Chinese fertilizers: Really can’t be any more “fertilized”
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Chinese fertilizers: They can’t be any more \"fertile\". The current situation in China’s fertilizer industry seems rather confusing. With weak market demand and continuously falling prices, corporate profits have dropped significantly. The warnings from industry experts that China has an excessive capacity in fertilizer production have not resonated; instead, the imbalance between supply and demand in the market has worsened. Since the beginning of this year, fertilizer production has been increasing by double digits on a monthly basis, and the pace of capacity expansion continues to rise. There is a severe overcapacity in fertilizer production. By the end of 2008, China’s output of synthetic ammonia was 50.5 million tons (in pure terms), while the actual output of urea was 51.04 million tons. These figures represented 33.6% and 34.6% of the world’s total production respectively, placing China at the top of the world in both categories. In the first five months of this year, the output of nitrogen fertilizers in pure terms was 19.983 million tons, representing a 10.9% increase compared to the previous year ； Urea production was 26 million tons in physical terms, representing a year-on-year increase of 9.8%. Based on current production forecasts, urea production this year is set to exceed 60 million tons. Following an increase of 3.27 million tons in urea production capacity across the country in 2007, another 2.85 million tons was added in 2008; by the end of 2008, China’s urea production capacity had reached 58.57 million tons in terms of physical volume. It is estimated that this year, the actual production capacity of synthetic ammonia and urea will increase by 2.46 million tons and 4.3 million tons respectively. Based on China’s agricultural development goals and current fertilizer application levels, the growth rate of demand for nitrogen fertilizers in China is around 2%, while the growth rate for urea is around 4%. This year, the demand for agricultural urea is expected to reach 40 million tons. Entering this century, with the rapid development of China’s economy, industrial demand for nitrogen fertilizers, particularly urea, has maintained an annual growth rate of 10%–15%; in 2007, the consumption of urea was 7 million tons. Last year, especially after the fourth quarter, industrial urea consumption declined significantly due to the slowdown in overall industrial development, with annual urea consumption dropping to 6.5 million tons. In 2009, industrial consumption of urea also remained at the level of 5 to 6 million tons. With a certain amount of exports, the apparent consumption of urea this year is estimated to be less than 50 million tons in terms of physical volume, and after supply and demand are balanced, the surplus will exceed 10 million tons. Similar to nitrogen fertilizers, the production of phosphorus fertilizers has also shown rapid growth in recent years. Since 2005, China has ranked first in the world in phosphate fertilizer production, and achieved self-sufficiency in 2006. Although the production volume in 2008 was 12.85 million tons (P2O5), showing a year-on-year decline, the self-sufficiency rate increased to 117% ； The proportion of high-concentration phosphate fertilizers in the total phosphate fertilizer production increased from 35.4% in 2000 to 73.8% in 2008; meanwhile, there was also a significant improvement in the industry’s layout and concentration. The phosphate fertilizer production in the four provinces with large phosphate resource reserves—Yunnan, Guizhou, Sichuan, and Hubei—accounted for 59% of the country’s total phosphate fertilizer production, while the combined output of the top 10 companies in this industry accounted for 43% of the total production. In 2007, China became one of the world’s major exporters of phosphate fertilizers, exporting 2.543 million tons of such fertilizers that year, accounting for about 25% of the global trade in phosphate fertilizers. From January to May this year, the cumulative production of phosphate ammonium reached 6.696 million tons in terms of physical volume, representing a 16.4% increase on a year-on-year basis. By the end of 2008, China had an annual phosphate fertilizer production capacity of around 20 million tons, of which the capacity for diammonium phosphate was about 11 million tons in terms of physical volume, while domestic demand was around 6 million tons ； The production capacity of monoammonium phosphate is around 13 million tons (in terms of physical volume), while the domestic demand is between 6 and 7 million tons. At present, some provinces rich in resources are still expanding their phosphate ammonium production capacity. According to IFA’s projections, China will account for 18 out of the 40 new phosphate fertilizer production facilities to be built globally over the next 5 years. It is expected that by 2010, China’s production capacity for high-concentration phosphate fertilizers will increase by another 3 million tons. Similarly, a report released by IFA recently stated that due to the overall global situation and farmers’ increased awareness of the risks associated with fertilizer use, global fertilizer consumption is expected to decline by 2.2% in the 2008–2009 period, with phosphate fertilizers seeing a 4.7% drop. The domestic phosphate fertilizer market is also likely to be affected by this downturn. After last September, prices of