Is it true? It feels a bit like bragging

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Unfazed by soaring coal prices, coal-based olefins show strong profitability. Author/Source: China Chemical Industry News Date: 11-11-2016 Clicks: 43 This year, domestic coal prices have seen an unexpected upward trend, with particularly rapid increases since the third quarter, suggesting that the booming situation of years ago might recur. Meanwhile, international oil prices have remained stable at low levels, still below $50 per barrel. However, during a recent visit to some coal chemical enterprises in the northwest region as part of a research team from Shaanxi, the author found that, under such dual pressures, the coal-to-olefins industry still demonstrated strong profitability. “Currently, the price of coal at the factory gate is as high as 530 yuan per ton, up by 210 yuan per ton from the beginning of the year; this alone increases the cost of polyolefins by over 1,000 yuan per ton. However, due to the steady upward trend in olefin prices this year, there has been a significant increase since November. Therefore, the rise in coal prices will not have a significant impact on the operational performance of coal-based olefin companies, and we are confident in achieving our annual production and operation targets. ”On November 10, Wang Huimin, general manager of Shaanxi Pucheng Clean Energy Chemical Company, said happily. He said that since the beginning of this year, international oil prices have remained low, driving down the prices of petrochemical products including PP and PE and reducing the profit margins for polyolefin products. At the same time, rising coal prices have increased the production costs for companies that produce olefins from coal, thereby weakening their profitability. Despite facing dual pressures, the company tightened its management, ensuring stable, efficient, and high-quality operation of the equipment; as a result, production increased significantly, which helped reduce the overall costs. Furthermore, the domestic PP and PE markets are generally showing a positive trend; currently, the ex-plant prices of PE and PP, including taxes, have risen to 9,600 yuan per ton and 8,400 yuan per ton respectively, an increase of 1,000 yuan per ton compared to September. From January to October, Pucheng Energy Chemical Company achieved operating revenues of 3.8 billion yuan and profits of 210 million yuan; as of November 9, the company had produced nearly 550,000 tons of polyolefin products this year, ensuring that it will meet its set annual production targets. The world’s first demonstration project for the comprehensive utilization of gas oil – Yanchang China Coal Yulin Jingbian Energy Chemical Company – is also performing well. In the first half of this year, the company produced a total of 974,300 tons of various products, of which 571,300 tons were polyolefin products – accounting for 57.13% of the annual target. The company generated sales revenue of 4.712 billion yuan and a profit of 525 million yuan. “Rising coal prices will certainly have an impact on the company’s performance, but not significantly; we are confident that we will be able to meet our annual targets. Currently, the load rates of both the methanol and DMTO plants exceed 110%, while the load rate of the DCC plant is 100%. The daily production of polyolefin products exceeds 3,200 tons, achieving excellent operational results. ” Li Wei, the general manager of the company, said. The performance of Shenhua Baotou coal-to-olefins project is also excellent. China Shenhua’s semi-annual report shows that during the first half of the year, the Baotou coal-to-olefins project produced 130,200 tons of PE and 124,300 tons of PP. The company’s revenue for that period was 1.934 billion yuan, while its profit was 176 million yuan. According to the author’s understanding, following its contribution of over 1.2 billion yuan in profits to its parent company in 2015, the 600,000-ton/year DMTO project at China Coal Yuheng produced 269,000 tons of PE and 261,000 tons of PP in the first three quarters of this year; the plant’s operation rate remained above 100% throughout that period. It is estimated that the DMTO project will generate profits of no less than 1 billion yuan this year. In addition, many coal-to-olefins projects such as Shandong Shenda, Ningxia Baofeng, and Shenhua Ningdong MTP have also thrived amid low oil prices and rising coal prices, achieving excellent results.