Coal chemical industry VS Petroleum chemical industry

Reply 1# yw520: Coal chemical industry cannot compete with the petrochemical industry in the short term.

Reply to 2# wenshoud: I think coal chemical industry still has a promising future.

Energy structure + cost advantages drive a recovery in the coal chemical industry. Abstract: After more than two years, crude oil prices have once again risen above $100. In the long term, the trend of high crude oil prices will not change. Such high prices, combined with China’s energy structure characterized by an abundance of coal and a shortage of oil, will greatly promote the development of the coal chemical industry. After more than two years, crude oil prices have once again risen above $100 per barrel. In the long term, the trend of high crude oil prices will not change. Such high prices, combined with China’s energy structure characterized by an abundance of coal and a shortage of oil, will greatly promote the development of the coal chemical industry. As a result, companies in this sector have become one of the investment targets in the capital market that benefit from rising oil prices. 　　High oil prices create opportunities for coal-based chemical industry. At the beginning of 2008, international crude oil prices exceeded $100 per barrel, and many industries that rely on oil as fuel or raw material faced increasing pressure due to rising costs. Developing the coal-based chemical industry and using coal to produce new fuels that can serve as alternatives to oil was also included in China’s 11th Five-Year Plan. Projects to produce alternative petroleum fuels, represented by China Shenhua, have been launched one after another, with many companies announcing their intention to enter the coal chemical industry on a large scale. 　　In anticipation of soaring oil prices in 2008, related coal chemical companies also experienced a period of strong market performance; companies such as Zhongtai Chemical, Yinglite, and Yuanxing Energy were all subject to speculation by market funds. 　　Unlike the chemical industry structure abroad, which is based on crude oil, China’s unique energy mix means that coal is used as the primary raw material in the country’s petrochemical and basic chemical industries. At present, many chemical products are priced on the international market or are highly affected by international prices; based on this logic, China’s coal chemical industry will benefit from high oil prices. 　　Huaxun Finance believes that the prosperity of the coal chemical industry is gradually recovering, and the prices of products in this sector, which rely on coal as the starting point of their production chain, show a tendency to rise further; thus, the prospects for this industry are positive. 　　Everbright Securities points out that high oil prices have two impacts on chemical products: one is related to cost advantages, including the costs of coal-based chemicals such as methanol, dimethyl ether, fuel ethanol, and chlor-alkali products. The second factor is the prosperity of agrochemicals, namely fertilizers and pesticides, resulting from the indirect impact on agricultural products. 　　PVC and chemical contracting sectors benefit significantly. Analysts at Zhejiang Merchants Securities told the Daily Economic News that for coal chemical stocks, their advantages stem mainly from two factors: one is the investment advantage in an environment of high oil prices. Currently, chemical products are mainly produced through two industrial pathways: the petroleum industry chain and the coal industry chain. For example, in the case of PVC, the main production methods are the ethylene route and the calcium carbide route; the ethylene route falls under the petroleum industry chain, while the latter belongs to the coal industry chain. 　　Everbright Securities believes that the price of PVC this year is relatively optimistic; the annual price range for PVC is likely to be between 7,500 yuan and 10,000 yuan per ton, which is significantly higher than in previous years. Integrated PVC companies in the industry that have a high degree of self-sufficiency in calcium carbide will continue to enjoy above-average profits, with earnings exceeding market expectations; examples include Inner Mongolia Junzheng, Yinglite, and Zhongtai Chemical. 　　At the same time, high oil prices will also stimulate demand for alternative energy sources such as methanol and dimethyl ether. CICC believes that the price of methanol is much lower than that of gasoline; methanol-blended gasoline is 0.49 yuan cheaper per liter than conventional gasoline. Consumption of methanol fuel is set to grow rapidly in the coming years, with the amount of methanol required for blending expected to increase from 3 million tons in 2009 to 15 million tons by 2015. Data from Business Society show that the average price of methanol in China has risen over the past ten days, from 2,536 yuan per ton to 2,621 yuan per ton. 　　Wang Min, an analyst at Business Society, said that the recent rise in international oil prices has been beneficial to coal-based chemical products such as methanol; the prices of methanol and dimethyl ether have risen to varying degrees recently. As the weather gets warmer, the demand for formaldehyde in downstream industries is increasing, and manufacturers are seeing an improvement in their sales performance compared to before. Among listed companies, firms such as Yuanxing Energy and Baotailong are worth paying attention to. 　　On the other hand, with high oil prices, companies engaged in coal chemical contracting such as China Chemical and Donghua Technology are also set to experience rapid growth. 　　According to media reports, the Ministry of Industry and Information Technology has completed a draft plan for the development of modern coal chemical industry during the 12th Five-Year Plan period. Investment in new coal chemical projects is accelerating, with approximately 600 billion yuan in additional investment over the next five years, providing sustainable growth opportunities for related engineering construction firms and equipment manufacturers. 　　