phosphate fertilizers in the domestic market plummeted, with selling prices falling well below costs; as a result, companies suffered heavy losses. To this day, they are still faced with the challenges of having inventory of products made from expensive raw materials and a sluggish market, and it will take some time to get rid of these products made from costly raw materials. It is worth noting that this year, the problem of structural overcapacity has not only failed to ease but has instead become more pronounced. According to the production analysis for May, the operating rates of facilities in some fertilizer companies remain significantly low. While the operating rate in the phosphate fertilizer sector is only around 50%, investment in the fertilizer industry still saw an impressive average increase of 30.2%; investment in phosphate fertilizers alone increased by 112% on a year-on-year basis, which is truly incredible. To overcome difficulties, it is necessary to \"downsize\". To ensure steady and rapid economic growth and help the Chinese economy recover as soon as possible from the impacts of the international financial crisis, a series of targeted measures have been taken, including expanding domestic demand, promoting foreign trade, and continuing to foster development. For the fertilizer industry, to overcome its difficulties, eliminating outdated production capacity is an essential approach. In the revitalization plan formulated by the State Council, expanding demand and phasing out outdated production capacity are given equal importance; however, from the perspective of rational fertilizer use and energy conservation, the demand for fertilizers in China is unlikely to see a significant increase. At present, China, which accounts for 10% of the world’s arable land, consumes 30% of the world’s chemical fertilizers. Both the total amount of fertilizers used and the amount applied per unit area are at relatively high levels. In China, the use of chemical fertilizers is now focused not on increasing quantities but on improving their quality. In other words, precision is achieved through soil testing-based fertilization and the use of compound fertilizers. China’s fertilizer utilization rate has reached developed country levels, and the amount of fertilizer used in Chinese agriculture will decrease by at least 30% to 40%. Furthermore, agricultural experts have pointed out that due to the extensive use of chemical fertilizers in recent years, there has been neglect of the application of organic fertilizers, resulting in a significant decrease in the organic matter content in the soil, which needs to be replenished urgently. Improving the efficiency of fertilizer use through scientific methods is the effective way to ensure **food security and increase farmers’ incomes, rather than continuously increasing the demand for fertilizers. It can be seen that as China’s scientific capabilities improve, the room for development of chemical fertilizers will continue to shrink. Here, we have not yet taken into account the negative factor of a decline in fertilizer demand, caused by the low purchasing prices of agricultural products over the long term, which affects farmers’ enthusiasm for farming. Regarding chemical fertilizers, which are both energy-based and resource-based products, China has always been very clear in its commitment to meeting the needs of domestic agricultural production; they are classified as products subject to export controls. In recent years, whenever fertilizer exports have increased significantly, **tariffs have been raised rapidly to control them. **The National Development and Reform Commission has also stated on multiple occasions that continuing to control fertilizer exports is an inevitable trend. Furthermore, due to the effects of the global economic downturn, energy and resource-rich countries with cost advantages are continuously expanding their domestic fertilizer production capacity. Meanwhile, major international fertilizer consumers are also increasing their domestic production, which results in an oversupply of fertilizer in the international market. As a consequence, China’s ability to earn profits in the international fertilizer market is under increasing pressure. Expanding domestic demand is unscientific, while promoting exports is impractical. The only way to achieve a balance between the supply and demand of fertilizers is to eliminate outdated production capacity, reduce overall fertilizer production, and thus reach a new balance between supply and demand on a more scientific basis. Accelerating the marketization process is an effective approach. At the beginning of this century, the integration of the fertilizer industry and the elimination of outdated production capacity have been suggestions that have arisen repeatedly amid the rapid development of the fertilizer sector; however, most companies ignore these suggestions when good profits are available. Faced with severe overcapacity and weak market demand, fertilizer companies are now facing another round of structural adjustments and reorganization. The principles guiding this round of adjustment in the fertilizer industry, as outlined in the \"Plan for the Adjustment and Revitalization of the Petrochemical Industry\" issued by the State Council – namely, phasing out smaller production facilities in favor of larger ones, replacing outdated production capacity with more efficient one, and eliminating capacities that make inefficient use of resources – reflect