient production capacity due to immature technology ； The existing devices and products are of low quality and cannot meet the demands. 5.2 It is necessary to increase efforts in innovation, expand channels for cooperation in technology and low-carbon resources, and develop green and high-end products. The global market demand for chemical products is moving toward higher-end and specialized products; by developing differentiated, high-value products and technologies, it is possible to raise the overall level of China’s petrochemical industry, shifting from large-scale production of basic chemical products to the development of high-value-added advanced chemical products. Statistics on the consumption of new chemical materials and the self-sufficiency rate are shown in Table 3. Table 3 Statistics on the Consumption of New Chemical Materials and Self-Sufficiency Rates
Product Category | 2010 | 2015 | Consumption (10,000 tons) | Self-Sufficiency Rate | Consumption (10,000 tons) | Self-Sufficiency Rate
I. High-performance resins | 147 | 257 | 57% | 218 | 263% |
1. Engineering plastics | 299 | 38% | 421 | 49% |
2. High-end polyolefin plastics | 645 | 35% | 922 | 38% |
3. Polyurethane resins | 486 | 95% | 743 | 96% |
4. Fluorosilicone resins (including silicone oils) | 228 | 3% | 331 | 103% |
5. Other high-performance resins | 219 | 0% | 63 | 110% |
II. Special rubbers | 256 | 51% | 335 | 66% |
1. Petroleum-based special rubbers | 214 | 45% | 259 | 56% |
2. Non-petroleum-based special rubbers | 428 | 5% | 761 | 100% |
III. High-performance fibers | 375 | % | 98 | 4% |
IV. Functional membrane materials | 274 | 5% | 435 | 4% |
V. Electronic chemicals | 484 | 45% | 695 | 3% |
Total for new chemical materials | 1,805 | 556% | 2,637 | 63% |
Changes in the composition of raw materials and crude oil prices have an impact on the development of this industry. With the rapid development of international low-carbon resources, a number of new facilities with strong competitiveness have been put into operation and entered the market, resulting in an increase in the supply of intermediate raw materials in the international market. Investing in importing intermediate raw materials to develop high-end downstream products, reducing carbon emissions, and generating profits through products with high technological content will become a prevailing trend. The forecasts for some of China’s major products are shown in Table 4. Table 4 Forecast of Demand for Some Major Chemical Products in China Unit: 10,000 tons Product Name 2020 2025 Ethylene (equivalent consumption) 4,600 5,060 Propylene (equivalent consumption) 3,700 4,430 Butadiene 4,400 5,500 Benzene 1,530 2,000 Xylenes 2,910 3,200 Ethylene glycol 1,600 1,950 Acetic acid 550 700 Acrylic acid 220 300 Vinyl acetate 200 260 Ethylene oxide 250 270 Epichlorohydrin 330 440 Polyethylene 2,800 3,350 Polypropylene 2,380 3,000 Polyvinyl chloride 2,120 2,700 Polystyrene 660 840 ABS 560 620 Styrene-butadiene rubber 160 180 Butyl rubber 110 140 Caustic soda 3,600 4,400 Soda ash 3,200 4,000 Tires (100 million units) 4.0 5.0 Key Points of Supply-Side Reform in the Petrochemical Industry 6.1 Capacity reduction (of outdated or excess capacity) Refining (10%–15%) – Small-scale refineries, unreasonable raw material allocation, substandard product quality, lack of product differentiation ； Olefins—Ethylene production from naphtha cracking on a scale of less than 300,000 t/a ； Nitrogen fertilizers (10%-15% of outdated production capacity) — backward gasification technology, poor raw material supply conditions, high energy consumption, and restricted regional environmental conditions ； Caustic soda (10%), calcium carbide (30%), PVC (20%) — poor raw material conditions, high energy costs, unreasonable chlorine-based product strategy ； Soda ash—capacity control ； Methanol (30%–40%) – outdated and unstable production capacity, high raw material costs, lack of downstream markets, high logistics costs ； Acetic acid (15%) – The downstream market prospects are narrowing, with excess production capacity ； Tires (20%) — Slowing growth in the automotive industry, restricted exports, low-end products ； Pesticides (30%–40%) — highly toxic, low effective, and do not meet environmental standards. 6.2 Cost reduction (dynamic and static): Conduct value addition analysis and cost contribution analysis for the industry; carry out an analysis of the industry’s value chain to increase its added value ； By identifying \"defects,\" optimization plans for raw material structure and energy utilization are proposed, thereby controlling production costs, financial costs, management costs, and sales costs ； Optimization of industrial chain design: maximization of resource utilization, rationalization of regional markets ； Petrochemicals – use oil where appropriate, use olefins where appropriate, use aromatics where appropriate, and use chemicals where appropriate ； Coal chemical industry – use coal when it’s suitable, gas when gas is appropriate, alcohol when alcohol is suitable, and olefins when olefins are appropriate. Analysis of product competitiveness expectations: For the analysis of product competitiveness expectations in future cycles, horizontal comparison analysis is used instead of vertical comparison analysis. 