Speech by Song Xianzhu, Deputy Director of the Raw Materials Department of the Ministry of Industry and Information Technology, at the 2011 Methanol Industry Conference

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Speech by Song Xianzhu, Deputy Director of the Raw Materials Department of the Ministry of Industry and Information Technology, at the 2011 Methanol Industry Conference 2011-03-29 Distinguished President Li, dear delegates, good morning! At a time when the whole country is earnestly studying the spirit of *** and implementing the Outline of the 12th Five-Year Plan, the China Nitrogen Fertilizer Industry Association organized the 2011 Methanol Industry Conference to summarize the economic performance of the methanol industry during the 11th Five-Year Plan period and outline the development directions for methanol in the 12th Five-Year Plan period. Meanwhile, exchanges on advanced technologies were also carried out. The conference was held at an extremely timely and necessary moment. On behalf of the authorities in charge of the industry and information technology sectors, I extend warm congratulations on the holding of this conference, and wish it every success in achieving its intended goals. Next, I will discuss two aspects: First, I will talk about the development trends in the petrochemical industry. It can be said that the 11th Five-Year Plan period was a golden age for the development of the petroleum and chemical industries; especially from 2006 to 2008, the growth rate was very high. After the international financial crisis, the industry faced some difficulties in 2009, with insufficient domestic demand and a sluggish market. In 2009, the \"Petrochemical Industry Adjustment and Revitalization Plan\" as well as other economic stimulus policies were introduced, and these policies played a crucial role in helping the industry stabilize and recover. By 2010, that is, last year, the entire industry recovered rapidly, with various economic indicators reaching record highs. Last year, the total industrial output value of the petroleum and chemical industry was 8.88 trillion, while the industrial added value was 2.24 trillion. The average annual growth rates for these two indicators during the 11th Five-Year Plan period were 20.8% and 25.9%, respectively. Last year, the industry’s profits amounted to 688 billion, with a growth rate of 12.6% during the 11th Five-Year Plan period. Of course, the rise in crude oil prices is also an important factor here. As we know, crude oil was priced at over 60 dollars per barrel in 2006; it reached its peak of 147 dollars per barrel by the end of July 2008, and now it’s again above 100 dollars per barrel. This leads to further increases in the prices of chemical products. Overall, through the development and adjustments during the 11th Five-Year Plan period, the chemical industry’s overall strength has increased significantly; it has become a major player in chemical production, with many of its products accounting for the highest output levels in the world. In 2010, for example, China’s methanol production capacity was over 38 million tons, and its output was over 15 million tons – both figures ranking first in the world ； Industrial structure adjustment accelerated, and the product structure improved further; the proportion of high-value-added premium products continued to rise, while industry concentration increased as well. By 2010, there were 19 oil refining enterprises with production capacities of 10 million tons each, and five ethylene production bases with capacities of 1 million tons each ； A centralized production structure has been basically established, with large-scale production bases for petroleum and natural gas chemicals, coal chemicals, salt chemicals, etc. having taken shape initially ； Breakthroughs have been achieved in technical equipment, and the level of development and innovation in major equipment has further improved, with some reaching world-class standards. II. In line with the development plan for the petrochemical industry during the 12th Five-Year Plan period, an overview of the development of the coal chemical industry and the methanol industry is provided. In accordance with the requirements of the Outline of the 12th Five-Year Plan for National Economic and Social Development, the Ministry of Industry and Information Technology is working on formulating plans for industrial transformation and upgrading, as well as 48 other industry-specific plans for sectors such as the petroleum and chemical industry and the olefin industry during the 12th Five-Year Plan period. The plan related to methanol is included within the petrochemical industry plan. These plans have been revised numerous times by various parties, and a draft version has now been prepared; it will be released at an appropriate time after further feedback from all relevant stakeholders is gathered. “During the 12th Five-Year Plan period, China’s petrochemical industry faced both rare opportunities and numerous challenges. Our overall strategy was to take transformation and upgrading as the key focus, adjust the industrial structure, optimize the layout of industries, increase investment in technological upgrades, enhance independent innovation capabilities, actively develop high-end products, improve the variety structure and product quality, extend the industrial chain, promote a circular economy, raise the efficiency of resource and energy utilization, advance mergers and reorganizations, phase out