the need to address the pressing issues facing the fertilizer industry at present in order to ensure its stable operation. At the same time, it is also necessary to think ahead, accelerate the shift to a different pattern of growth, promote industrial upgrading, and enhance the industry’s long-term competitiveness. Among the plan targets set by the **National Development and Reform Commission for phasing out outdated production capacity, fertilizers are one of the key areas within the petrochemical industry that require such action. To ensure that this structural adjustment truly yields results, drawing on past experience and given that domestic fertilizer production is now fully capable of meeting domestic market demand, **there is no longer any concern that the reform will lead to a sharp rise in fertilizer prices, making it unaffordable for farmers to purchase them. At the beginning of this year, the **National Development and Reform Commission and the Ministry of Finance jointly issued the \"Notice on Reforming the Price Formation Mechanism for Fertilizers,\" which accelerated the reform of the fertilizer distribution system. Price controls on fertilizers were removed, and the ex-factory prices of domestically produced fertilizers were changed from being set under guidance prices to being determined by market forces. Various temporary price intervention measures, such as those aimed at controlling price differences in the fertilizer distribution process, were also abolished. At the same time, gradual adjustments have been made to the preferential policies for fertilizer production, with the aim of enabling enterprises that possess scale effects and cost advantages to enhance their competitiveness in the market. Through market mechanisms, the industry is meant to achieve a process of survival of the fittest. To accelerate the marketization of fertilizers, **reforms and improvements to industrial policies will also be carried out, a mechanism for phasing out excess production capacity will be established, enterprises will be encouraged to upgrade their technologies through the use of new technologies, processes, and equipment, and efforts will be made to phase out outdated production capacities by developing high-value-added products. At the same time, **support will also be provided to competitive enterprises through policies related to credit, taxation, and environmental protection, in order to accelerate the structural adjustment of fertilizer companies and help the fertilizer industry move toward healthy development as soon as possible.
**The National Development and Reform Commission is conducting a survey of the status of fertilizer production and construction. **The commission has decided to start investigating, starting in August, the current production capacity and development trends of fertilizer manufacturers across the country, including those that handle pyrite and phosphate ores, in order to better meet the demands of agricultural production for fertilizers and to promote the proper development of the fertilizer industry. This survey was commissioned by the National Development and Reform Commission to the Petroleum and Chemical Industry Planning Institute; in accordance with the principle of territorial management, the questionnaires are to be filled out on a per-independently operating or accounting enterprise basis ； Single-element fertilizer manufacturers shall fill out the questionnaires according to nitrogen fertilizers, phosphorus fertilizers (including compound fertilizers), potassium fertilizers, and sulfur-phosphorus mining enterprises; comprehensive enterprises shall fill out the questionnaires in full or in part based on their product portfolio. The survey of the existing production capacity and construction projects of nitrogen fertilizer enterprises includes information such as the name of the facilities, raw materials and their sources, process routes, commissioning dates, facility status, production volumes from 2007 to 2009, and production capacity from 2007 to 2015. In addition, it covers data on ammonia synthesis consumption rates, as well as details on the main production equipment such as fixed-bed gas generators, coal-water slurry gasifiers, syngas compressors, ammonia synthesis towers, carbon dioxide compressors, urea synthesis towers, and urea granulation towers/machines. In addition to production details, the survey of phosphate and potassium fertilizer manufacturers also includes information on nutrient content (phosphorus fertilizers are expressed in terms of phosphorus pentoxide, while potassium fertilizers are expressed in terms of potassium oxide); phosphate fertilizer manufacturers are also required to report on the comprehensive utilization of phosphogypsum. It is reported that the relevant enterprises must submit their application materials to the Petroleum and Chemical Industry Planning Institute by September 15.
At least we still produce methanol.
Given the ongoing impact of the current financial crisis, the situation for methanol is also not optimistic! At present, many ammonia synthesis plants have hydroxymethanol or methanol production systems; it would be quite difficult for them to stop producing ammonia altogether and switch entirely to methanol production!
Ask the **Development and Reform Commission – it is this X Commission that has, for many years now, failed to put limits on the uncontrolled expansion of nitrogen fertilizer production, and it is responsible for creating this situation.
