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By the end of 2006, the **National Development and Reform Commission** finalized the draft \"Medium- and Long-Term Development Plan for the Coal Chemical Industry.\" Under this plan, China will establish seven major coal chemical industry zones, namely those in the middle and lower reaches of the Yellow River, eastern Inner Mongolia, eastern Heilongjiang, Jiangsu, Shandong, Henan, Anhui, the Central Plains region, Yunnan and Guizhou, and Xinjiang. In 2007, with the active participation of enterprises and capital, investment in coal chemical projects was extremely vigorous. Since 2008, international oil prices have remained above $100 for an extended period, giving coal-to-oil and coal-to-chemicals processes a greater competitive advantage. Research shows that among the routes for developing coal chemical industry in China, methanol to propylene (MTP) will have the greatest competitive advantage. The current situation in the global oil industry is one characterized by a rapid increase in petrochemical production capacity in the Middle East, as well as a swift rise in demand and production capacity in China. The Middle East and China have thus become the hubs of the global petrochemical industry. Unlike the Middle East, where ethylene is primarily produced through cheap ethane cracking, China’s petrochemical companies mostly produce ethylene by cracking naphtha; with rising crude oil prices, the cost of raw materials is no longer competitive. Considering solely the economics of the ethylene product line, China’s competitiveness is now far inferior to that of the Middle East. However, in addition to ethylene products, naphtha cracking also produces important products such as propylene, which cannot be manufactured by ethane cracking units. Compared to the Middle East, the production of propylene derivatives is China’s core competitive advantage. Compared to the MTO route, MTP can produce more propylene. Based on China’s demand trends, the growth rate of propylene will be higher than that of ethylene. China’s demand for ethylene equivalent was 17.3 million tons in 2006, and it is expected to reach 30.5 million tons by 2012, with an average annual growth rate of 9.9% ； China’s demand for propylene equivalent was 11.5 million tons in 2006, and it is expected to reach 21.3 million tons by 2012, with an average annual growth rate of 10.8%. Considering the supply and demand balance in the Middle East and China, China will face a severe shortage of propylene supply in the future. According to METI’s projections, China’s deficit in ethylene in 2012 will amount to 12.4 million tons, while the amount available for export from the Middle East will be 17.4 million tons. China’s equivalent deficit in propylene in 2012 will reach 5.9 million tons, while the exportable supply from the Middle East amounts to only 4.4 million tons. In the future, imports from the Middle East can meet China’s demand for ethylene derivatives, but the supply of propylene derivatives is far from sufficient. Under these circumstances, the development of large-scale coal-based methanol and MTP better meets the market needs of our country. According to data provided by the organizing committee of the 2008 Asian Methanol and Derivatives Summit, China’s methanol production was nearly 11 million tons in 2007, and it was expected to exceed 13 million tons in 2008. As of 2007, methanol in our country was primarily used for traditional applications such as in the production of formaldehyde, acetic acid, and MTBE; new applications like dimethyl ether (DME) accounted for only a small proportion, less than 10%. This post was last edited by hallon520 on 2009-4-2 14:30]