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China’s petrochemical industry is at a critical stage of moving from being large-scale to being highly competitive. Cai Ronghua, head of the Petrochemicals and Chemicals Division of the National Development and Reform Commission, revealed at the “2009 Industry Development Analysis Meeting” that the revised “Petrochemical Industry Adjustment and Revitalization Plan” will be officially issued in the near future. The plan was reviewed and approved in principle by the State Council’s executive meeting on February 19, but its specific details have remained unclear. Regarding the contents of the much-talked-about \"Plan for the Adjustment and Revitalization of the Petrochemical Industry,\" Cai Ronghua, head of the Petrochemicals Division of the Industry Coordination Department under the National Development and Reform Commission, revealed at the \"2009 Industry Development Analysis Meeting\" held on March 22 that the revised \"Plan for the Adjustment and Revitalization of the Petrochemical Industry\" will be officially issued in the near future. The petrochemical industry aims to operate steadily in 2009, and over the next three years its structure will become more rational. Guidance is urgently needed for the coal chemical industry. In response to a question from a guest regarding whether there would be changes in the industry policies for coal chemicals, Cai Ronghua said that over the next three years the focus will be on advancing the existing coal chemical demonstration projects; large-scale development of this industry will not take place. Only after these demonstration projects are completed will consideration be given to the further development of coal chemicals, and appropriate controls may be implemented. ” The coal chemical industry demonstration projects currently underway in our country include Shenhua Baotou’s 600,000-ton per year coal-to-olefins project, Zhongtian Hechuang’s 3 million tons per year coal-to-dimethyl ether project, Xinjiang Guanghui’s 1 million tons per year coal-to-dimethyl ether project, China National Coal Group Heilongjiang’s 600,000 tons per year coal-to-olefins project, Datang Keqi’s 4 billion cubic meters per year coal-to-natural gas project, Datang Fuxin’s 4 billion cubic meters per year coal-to-natural gas project, and Ordos HuiNeng’s 1.6 billion cubic meters per year coal-to-natural gas project. At present, in some areas, ignoring the carrying capacity of water resources, ecosystems, and the environment, there is an overemphasis on the proportion of coal resources that should be converted, leading to a surge in coal chemical projects. In his speech titled “Ideas for the Adjustment and Revitalization of the Petrochemical Industry,” Cai Ronghua mentioned that “the enthusiasm for coal chemical industry development needs to be guided.” Coal chemical industry demonstrations should be carried out in a steady manner, adhering to the principles of controlling the total production capacity, phasing out outdated processes, protecting the ecological environment, developing a circular economy, integrating energy and chemicals, and conducting energy efficiency evaluations throughout the entire life cycle. It is necessary to firmly curb the uncontrolled expansion of the coal chemical industry, with a focus on advancing existing demonstration projects such as those for coal-to-oil, coal-to-olefins, coal-to-dimethyl ether, coal-to-methane gas, and coal-to-ethylene glycol. ” Coal chemical projects are large in scale, require substantial investment, and have a significant impact on coal and water resources. If construction is carried out blindly, it will pose significant risks to the safe development of the industry, as well as having a negative impact on the local economic and social development. Some large coal chemical projects consume 4,000 to 5,000 tons of water per year, which is equivalent to half of the flow volume of a small river. Cai Ronghua added, “Over the past few years, we have emphasized the need to ensure proper support for coal chemical projects, and to plan and construct them in a rational manner based on the local availability of coal and water resources.” ” China’s consumption of petrochemical products remains in a growth phase. Since 2000, the industrial added value of the petrochemical industry has been growing at an average rate of around 20% per year, and the production volume of its key products ranks among the highest in the world. In 2008, China’s petrochemical industry comprised 29,700 enterprises, with an output value of 5.5 trillion yuan; it paid a consumption tax on refined oil products of up to 250 billion yuan each year ； The industrial added value was approximately 1.25 trillion yuan, accounting for about 4% of the country’s GDP ； An investment of about 660 billion yuan was made, accounting for 3.8% of the national total ； Of the total industrial output, the Yangtze River Delta, the Bohai Rim region, and the Pearl River Delta account for about 2/3 ； Refining, ethylene, fertilizers, and high-end products account for 80%. 50% of the products are in supply-demand balance, 30% are in short supply, and 20% are in excess supply. Regarding the future trends of the industry, Cai Ronghua analyzed that \"China’s consumption of petrochemical products is still on the rise; there is a constant demand for oil products, fertilizers, and pesticides, and the market for high-end petrochemical products holds great potential.\" The petrochemical industry is at a critical stage of transitioning from scale to strength; its comprehensive advantages for industrial revitalization still exist, and the trend of its development has not changed. Therefore, the petrochemical industry should take advantage of current favorable factors such as a reduction in market supply-demand imbalances and falling construction costs, and use market-driven mechanisms to accelerate structural adjustment and industrial upgrading in order to grow and strengthen further. ” The reporter learned that in the future, focus will be placed on phasing out inefficient, low-quality, and outdated oil refining units with a capacity of 1 million tons or less. Those included on the elimination list also comprise fertilizer production capacities with outdated technology and inefficient use of resources, as well as a number of highly toxic and high-risk pesticide varieties. Outdated production capacity for products such as calcium carbide and methanol is also included. Cai Ronghua emphasized that, \"In the future, strict controls will be imposed on the construction of projects for products involving overcapacity. Relevant departments are working urgently to formulate (or revise) industry policies, standards, and catalogs, and to use comprehensive measures to accelerate the phasing out of outdated production capacity.\" ” Cai Ronghua revealed that efforts are being made to study the establishment of **fertilizer reserves. Improve the commercial reserve systems for fertilizers during off-seasons at both the central and local levels, support key fertilizer manufacturers in stocking up on phosphate ammonium and urea, and refine the dynamic adjustment mechanism for comprehensive subsidies for agricultural inputs. He said, “It’s because of the asymmetry in fertilizer production and consumption.” During the fertilizer application season each year, there is a significant difference in timing from south to north; in the south, spring plowing begins around the time of the Spring Festival, while in the north it doesn’t start until April or May, or even until the end of May. Fertilizers are a product with seasonal demand, and a well-developed inventory system is necessary. ” The provisions regarding commercial reserves of refined oil products have been included in the upcoming \"Plan for the Adjustment and Revitalization of the Petrochemical Industry\". Cai Ronghua said that the commercial reserves for refined oil will be established following the approach used for crude oil commercial reserves, and the relevant methods and systems for such reserves will be developed as soon as possible. Currently, China’s reserves of refined oil are primarily used for military purposes and disaster relief. “From the perspective of market stabilization, we need to further increase reserves of refined oil; it is difficult to control the market without having a consumption reserve for one month. ”The elements related to refined oil reserves in the plan also include accelerating the construction of reserve facilities, increasing refined oil reserves, and focusing on stockpiling oils from key enterprises.