Nitrogen fertilizers are currently roughly at cost level. 70% of the urea produced comes from coal, so factors affecting urea prices are closely linked to the price of coal as a raw material in Australia. Although there have been reports of falling coal prices recently, due to the winter heating needs in the north, coal prices will decline slowly. Perhaps coal prices will drop significantly in March or April next year, but due to factors such as the approaching peak season for fertilizer sales and transportation constraints, urea prices could rise sharply at that time. In this decline in the price of phosphate ammonium, the period of sharp drops has come to an end; now it has entered a stable yet somewhat sluggish consolidation phase. It is well known that the drop in the price of phosphoric ammonium is due to the sharp decline in sulfur prices. The author came across statistical data on domestic sulfur prices; over the five-year period from 2002 to the first half of 2007, the lowest price of sulfur remained around 1,100 yuan per ton. Sulfur is cheap abroad, but when transportation costs such as shipping fees, port charges twice over, and storage fees during transit are added, the normal price in China is above 1,000 yuan per ton. Therefore, I believe that once sulfur’s price drops below 1,000 yuan per ton, it has reached a relatively low level, and manufacturing companies can easily manage and absorb cost fluctuations within this range. Potash fertilizer is a resource monopolized by large enterprises, both internationally and domestically. Among the three elements, potassium fertilizers have the highest price; if this price remains high, a decline in sales is inevitable ； It is difficult to maintain high prices when sales are declining. At the same time, the monopoly structure has led to sharp increases in potassium fertilizer prices, with little possibility of a decline. Therefore, the price of potassium fertilizers will show a downward trend amid weak sales volumes. This trend is relatively slow and should be absorbed by manufacturers and distributors in their operations. In terms of product selection, low-potassium compound fertilizers help companies avoid the risks associated with declining potassium fertilizer prices. From the supply side, fertilizer prices have fallen from high levels to lower levels ； From the perspective of demand, rising food prices will drive an increase in demand. This year, **to stabilize the market and boost domestic demand, the grain procurement prices for 2009 were set in advance, with an increase of 13–15% in those prices. With rising grain prices, the increase in farmers’ purchasing demand will first be reflected in the consumption of fertilizers. Positive expectations regarding food prices will certainly boost enthusiasm for growing crops and increase investment in related fertilizers. Food prices directly affect farmers’ purchasing power, and the fertilizer market will be one of the most direct beneficiaries of rising food prices. The decline in the consumption of phosphate-based fertilizers this year is directly related to insufficient purchasing power caused by low grain prices. Why have the prices of phosphate ammonium on the international market risen to 1,200 dollars per ton? Clearly, the high grain prices in the international market have played a supporting role. Driven by the combined effect of falling fertilizer prices and rising demand, consumption of phosphate fertilizers is expected to increase significantly in 2009 compared to 2008; overall sales volume is likely to return to 2007 levels and may even reach record highs. The future is bright, but the path is tortuous. The overcapacity in the fertilizer industry is already severe, and combined with the difficulties in capital flow for companies due to high inventory levels, this will lead to intensified competition next year. Judging from the current situation, market competition in 2009 will be quite fierce. It is common for some companies to sacrifice profits in order to obtain working capital.
Our company is also facing difficulties; in order to secure working capital, we are on the verge of incurring losses, and every day we focus on reducing energy consumption and waste.
Our company is capable of producing 300,000 tons of ammonia per year; methanol is produced as a by-product. However, at present, producing methanol results in losses for our company. Therefore, we produce methanol solely for purification purposes. If the situation remains the same, it seems we will continue to produce it just for that purpose of purification. Under the impact of the financial crisis, our company has also been making improvements, mainly in an effort to reduce consumption. Currently, the high cost of coal gas production is our main problem, with raw materials and shipping costs being the primary factors contributing to this. I’m not sure if this issue exists in other companies. In short, the chemical industry is going through a challenging period right now; many chemical companies are closing down, and energy conservation and reduction of consumption are the main ways to address these problems.