6.3 Addressing weaknesses (products and technologies) in refining: accelerating the improvement of oil product quality ； Improve refining processes and equipment to enhance adaptability to low-quality crude oil ； Practice \"molecular refining\" to enhance the precision of the refining process and maximize its value ； Improve the comprehensive utilization level of by-product resources in the refining industry. Olefins: Enhance the integrated utilization of resources in refining, promote the use of lighter raw materials for petroleum-based olefins, and increase the proportion of light hydrocarbons ； Advance steadily the production of olefins from coal (methanol) and propylene from propane dehydrogenation. Aromatic hydrocarbons: Scientifically plan the petrochemical aromatic hydrocarbon industry in line with requirements such as integrated refining and chemical processing as well as environmental protection ； Promote the industrialization of coal-based aromatics, advance the diversification of aromatic raw material sources, and build the industrial infrastructure for the integration of aromatics and polyesters. Organic raw materials: Developing scarce varieties such as ethylene glycol, acrylonitrile, styrene, hexanitride, etc ； Accelerate the adoption of clean production processes to replace highly polluting ones, such as those for propylene oxide, chloropropylene oxide, and methyl methacrylate. High-end polyolefin plastics: polyethylene made from comonomers such as high-carbon α-olefins like hexene-1 and octene-1, as well as polyethylene and polypropylene produced using bimodal and metallocatalytic processes ； Continuous bulk method ABS and ABS alloys. High-performance rubber materials: solution-polymerized styrene-butadiene, rare-earth cis-butadiene, halogenated butyl, hydrogenated nitrile butadiene, etc ； Silicone rubber made from coal, a new type of thermoplastic elastomer ； Moderate development of non-traditional natural rubbers such as eucommia gum ； Explore co-crosslinking techniques for different rubber varieties to improve the cost-performance ratio of rubber materials through the development of composite rubbers. Engineering plastics: high-performance engineering plastic products such as PC, PPO, PTT, PCT, PEN, PETG, PI, etc. Polyurethane materials: high-end varieties such as silicone-modified polyurethane elastomers ； Gas-phase phosgenation of isocyanates, specialty isocyanates such as HDI ； Water-based or solvent-free polyurethane products. Fluorosilicon materials: high-performance fluorosilicon polymers and fine chemicals ； ODS (ozone-depleting substances) substitutes with a low greenhouse effect ； Silicone oil-based composites. Biodegradable plastics: polylactic acid PLA, polyhydroxyalkanoates PHA, polybutylene succinate PBS, polypropylene carbonate PPC, bio-nylon, etc. High-performance fibers: high-strength and high-modulus carbon fibers, para-aramid fibers, ultra-high molecular weight polyethylene fibers, polyphenylene sulfide fibers, polypropylene terephthalate fibers, etc. Functional membrane materials: high-end functional membrane materials, high-throughput, high-performance membranes for water treatment ； Films for solar cells, films for special optics ； Membranes for lithium batteries and fuel cells ； Special gas separation membrane ； Sodium hydroxide uses perfluorinated ion exchange membranes. High-end specialty chemicals: safe food additives and environmentally friendly plastic additives ； High-performance electronic chemicals and water treatment agents, etc. Nitrogen fertilizers: Adjust the raw material structure, develop the production of fertilizers from low-rank coals such as bituminous coal and lignite, and promote advanced technologies such as gasification, low-pressure ammonia synthesis, and ultra-low emission treatment of wastewater generated in nitrogen fertilizer production. Phosphatic fertilizers: Enhance the comprehensive utilization of associated resources from phosphate mines and the by-product phosphogypsum. Potash fertilizers: Improving the comprehensive utilization of resources associated with potassium minerals ； Upgrade the range of compound fertilizer products. Pesticides: Developing environmentally friendly pesticide formulations along with new accompanying adjuvants ； Promote the recycling and harmless treatment of waste pesticide packaging ； Develop and promote advanced clean production processes for pesticides and their intermediates ； Accelerate the development and industrialization of new pesticide varieties with independent intellectual property rights. Chlor-alkali: Promoting energy-saving new technologies such as zero-gap and oxygen cathodes ； Encourage the development of oxychlorination-based PVC production to promote mercury-free PVC manufacturing ； Develop high-end, precision chlorinated products and improve the comprehensive utilization level of by-product hydrogen chloride. Soda ash: Optimize and adjust the industrial layout by taking into account factors such as salt resource availability, coal supply, and market demand. Tires: Developing high-end tire products such as aviation tires ； Improve the system for the recycling of used tires. Coal-to-natural gas and coal-to-oil: rational planning to address shortages, improving the level of clean conversion of coal and production efficiency; strict compliance with safety and environmental regulations, as well as the development of advanced treatment technologies for wastewater containing high levels of salts and phenols ； Moderate development of natural gas production via coke co-production, and natural gas production via fertilizer co-production ； Advance the industrialization of coal-to-oil projects and improve the comprehensive utilization level of naphtha and liquefied gas produced as by-products of coal-to-oil processes. Optimized utilization of coal by grade: Improving the pyrolysis technology for low-rank coal and the hydrogenation technology for medium- and low-temperature tar, in order to enable larger-scale installations and enhance environmental protection standards. Biomass new energy: Developing bioethanol derived from cellulose and biodiesel made from food waste oils and similar materials ； Explore new biomass energy sources based on novel high-energy plants and animals such as sweet sorghum and oil-rich microalgae. (Source: Journal of Coal Processing and Comprehensive Utilization, Issue 02, 2017)