outdated technologies, and work toward energy conservation and emission reduction, in order to ensure the healthy and sustainable development of the petrochemical industry. In the field of coal chemical industry, industrial development is planned based on factors such as the reserves and distribution of coal resources, water resources, the ecological environment, and transportation conditions. An emphasis is placed on adopting a concentrated and intensive approach as well as integrated upstream and downstream operations to establish coal chemical production bases. Encourage the integration of coal chemical industry and salt chemical industry, as well as cooperation between chemical enterprises and coal enterprises, to achieve an integrated development model for coal, electricity, and chemicals. Traditional coal chemical industry is an important foundation of China’s chemical sector; it has played a vital role in the country’s economic development over the years. However, its developmental foundation is relatively weak. It is necessary to focus on implementing energy-saving technological upgrades to promote industrial upgrading, strictly control the rapid growth of production capacity, phase out outdated production facilities, extend the industrial chain, and develop high-value-added derivative products in the downstream sector. Actively develop methanol production from coke oven gas, and carry out pilot projects for methanol fuel vehicles. With technological advancements, modern coal chemical industry is currently experiencing high levels of enthusiasm for its development. However, compared to the petrochemical industry, it is characterized by high consumption of energy and water resources, significant carbon dioxide emissions due to energy use, high investment requirements, and substantial industrial risks. At present, coal-to-olefins, coal-to-oil, coal-to-natural gas, and coal-to-ethylene glycol are still in the stage of industrial demonstration. Although some projects have already begun operation, further improvements to the process technologies are needed to achieve stable production over long periods of time. In recent years, modern coal chemical industry has made bold efforts to capitalize on its strengths and overcome its weaknesses, given the decreasing availability of oil and gas while coal remains an important and advantageous energy source and resource for our country. Significant breakthroughs have been achieved in terms of development strategies and technical equipment, which can truly be regarded as remarkable achievements. New coal chemical projects should continuously improve their process flows and optimize the variety structure, based on a comprehensive summary of the experiences gained from pilot projects as well as economic and technical evaluations, in order to achieve full production capacity and meet relevant standards. At the same time, it is necessary to improve development strategies to avoid redundant construction and homogeneous development, strictly control the rapid growth of production capacity, increase research on downstream derivative products, and continuously extend the industrial chain. Regarding methanol. The current situation is that there are many small and medium-sized methanol production enterprises, with an average scale that is relatively small. Due to differences in the sources, prices, and production processes of the raw materials used for methanol production, the profitability of these enterprises varies greatly. Overall, the methanol market has significant potential for growth in downstream applications, with demand increasing year by year; at the same time, there is a problem of insufficient utilization rates and overcapacity. The future development of methanol should follow these principles: First, the industrial layout must be carried out in strict accordance with the requirements of the 12th Five-Year Plan. The coal chemical industry and the methanol industry require substantial resources in terms of coal, water, as well as technical expertise and financial support. During the 12th Five-Year Plan period, the development of methanol production from coal and coke oven gas, along with downstream projects that utilize methanol to produce olefins, should take place in areas where the conditions are suitable. II. Persist in extending the industrial chain. The methanol industry is encouraged to develop downstream products, including ethylene, propylene, polyethylene, polypropylene, polyvinyl alcohol, vinyl acetate, ethyl acetate, butyl octyl alcohol, acrylic acid, acrylates, acetic anhydride, phthalic anhydride, and other such products. III. Adhere to technological transformation. Through technological upgrades, energy consumption can be reduced and costs lowered; clean production processes can be employed to cut pollutant emissions, thereby further enhancing the development level and competitiveness of the methanol industry. Those present are all experts with many years of experience in the production and research of methanol, and they have a thorough understanding of the industry. It is believed that through the exchanges and discussions at this conference, new ideas can be developed, new technologies can be shared, new problems can be solved, and new breakthroughs can be achieved. Finally, I wish everyone good health and success in their work during their time in Suzhou. I hope our industry will continue to develop better, and I welcome everyone to visit the Ministry of Industry and Information Technology.