Source: China Chemical Industry Information Network. On July 29, the Ministry of Commerce held a hearing to hear the opinions of the applicants in the methanol anti-dumping case. Experts from the China Nitrogen Fertilizer Industry Association say that China’s methanol industry has suffered extremely severe tangible damage, and the entire sector is facing an unprecedented crisis. According to a survey conducted in January by the China Nitrogen Fertilizer Industry Association among 30 methanol producers, the profit margin for methanol was -76.34 million yuan ； According to statistics on 26 methanol producers in February, their methanol profit was -40.071 million yuan. Since the import of methanol from abroad causes significant harm to domestic methanol producers, there is a direct causal relationship with the entry of products from exporting countries. According to relevant data, the margin of dumping is between 30% and 60%. Therefore, domestic methanol companies are highly likely to win the case. Lawyer He Jinghua from Boheng Law Firm said that the characteristics of dumping in this case are quite evident, and it is highly likely, based on the investigations, that dumping is taking place in Saudi Arabia, Malaysia, Indonesia, and New Zealand. China Chemical Information Network interviewed several corporate representatives who attended the presentation session. Shanxi Fengxi Fertilizer (Group) Co., Ltd., Yan Bingkuan; China Coal Heilongjiang Coal Chemical Co., Ltd., Zhang Zhihua. China Chemical Information Network: Hello, Mr. Yan, could you please provide some information on the current production status of your company’s methanol products? Yan Bingkuan: Judging from the current market situation, we incur cash flow losses whenever we produce methanol. All of our monol alcohol plants are currently shut down. After this year’s Spring Festival, methanol prices rebounded for a period of time, rising above 1,800 yuan. Since the manufacturing cost of monohydrates at our company is around 1,900, it’s simply not possible to produce them; the more we produce, the greater the losses. China Chemical Information Network: Is methanol the main product your company deals in? Yan Bingkuan: Our company’s main product is urea, and its second main product is methanol. We produce 1.2 million tons of urea and 400,000 tons of methanol per year, but production of methanol has been almost completely halted at present. Due to the requirements of our entire circular economy chain, Lianchun Alcohol cannot stop operating; otherwise, its production will also cease. China Chemical Information Network: Is all the methanol produced by your company coal-based methanol? Yan Bingkuan: Yes, we all use coal-based methanol. Looking at China’s current methanol industry chain, almost all entities are operating at a loss. China Chemical Information Network: What is your view on the prospects for the overall methanol market in China? Yan Bingkuan: From my own analysis, it’s definitely out of the question before the end of 2009. Currently, overseas methanol accounts for over 50% of the market. Since last year, when the price of methanol dropped below 3,000, we have been in the red. Other methanol companies should be similar to us. China Chemical Information Network: As far as we know, the total amount of methanol imported into the country in 2008 was around 143 tons, while in the first six months of this year it already exceeded 3.4 million tons. Why has there been such a sharp increase? Is it due to the sudden drop in methanol prices overseas? Yan Bingkuan: We have statistics showing that when the market price of methanol is higher than its cost, it is the methanol producers who determine the market price of this substance. Once the market price of methanol falls below its cost, it is the price of imported methanol that determines the market price of methanol. You sell it for 1900, he sells it for 1800; you sell it for 1800, he sells it for 1650. So there’s no other choice but to stop production. China Chemical Information Network: When did you realize the impact of imported methanol? Yan Bingkuan: It was probably in February this year, after the Spring Festival. At first, it was thought to be due to the economic crisis, but sectors such as steel, metallurgy, and coke have all seen improvements thanks to government policies; only methanol’s situation has continued to deteriorate day by day. **With such substantial investments being made to boost the market, methanol is closely related to industries such as construction. The huge amounts of capital invested in infrastructure development have not led to healthy growth in China’s methanol industry; instead, the overall situation in this industry has worsened. China Chemical Information Network: In other words, when we boost domestic demand, it is overseas methanol that ends up benefiting from it. Yan Bingkuan: Right. Currently, the market share of imported methanol has reached 50%, which is truly alarming. Last year, it barely reached 10%. China Chemical Information Network: What are the sales channels or demand for methanol in your company? Yan Bingkuan: Mainly formaldehyde, acetic acid, and dimethyl ether. China Chemical Information Network: Thank you very much for agreeing to our interview. Thanks. China Chemical Information Network: Hello, Mr. Zhang. You attended the hearing where the applicants in the methanol anti-dumping case presented their views, which was organized by the Ministry of Commerce. Please take into account your