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The revitalization plan for the petrochemical industry has finally been released. Similar to the previously announced revitalization plan, the one reviewed and approved at the State Council’s executive meeting on the 19th consists only of 6 general principles, such as \"maintaining stable operation of the industry: boosting consumption of petrochemical products and improving the price formation mechanism for energy products.\" Most of these descriptions are rather general; only the statement \"control the overall volume and phase out outdated production capacity\" explicitly mentions halting the approval of coal chemical projects such as those for producing coke and calcium carbide, which are aimed solely at expanding production capacity. On the 23rd, an insider from the PetroChina and Sinopec sectors told our newspaper that the plan was largely within expectations; “Most of the provisions have always been the goals that these two groups have been striving for. It’s just that they have now been clearly stated. The impact on the industry will depend on the specifics of the implementation rules, so it’s still impossible to determine at this point.” ” Coal-based chemical industry? “Although no one had guessed that controlling coalification would be included in this plan, it is not surprising. ”Liu Xintian, executive editor-in-chief of the Information Center of China Chemical Industry Network, told our newspaper that the coal chemical industry experienced extreme fluctuations around September last year. Last year, international oil prices soared, making coal prices appear very low in comparison. Coal can be used as an alternative to oil to produce various chemical products, which creates significant profit opportunities for the coal chemical industry; as a result, there was a surge in investment in this sector. According to statistics from the National Development and Reform Commission, as of May 2008, there were 30 new coal chemical projects under construction in China, with a total investment of over 80 billion yuan. The additional production capacity these projects would generate was 8.5 million tons of methanol, 900,000 tons of dimethyl ether, 1 million tons of olefins, and 1.24 million tons of coal-derived oil. The registered production capacity for these projects is 34 million tons for methanol, 3 million tons for olefins, and 3 million tons for coal-to-oil. Today, the coal chemical industry is in a very poor state. According to data provided by Yimao Information, as of December 2008, the operational rate in the field of advanced coal chemical processing across the country was only 60%; in Shanxi, which accounts for half of the coal chemical industry, 79% of enterprises had ceased operations entirely. The problems of coal chemical industry are also reflected in resource waste. According to relevant data, 10 to 12 tons of water are required to produce 1 ton of oil through coal indirect liquefaction, and other coal chemical processes consume even more water – 15 tons of water are needed to produce 1 ton of methanol using traditional methods. A researcher at Yimao Information told our newspaper that there is also a shortage of coal resources. “Projects submitted for approval require details on the available raw materials, but companies often claim that all the coal resources in the surrounding area can be used as raw materials for those projects, leading to significant overlaps. As a result, many projects end up without the necessary resources to proceed.” ” Previously, **the development scale of the coal chemical industry through point braking had already been addressed. Last September, the **National Development and Reform Commission officially published on its website the \"Notice on Issues Concerning the Strengthening of Management of Coal-to-Oil Projects,\" issuing a suspension order for all coal-to-oil projects other than those carried out by Shenhua in the direct liquefaction process. But the fact is, this suspension order did not curb the companies’ enthusiasm. “As far as I know, many more companies have submitted applications to the National Development and Reform Commission for coal-to-oil projects. ”Liu Xintian said that imposing further restrictions on coal chemical projects is also a response to them. Industry experts interviewed by our newspaper generally believe that **this move clearly aims to protect the petrochemical industry at the expense of the coal chemical industry. “Recently, coal chemical industry has begun to impact the petrochemical sector, and this plan clearly aims to guide the chemical industry down the path followed by Sinopec and CNPC. ”Liu Xintian analyzed. Protect petrochemicals? The days of the petrochemical industry are by no means better than those of the coal chemical industry. The Petrochemical Association of China National Petroleum Corporation (11.43, 0.05, 0.44%) concluded that in 2008 growth declined for the first time in 10 years. According to information provided by the association, starting in September, the growth rate declined significantly due to the financial crisis; it was close to zero in November, and negative growth occurred in December. The industry’s economic cycle shifted from high growth over the past 10 years to a downward trend. Corporate losses have expanded significantly. According to statistics from the association, as of the end of November last year, there were 4,556 loss-making enterprises in the chemical industry, a 20.2% increase compared to the previous year, with a loss rate of 15.3% ； Losses for loss-making enterprises amounted to 211.91 billion yuan, a 393.5% increase compared with the previous year. Coal chemical industry makes the situation for the petrochemical industry even more difficult. Analysts at Yimao Information note that, taking fuel oil as an example, since the implementation of the fuel tax on January 1 this year, petrochemical producers have had to pay an additional 800 yuan for each ton of petrochemical fuel oil sold. Since the fuel tax policy has not yet been applied to coal-based fuel oils, this creates significant pressure on petrochemical companies. It can be said that the influence of the coal chemical industry has extended into the petrochemical sector as well. ” As evidence, according to sources familiar with the plan for revitalizing the petrochemical industry, the key products mentioned in the appendices of this plan are those related to supporting key and major enterprises, as well as those related to the development of high-end alternative products. The key enterprises among them mainly include Sinopec and CNPC; the products of these two companies are likely to appear in the appendix of the plan. However, experts believe that this is due, on the one hand, to the irreplaceable role of these two companies among the central state-owned enterprises, and on the other hand, to the fact that coal and oil have distinct roles: coal is mainly used for power generation, while oil is primarily used in the chemical industry. ” The plan for fertilizers needs further refinement. Another highlight of this plan is the emphasis placed on enhancing the capacity to supply agricultural inputs; the second point of the plan states, “Adjust the production structure of fertilizers and pesticides, and improve the system for storing fertilizers in times of shortage.” ” After the financial crisis, the precarious situation of the fertilizer industry within the struggling petrochemical sector was truly alarming. Data shows that by the end of 2008, the inventory of urea products held by enterprises across the country amounted to 2.35 million tons, a 160% increase from the previous year, while the inventory of diammonium phosphate reached 1.25 million tons, a 231% increase compared to the previous year. Furthermore, the sharp drop in international sulfur market prices has caused huge losses to phosphate fertilizer companies. The company’s inventory of 1.5 million tons of high-priced sulfur, 3 million tons of high-priced pyrite, and 3.3 million tons of high-priced ammonium phosphate resulted in losses of nearly 15.6 billion yuan for the company. There are over 40 urea production plants across the country that have ceased operations, and nearly 100 ammonium carbonate production plants have also stopped working. The operating rate of phosphate fertilizer plants across the country is less than 50%. “Previously, measures such as reducing tariffs on fertilizers and liberalizing fertilizer prices seemed to be more targeted; without further elaboration on the two points mentioned in this plan, it is not clear what impact they will have on the industry. ”An analyst specializing in fertilizers at Yimao Information told our newspaper. It is reported that the full name of the fertilizer off-season storage system is the Fertilizer Off-Season Reserve System. Every year from September to October, relevant policies are introduced to invite bids from companies that wish to stockpile fertilizers during the off-season for their sales. The winning companies are entitled to interest subsidies, but in practice, driven by commercial interests, they often fail to fulfill the tasks specified despite receiving these subsidies. Furthermore, provisions in this plan such as “accelerating the implementation of major oil refining and ethylene projects under construction” and “expediting the establishment of refined oil reserves and improving tax policies” are within the expectations of industry experts.