The company is a rising star in the chlor-alkali industry in recent years; currently, it produces 5 tons of PVC and 4.1 tons of caustic soda per 10,000 shares. An increase in PVC prices by 500 yuan leads to an increase in earnings of 0.15 yuan. CITIC Construction Investment noted that the company uses only 1.36 tons of calcium carbide per ton of PVC produced (the industry average is 1.4 to 1.5 tons), placing it among the leaders in terms of energy consumption per ton of calcium carbide in the industry ； The self-sufficiency rates for coal, electricity, and calcium carbide have reached 100%, 80%, and 60% respectively, with a trend toward further improvement in the future. As a company that entered the industry on a large scale not long ago, its level of PVC cost control is second to none in the industry. At the same time, the company currently owns three coal mines: Baiyinwusu, Heilonggui, and Shenhua Junzheng, with a total reserve of 116 million tons. It has also obtained the exploration rights for the Wunit Coal Mine in Inner Mongolia, whose estimated reserve is 2.7 billion tons. 　　In the short term, the company’s performance is highly predictable, offering certain valuation advantages and a safety margin ； In the long term, although there is still some uncertainty regarding the company’s coal mine consolidation and business expansion efforts at present, its ability to acquire resources and to benefit from the trend of resource consolidation in Inner Mongolia during the 12th Five-Year Plan period is certain; thus, its future growth is promising. CITIC Construction Investment expects the company’s earnings per share for 2011 to 2013 to be 1.40 yuan, 1.96 yuan, and 2.52 yuan respectively. 　　Inlite (000635, closing price: 18.31 yuan). The company’s annual report for 2010 showed that it achieved operating revenue of 2.468 billion yuan, a year-on-year increase of 31.72% ； The net profit attributable to the shareholders of the listed company was 128 million yuan, a year-on-year increase of 167.55% ； Earnings per share are 0.72 yuan. Xingye Securities noted that during the reporting period, the average selling price per ton of PVC for the company increased by 17.39%, while the unit cost rose by only 1.7% ； Sales revenue increased by 27.69%, while production costs rose by 10.47%. In 2010, although the prices of products in the PVC industry gradually increased, the production costs across the industry also rose steadily. In particular, efforts to save energy and reduce emissions in the fourth quarter led to a significant increase in the cost of raw materials, resulting in poor profitability for the industry. This market environment is precisely able to reflect the advantages of the company’s integrated comprehensive support system. The company’s PVC production capacity was utilized at over 90% throughout the year, and with costs remaining almost stable, the profitability of PVC increased significantly. 　　Huatai Securities expects the company’s earnings per share to be 0.90 yuan, 1.26 yuan, and 1.55 yuan for the years 2011 to 2013 respectively. 　　Sinochem (601117, closing price: 8.04 yuan) has, through the introduction, integration of advanced technologies as well as independent research and development, mastered almost all of the world’s coal gasification technologies. It holds a significant share of the market for engineering design and construction contracting in the coal chemical industry in China; it has designed or undertaken EPC projects for numerous coal chemical initiatives, completing nearly 300 projects related to coal gasification, coal liquefaction, coal-to-natural gas production, and coal-to-methanol production. Since the owners of these companies are mainly enterprises, and they hold an irreplaceable leading advantage in the field of modern coal chemical industry, granting them the power to set market prices. CITIC Securities noted that the company’s newly signed contracts consistently exceeded market expectations; the contract value for the Yili Xintian coal-to-natural gas project alone amounted to 8.287 billion yuan, accounting for about 30% of the company’s revenue in 2009. There is a clear trend toward larger orders, and the strong performance of the industry will drive a continuous increase in the company’s orders. China Merchants Securities notes that, given the huge investment requirements and extreme complexity of the modern coal chemical industry, the company holds a competitive advantage; it expects the company’s earnings per share to be 0.50 yuan in 2011 and 0.70 yuan in 2012.

Reply to 4# 25775338 Thanks! It seems I understand a bit now.

Personally, I think coal chemical industry still has a promising future.

In the long term, coal chemical industry still has a bright future, as coal reserves will last for another 200 years, while oil reserves will only last for a little over 50 years.

**There are already some bans, indicating that the advantage is not very significant.

Reply to 8# zhaobinyx: The development of the coal chemical industry depends on **policies**

Each has its own advantages; the petrochemical industry relies on oil, while the coal-based chemical industry depends on coal, and all resources will eventually run out. It depends; in areas rich in oil, it is best to develop the petrochemical industry, while in areas rich in coal, it is best to develop the coal chemical industry. These are all closely related to our lives, and finally, it is essential to achieve rational use of resources.

It seems that areas rich in coal do not have much water resources! ! Blindly developing coal chemical industries in some coal-rich areas might severely impact the local water resources! !