company’s production and sales situation of methanol. Zhang Zhihua: Our company’s methanol production has now been reduced by one-third. Originally, we expanded the production facility to 360,000 tons per year; together with our original capacity, the total production capacity should be 480,000 tons per year. However, due to the deterioration of the market, all this newly added production capacity remained unused, with the investment of over a billion yuan sitting there unused. Therefore, we are very hopeful that an appropriate solution can be found for this anti-dumping case involving Jiachun. Of course, from the perspective of our company, we do not require that methanol of a certain type be completely isolated; this also does not comply with the rules for entering the market. But the problem now is that, in many cases, the current methanol market is unfair. **The relevant authorities should uphold fairness in accordance with the relevant WTO principles. By allowing normal competition under the same rules internationally and domestically, a good outcome is surely guaranteed. That is our expectation. China Chemical Information Network: What are your views on the prospects for this methanol anti-dumping case? Zhang Zhihua: Over 100 representatives attended this meeting; it’s related to the methanol industry, and there has never been anything like this in terms of market research. It can be said that everyone is very anxious. In many companies, the persons in charge of administration, finance, marketing, legal affairs, and other areas are all present. Previous conferences on methanol market research were probably not very large in scale and did not cover a wide range of topics. As far as I know, many of the companies attending the meeting had already made some basic internal legal assessments before becoming supporting companies or complainants. If there is no basic judgment, it can be said that no one would waste time and effort on doing this. So personally, I am very much looking forward to this methanol anti-dumping case. China Chemical Information Network: We know that imports of methanol have increased rapidly this year. What do you think are the reasons behind this? Zhang Zhihua: I believe that since the international financial crisis has affected the real economy, international methanol producers are no exception. They have some production facilities that were built and put into operation later, resulting in a significant increase in their production capacity. With weak demand for methanol worldwide, even their existing capacity is not sufficient to meet the demand. As the world’s largest methanol consumer market, China will undoubtedly become a target for international methanol producers. Therefore, it is not surprising that imports of methanol have grown rapidly this year. However, these international methanol producers have inappropriate market strategies. Since you have set your sights on this market, you should adopt fair competitive practices; you cannot disregard the balance of price systems in third countries just to seize this market. In fact, these imported methanol products have also begun to undercut each other’s prices. And it’s not just these four ** this time. China Chemical Information Network: But we have applied for anti-dumping investigations on these four **. Zhang Zhihua: Because if there are **too many** factors involved, it goes against the current trend of opposing the rise of trade protectionism. Industry companies also say when communicating with lawyers that the reverse impact cannot be too significant; if it is, it represents a pressure on ** as well as on the authorities responsible for handling the matter. China Chemical Information Network: If it is determined that anti-dumping measures are warranted and anti-dumping duties are imposed on imported methanol from abroad, can domestic enterprises return to their previous state? Zhang Zhihua: It’s hard to say, but if an anti-dumping ruling is issued and anti-dumping duties are imposed on imported methanol from abroad, it will certainly help the recovery of the domestic methanol industry. China Chemical Information Network: In your opinion, how significant is the impact of this import of methanol from abroad on China’s domestic methanol industry? Zhang Zhihua: Basically, all the profits from the previous one or two years were lost, and the company was never able to recover from that. China Chemical Information Network: Some experts predict that by 2015, the production capacity of the domestic methanol industry will far exceed the domestic demand for methanol, resulting in a surplus. Does this mean that there are also price differences among the domestic methanol industries? Even with the imposition of anti-dumping duties, market prices remain unacceptable to some companies. Zhang Zhihua: There are objective differences among domestic methanol manufacturers, and a natural reshuffling is inevitable. We cannot attribute the difficulties of certain companies to imported methanol. However, losses across the entire domestic methanol industry are definitely abnormal. Regarding the issue of overcapacity you mentioned just now, in fact, demand is changing; that is to say, demand is not constant. For example, the fuel market is gradually being opened up through policy measures. As far as I know, three years ago academicians took the lead in working on methanol as a fuel for vehicles. I believe that, in the foreseeable medium term, methanol replacing ethanol is definitely