The industrial policy for the coal chemical industry is set to be released, and the coal industry may experience a period of growth

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China’s National Development and Reform Commission is likely to release its first development plan for the coal chemical industry soon; this policy could encourage domestic companies to use coal instead of oil as the main raw material for chemical products. 　　The National Development and Reform Commission said on its website on Wednesday that it has recently completed a draft policy to encourage chemical companies to develop coal chemical projects in areas with newly discovered coal reserves. 　　The main areas with newly discovered coal reserves are Xinjiang and Inner Mongolia in the northwest. 　　The National Development and Reform Commission expects that this plan will reduce the demand for oil by chemical companies and alleviate the increasingly severe domestic oil shortage crisis. 　　China’s demand for oil is growing rapidly, and it views coal chemical projects as an effective means to reduce dependence on crude oil imports and ensure a stable energy supply. China is the world’s largest coal producer. 　　Coal chemical technology primarily converts coal into methanol, in order to produce ethylene and propylene, which are fundamental components of various plastics and chemical products. 　　This draft policy will impose appropriate restrictions on the development of coal chemical projects in existing coal mines, and prevent such projects from being established in areas where coal reserves are scarce, in order to balance the coal demand of industries such as electricity generation and steel manufacturing. 　　The National Development and Reform Commission stated that Zhang Guobao, the vice minister in charge of energy, has approved the draft plan and hopes that it will be finalized as soon as possible, though no date for its release has been given. 　　Chinese energy companies have been hoping to **release clear plans regarding the coal chemical industry in order to reduce their own investment risks. Although the coal chemical industry requires substantial investment, its profit margins are quite high due to China’s relatively low coal prices. 　　China’s power producer China Guodian Corp. launched the company’s first coal chemical project on Monday in northern Inner Mongolia, with an investment of 2.1 billion yuan (equivalent to $285 million). It is expected that starting from 2010, the project will produce 820,000 tons of fertilizer per year. 　　Once announced, this policy could further stimulate China’s coal demand and drive an increase in coal imports. According to the latest projections released by the National Development and Reform Commission on Tuesday, China will become a net coal importer starting in November, and this trend is set to continue for most of next year. 　　Customs data shows that China’s coal imports in November were 4.34 million tons, while exports during the same period were 4.18 million tons.