Review of the Development of China’s Coal Chemical Industry in 2007

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Review of the Development of China’s Coal Chemical Industry in 2007: 2007 was a year of steady progress for China’s coal chemical industry. Against the backdrop of international oil prices reaching levels above $100 per barrel and an increasing global demand for alternative chemical raw materials and energy sources, China’s coal chemical industry, with its advanced level of industrialization, became an important part of the country’s energy structure. Investment opportunities in the coal chemical industry continue to attract significant attention from both domestic and international investors. Continuous progress has been made in scaling up coal chemical technologies, the construction of large-scale coal-to-oil and coal-to-olefins plants is advancing smoothly, and product standards for related substances such as dimethyl ether have been established one after another. ——Relevant policies continue to play a leading role in the development of the coal chemical industry. Guided by the National Development and Reform Commission’s “Notice on Strengthening the Management of Coal Chemical Project Construction to Promote the Healthy Development of the Industry,” China’s coal chemical sector is developing in an orderly manner, with coal-to-oil and MTO/MTP demonstration plants set to be completed and put into operation within the scheduled time frames. Affected by the National Development and Reform Commission’s ban on new projects using natural gas for chemical purposes, coal-based methanol will become the main source of methanol in China. As for the much-discussed \"Medium- and Long-Term Development Plan for Coal Chemical Industry,\" the official document was still not released in 2007, despite the release of a draft for feedback at the end of 2006. ——The construction of Shenhua’s coal-to-oil facility is progressing smoothly. Since its commencement in August 2004, the world’s first industrial-scale facility for direct coal liquefaction developed by Shenhua Group has made steady progress; by the end of 2007, 98% of the construction work had been completed, and a number of significant technological breakthroughs of milestone importance were achieved: the world’s first commercial direct coal liquefaction technology ； The world’s first complete set of technologies for the production of nanoscale catalysts for direct coal liquefaction ； Technology for manufacturing and lifting the world’s largest and heaviest hydrogenation reactor ； China’s first set of application technologies for fluidized-bed hydrogenation (T-STAR), etc. According to officials from Shenhua, the company’s direct coal-to-oil demonstration plant is set to begin trial operations at the beginning of 2008. ——Alcohol-ether fuels are developing rapidly. In 2007, China made significant progress in the development of alcohol-ether fuels; hundreds of thousands of tons of methanol and dimethyl ether were produced annually, and the total capacity of projects under construction also reached tens of millions of tons, laying the foundation for the advent of an era dominated by alcohol-ether fuels. The product standard for dimethyl ether for use in urban gas, issued by the Ministry of Construction in October, removed obstacles to the use of dimethyl ether fuel in civilian applications. SNOW Group has taken a leading position in the dimethyl ether fuel industry thanks to its strong distribution network for civilian gas, with industry giants such as Jutai Energy, Lanhua Kechuang, and Hubei Tianma following closely behind. Breakthroughs have also been achieved in the use of dimethyl ether in vehicles; driven by a industry-academia-research consortium composed of nine organizations including the Energy Research Institute of Shanghai Jiao Tong University, Shenwo Bus, Shangchai Group, and Shanghai Huayi, tests on dimethyl ether for vehicle use have been **successful**. ——New autonomous coal chemical technologies are beginning to gain an advantage. In 2007, China’s coal chemical industry moved away from relying solely on imported technologies; technologies with independent intellectual property rights developed rapidly, enabling China to assume a leading position globally. Among them are the Shenhua direct coal-to-oil technology, which is about to enter industrial production; the DMTO technology developed by the Dalian Institute of Chemical Physics, for which a catalyst factory with an annual capacity of 2,000 tons has been built; the water-coal slurry gasification technology developed by Yankuang and East China University of Science and Technology, which is being exported abroad; and the methanol-to-gasoline technology that came online in Yunnan in December. ——The coal chemical equipment industry is seeing opportunities; the development of coal chemistry has driven the growth of this industry. Driven by market demand, the coal chemical equipment industry has also received attention from **the relevant regulatory authorities. The development of large-scale coal chemical plant equipment has been listed as one of the 16 key technical and equipment projects to be vigorously developed in the future, with the localization of such equipment being a priority. Against this backdrop, the coal chemical equipment industry saw favorable development opportunities in 2007.