the direction in which the market will develop. We know that ethanol is produced using grains as its raw material, whereas methanol has certain advantages in comparison. Under these circumstances, the conflict between market demand and domestic methanol production capacity is not irreconcilable. Under a market economy, any investment by an enterprise is permitted as long as it complies with **’s policy requirements. So it is normal for there to be a process of survival of the fittest among enterprises – weaker companies perish, and outdated technologies are eliminated. The problem now is that not all companies can die, right? China Chemical Information Network: We know that anti-dumping investigations last for one year. In your opinion, how many companies will be able to survive through that one-year period? Zhang Zhihua: Half, I guess. About half of the companies won’t be able to make it through and will have to stop operations first. And the losses for those companies that come to a halt are significant. For those enterprises that carry out downstream operations as well, the equipment can still be used; otherwise it’s useless, as processes such as synthesis and purification cannot take place. This will result in huge waste of investment. China Chemical Information Network: What’s your view on the reshuffling in the methanol industry? Zhang Zhihua: I believe that, at present, three factors determine the reshuffling in the methanol industry. The first factor is low levels of investment, production, and prices, as well as poor profitability, followed by a recovery ； The second factor is that **relevant regulations were issued in December last year to restrict coal-based chemical industries; projects with a capacity of less than 600,000 tons are no longer allowed, and those that are not environmentally sustainable are also prohibited ； The third factor is the sudden and rapid increase in imported methanol. It can be said that the current situation is rather poor. To use an analogy, it used to be like \"boiling a frog in warm water\" – it gave companies time to think about what to do, whether they should change their production focus Now, it’s immediate shock and death. China Chemical Information Network: Thank you very much for agreeing to our interview. Thanks. ://bbs.hcbbs.com/redirect.php?goto=findpost&pid=2904615&ptid=523320]8# beipiaoye
The inevitable trend toward diversification of products in China’s nitrogen fertilizer industry; product diversification has become a consensus for the development of nitrogen fertilizer companies. The question is how to diversify? The appropriate approach is to combine \"fertilization\" with \"chemical treatment\", by expanding into a field that is still relatively familiar; this reduces risks, allows for quicker implementation, and makes expansion easier. Carbon monoxide-based chemical products possess significant market value; substances such as methanol, dimethyl ether, dimethyl carbonate, acetic acid, and vinyl acetate are important carbon monoxide compounds with wide-ranging applications. Methanol is a basic raw material for organic synthesis; it can also be used as a fuel for vehicles mixed with gasoline, and serves as a chemical carrier for hydrogen in fuel cells. Dimethyl ether can be used as a clean diesel engine fuel. Acetic acid, acetic anhydride, and vinyl acetate are widely used in the pharmaceutical industry, food production, synthetic fiber manufacturing, and the synthesis of fine chemicals. Dimethyl carbonate can replace the toxic phosgene as a carbonylating agent, and replace the toxic dimethyl sulfate as a methylating agent. The development of these carbon-based chemical products relies on the advancement of next-generation energy and chemical technologies using coal and natural gas as raw materials. 1.3 Co-production is the development trend of the next generation of energy chemicals. “Co-production” refers to the use of coal or natural gas as raw materials; after high-temperature conversion or partial oxidation to produce gas, this gas is used to manufacture chemical products such as nitrogen fertilizers, methanol, and their derivatives, while also being utilized for power generation and to produce city gas. By doing so, energy utilization efficiency is high, meeting the requirements of sustainable development in green chemistry and ecological chemistry. Therefore, it is imperative to develop \"combined production\" of coal, chemicals, electricity, gas, steam, etc. Even in the field of \"chemical\" production itself, there is an option for \"co-production.\" The nitrogen fertilizer industry can be combined with carbon-based chemical production; using the same raw materials, employing similar gas generation and optimization processes, as well as comparable synthesis reactions, along with integrated utility systems. This approach opens up broad prospects for the further development of both the nitrogen fertilizer industry and carbon-based chemical production. 