Prospects for China’s coal chemical industry in 2008

Thread Content

Outlook for China’s coal chemical industry in 2008: Over the past year of 2007, China’s coal chemical industry developed steadily under the guidance of the National Development and Reform Commission; new coal chemical projects were launched in an orderly manner, and product standards were introduced one after another. So, what are the development trends in China’s coal chemical industry in 2008, and what factors will influence its direction? Can coal chemical products gain market acceptance? And let us look forward together. --The \"Medium- and Long-Term Development Plan for the Coal Chemical Industry\" will be released. By the end of 2007, Zhang Guobao, vice chairman of the National Development and Reform Commission, stated that formulating such a plan is of great significance for regulating and guiding the healthy development of the coal chemical industry. Zhang Guobao emphasized that the development of coal chemical industry must take into account not only the rational utilization of coal resources, but also constraints such as environmental capacity, water resources, and the market ； The development of coal chemical industry must comply with the requirements of **‘energy conservation and emission reduction’**; it is necessary to evaluate, from a life-cycle perspective, the energy efficiency of coal chemical products as well as the environmental impact of their carbon dioxide emissions. He requested the Ministry of Industry to further refine and improve the Medium- and Long-Term Development Plan for the Coal Chemical Industry, and to submit it to the committee’s executive meeting for review as soon as possible. It is foreseeable that the \"Medium- and Long-Term Development Plan for the Coal Chemical Industry,\" whose draft for public comment was released at the end of 2006, will likely be officially introduced in 2008 after more than a year of review. --Production capacity for coal-based methanol and coal-based dimethyl ether will increase. According to incomplete estimates, by the end of 2007, China’s production capacity for coal-based dimethyl ether was around 2 million tons per year; however, there were projects under construction with a capacity of over 10 million tons, and a significant portion of these projects were set to come online in 2008. Moreover, most of the newly built dimethyl ether projects are equipped with coal-based methanol plants, and the methanol production capacity is 1.4 times that of the corresponding dimethyl ether production capacity. Therefore, the production capacity of the methanol dimethyl ether industry in the country will be fully utilized in 2008. Since the methanol product from most methanol/dimethyl ether combined plants is used as a raw material for producing dimethyl ether, it will not have a significant impact on the spot price of methanol. Moreover, in a market environment where the price of household liquefied gas is high, the sales of dimethyl ether as a substitute for it are promising. --A million-ton-scale coal-to-oil demonstration plant is set to begin operations. Since its commissioning in 2004, Shenhua’s million-ton-scale direct coal-to-oil demonstration plant has attracted considerable attention. By the end of 2007, 99% of the total work had been completed, and operation is expected to begin successfully in 2008. Previously, public reports indicated that the testing drive would take place in April, but now sources say the expected date for a successful testing drive has been pushed back to September. This can be understood as Shenhua leaving some margin of time to ensure the successful operation of the plant; after all, the scale increases by more than a hundred times, from the 10,000-ton pilot plant located in Wujing, Shanghai, to the million-ton demonstration plant in Inner Mongolia ； The harsh operating conditions in coal-to-oil conversion units place high demands on the equipment and instruments ； Even if driving is successful, it remains to be seen whether continuous operation can be ensured to enable commercial production. --Environmental capacity and water resources are under strain. In our country, areas with abundant coal lack water, while areas with plenty of water lack coal. Apart from the Yunnan region, most of China’s major coal-producing areas lack water resources, making it difficult to meet the water demands of numerous coal chemical plants. Taking Shaanxi as an example, it is reported that after thorough evaluation, the province decided to utilize the surface water resources of the Wuding River to build the Wanggedu Reservoir. Construction of this reservoir is expected to begin in the first half of 2008. In the meantime, while the Wanggedu Reservoir has not yet been built, Yulin City has launched emergency water supply projects to meet the water needs of industrial projects in the Yuheng Coal Chemical Industry Zone. It can be seen that the factors restricting the development of coal chemical industry in northern Shaanxi include water resources, environmental capacity, ecological protection, and logistics, with water being one of the main factors. The Yuheng Coal Chemical Industry Zone is one of the largest coal chemical industry zones planned in Shaanxi Province. The water consumption for just its first-phase project is already high, and there are plans to develop a second phase as well. The Wanggedu Reservoir alone is not enough. It is understood that long-term solutions for water resources include projects such as the Yellow River diversion project, the South-to-North Water Transfer project, and water resource exchange. It is evident that water resources and environmental capacity will test the carrying capacity of local coal chemical industries. Overall, China’s coal chemical industry will continue to develop in an orderly manner in 2008, with new types of coal chemical products gradually entering the market and being accepted by it. Pilot projects for methanol and dimethyl ether fuels will make progress, and coal-derived petroleum products will also begin to compete with traditional oil-based gasoline and diesel. Water resources, environmental capacity, and market affordability in various regions will become the main factors restricting the development of the coal chemical industry.