Naphthalene Manufacturers Will Compete for Feedstock    

By Gao Liping, the Consulting Division of China National Chemical Information Center
In 2004, China's industrial naphthalene capacity was about 490 000 t/a. Since 2006, due to the rise of crude oil prices, the costs of petrochemical raw materials have constantly increased. This has brought good development opportunities to the coal tar processing industry. In various places of China, particularly in Shanxi and Shandong provinces, several large-scale coal tar processing units have been built, helping the country's industrial naphthalene capacity increase year by year and reach 860 000 t/a in 2009. Between 2004 and 2009, the average annual growth rate of China's industrial naphthalene capacity reached 12%.
   In recent years, the average operating rate of China's industrial naphthalene makers is low, between 60% and 70%. In 2004, China produced 340 000 tons of industrial naphthalene, with a capacity utilization rate of 69%. In 2009, China's industrial naphthalene output reached 520 000 tons, but the capacity utilization rate was only 61%. The low operating rate is mainly due to the following two reasons. First, many new industrial naphthalene projects started up but do not fully operate across the whole year, pulling down the overall operating rate. Second, since 2006, with the rise of international crude oil prices, many fuel and heavy oil producers have turned to use coal tar as raw material. This has caused the soaring of coal tar prices, making some coal tar processing enterprises reduce or cease production due to the high prices or short supply of coal tar, and thus affecting the annual operating rate of the industrial naphthalene industry.
　　At present, China has more than 100 industrial naphthalene manufacturers. Before 2005, China's industrial naphthalene manufacturers were mostly metallurgical companies, such as the Chemical Branch of Baoshan Iron and Steel Co Ltd, Anshan Iron and Steel Group Corporation's Chemical General Plant, Maanshan Iron and Steel Company Limited's Coal Coking Company, Wuhan Iron and Steel (Group) Corporation's Coking Co Ltd, Benxi Iron and Steel (Group) Corporation's Coking Plant, and Panzhihua Iron and Steel Group Corporation's Coal Chemical Company. In recent years, with the rapid development of the coal chemical industry, the coal tar processing capacity of chemical companies has grown rapidly, and a number of large-scale coal chemical enterprises became industrial naphthalene producers, like Huanghua Xinnuo Lixing Coal Chemical Co Ltd, Jining Chenguang JKT Coal Chemical Co Ltd, JFE Zhenxing Shandong Chemical Co Ltd, etc. As of 2009, China had more than 40 large-scale industrial naphthalene producers with an annual capacity of more than 10 000 t/a each. Their combined capacity accounted for nearly 90% of China's total.

China's leading industrial naphthalene makers in 2009
Company                              Capacity, thousand t/a
Huanghua Xinnuo Lixing Coal Chemical Co Ltd      60
JFE Zhenxing Shandong Chemical Co Ltd           40
Jining Chenguang JKT Coal Chemical Co Ltd       40
Shanxi Taixing Hejin Jingcheng Chemical Co Ltd    36
Henan Baoshuo Tar Chemical Industry Company Limited    35
Shanxi Hongte Coal Chemical Co Ltd               30
Shandong Gude Chemistry Co Ltd                  30
Shanxi Jiexiu Jiaqian Coal Chemical Co Ltd      30
Shanxi Coking Co Ltd                            28
Tangshan Koppers Kailuan Carbon Chemical Co Ltd    28
Shanxi Lubao Group                                27
Chemical Branch of Baoshan Iron and Steel Co Ltd    25
Shanghai Meishan Enterprise Development Co Ltd    20
Anshan Iron and Steel Group Corporation's Chemical General Plant    20
Hebei Shenzhou Yongyuan Chemical Co Ltd           20
Others                                          390
Total                                            860
Source: CNCIC


   In addition, China has more than 60 small-scale coal tar processing enterprises mostly located in Shanxi, Inner Mongolia, Ningxia, Shandong and Yunnan provinces or regions, with a capacity of less than 10 000 t/a each. They mainly produce industrial naphthalene from coal tar that is procured from surrounding areas. Their production is highly volatile. In 2009, their combined industrial naphthalene capacity accounted for less than 10% of China's total. As the Chinese government attaches more importance to the protection of the environment and resources, it has cast increasingly strict requirements on the production scale, production technology, resource utilization efficiency and environmental protection of coal tar processing enterprises. In the end of 2008, the Chinese government revised the entry threshold conditions for coking industry, which stipulates that the single-set capacity of new anhydrous coal tar processing units should reach 150 000 t/a at least, and the existing coal tar processing units with a single-set capacity of less 100 000 t/a should be phased out. In addition, in recent years, as a number of medium and large-scale coal tar processing plants were put into production, the market competition has become more intense, accelerating the closure of small-scale coal tar processing enterprises.
   At present, some industrial naphthalene manufacturers in China use the ethylene cracking tar to produce industrial naphthalene. It is estimated that their number is less than 10 and their total capacity is about 20 000 to 30 000 t/a. Such manufacturers include Shandong Qilong Chemical Co Ltd, Shanghai Jinhuan Petronaphthalene Development Co Ltd, Changshu Alliance Chemical Co Ltd, Nanjing Yunhe Petrochemical Co Ltd and Jiangsu Hualuan Chemical Industry Co Ltd. Every year, China produces about 1.5 million - 2 million tons of ethylene-cracking tar as by-product, but most of such tar is burned as fuel. China's annual coal tar output is 7 million - 8 million tons. Compared to this figure, China's annual output of ethylene-cracking tar is relatively small. Due to the limited source of ethylene-cracking tar and high production cost, the production of petroleum-based industrial naphthalene has not been well developed.
   The Chinese government has put increasingly stricter regulations on the coal tar processing industry. The enhanced policy-led threshold of the coal tar processing industry has to some extent limited the construction of new industrial naphthalene projects. Currently, there are four n