2. Technical foundation for the simultaneous development of the nitrogen fertilizer industry and carbon-based chemicals in the energy chemical sector 2.1 Technical achievements already obtained through the synergistic development of China’s nitrogen fertilizer industry and carbon-based chemicals China has a long history of integrating these two industries, and notable results have been achieved in this regard. The series-connected “Lianchun” system has been widely adopted in small and medium-sized nitrogen fertilizer plants in China, yielding significant benefits. Methanol is produced in conjunction with ammonia through a series process; the methanol synthesis takes place after the decarburization step and before the trace carbon monoxide removal process, with methanol synthesis being integrated into the ammonia production process in a sequential manner. Ligroin has the following advantages: ammonia synthesis plants produce a new product – methanol, as a by-product ； The CO load entering the copper washing (or methanation) step is reduced ； Changing the previous process can appropriately relax the requirements on the conversion rate, thereby reducing steam consumption ； The polyol plant can also make use of equipment such as the outer cylinder of ammonia synthesis towers and circulators that become idle following the expansion of ammonia synthesis production, resulting in lower investment costs and faster implementation. Many nitrogen fertilizer plants in our country, while producing methanol as a by-product, have also developed a range of carbon-based chemical products. Some companies produce formaldehyde and its derivative products; others utilize synthetic ammonia to manufacture methylamine and dimethylformamide. Still other companies make use of carbon monoxide to produce formic acid and acetic acid. There are also firms that work in conjunction with the chlor-alkali industry to produce methane chlorides as well as sodium methoxide and potassium methoxide. Additionally, some companies collaborate with the petrochemical industry to produce dimethyl carbonate through transesterification methods. Each of these companies has developed its own strategies, achieving a series of technological advancements and improvements. 2.2 Notable achievements in the development of one-carbon chemical technology in China: For the nitrogen fertilizer industry to develop in conjunction with one-carbon chemical technology, it is necessary to pay attention to the technological advancements in this field. Over the past decade or so, China has achieved remarkable and substantial progress in carbon-based chemical technologies, developing numerous technologies with independent intellectual property rights. China has built a sufficient technical foundation for large-scale methanol plants that are designed, manufactured, and operated domestically. Large gasifiers that use coal slurry as a feedstock and have a daily coal feeding capacity of over 1,000 tons have been successfully put into operation ； Technical breakthroughs have been achieved in the pilot test of gas-flow bed dry coal powder gasification furnace ； Various low-energy natural gas steam conversion and partial oxidation technologies have been mastered ； A variety of efficient and practical decarburization and desulfurization processes have been successfully applied in production practice ； The transformation, deep desulfurization, and methanol synthesis catalysts have all been domestically produced ； A new type of methanol synthesis reactor has become a patented technology in China ； Distillation equipment has reached levels of energy efficiency and optimization. China has made a series of new breakthroughs in the production technologies for its key products in the field of carbon-based chemicals. The domestically developed methanol low-pressure carbonylation plant with an annual capacity of 100,000 tons for the production of acetic acid has been put into operation successfully and is functioning well ； The production facility for acetic acid with an annual capacity of 200,000 tons, developed through research, is under construction and is expected to come online this year ； The plant for producing 20,000 tons per year of methyl formate via methanol carbonylation and formic acid via hydrolysis has been in normal operation for many years ； Industrial-scale plants for producing dimethylformamide and N-methylformamide from methyl formate as raw material have been in operation for many years ； The synthesis of dimethyl carbonate by liquid-phase carbonylation-oxidation and transesterification methods has been industrialized ； Pilot tests and the like for the two-step oxidation-coupling method to produce dimethyl oxalate and ethylene glycol have been completed. Achievements have also been made in basic research and applied basic research in the field of carbon-1 chemistry, many of which are innovative and provide a foundation for further integration between the nitrogen fertilizer industry and carbon-1 chemistry. 2.3 China’s nitrogen fertilizer industry boasts advantages in utility services and equipment manufacturing. Being a traditional industry, it has developed over the past few decades and possesses significant strengths in areas such as utility services and equipment manufacturing, which can facilitate the integration of the nitrogen fertilizer industry with carbon-based chemical industries. Fertilizer plants generally have utility facilities (water, electricity, steam). If carbon-based chemical products are to be produced, there is no need to rebuild these utility systems; only appropriate expansion on the existing infrastructure is required. Nitrogen fertilizer plants usually have maintenance workshops, and large and medium-sized nitrogen fertilizer enterprises also have manufacturing subsidiaries that can carry out the design and production of equipment on their own. Therefore, when nitrogen fertilizer companies expand into carbon-based chemical industries, they possess very strong advantages in terms of talent and technology.