Coal Chemical Industry: Burdened with Surplus Product, but Capacity Construction Is in Full Swing
Year:2014 ISSUE:3
COLUMN:ORGANICS
Click:193    DateTime:Feb.24,2014
Coal Chemical Industry: Burdened with Surplus Product, but Capacity Construction Is in Full Swing

By Sang Jianxin, CNCIC

Last year the import volume of coal to China increased drastically and the price of coal slid. The demand for methanol was brisk and the price of methanol went up. Producers of coal chemicals with surplus capacity such as acetic acid could hardly increase their prices, and they had a hard time in operation. The construction of new coal chemical projects such as coal-to-olefin (CTO), coal-to-gas (CTG), coal-to-liquid (CTL) and coal-to-aromatic (CTA) projects was in full swing. The first CTG project and the first CTA project in China were both completed in 2013. Due to problems in environmental protection, CTG projects triggered widespread discussions, both at home and abroad.

The import volume of coal increased drastically, the export volume was reduced, the prices came down and policies were issued to restrict coal imports

The total output of coal in China in the first 10 months of 2013 was lower than the same period of the previous year. Winter is the peak season for coal demand. As the weather is getting cold, the consumption of power for civil uses in both the north and the south increase constantly and the year-on-year growth rate of coal output will turn from negative to positive. Data from the China Coal Industry Association show that the total output of coal in China was 3.09 billion tons in the first 10 months, down 0.3% year-on-year. The output was 320 million tons in October, an increase of 1.6%. It is estimated that the output of coal in China in 2013 was equal to the output in the previous year.
According to data released by the General Administration of Customs, the total import volume of coal was 261.12 million tons in the first 10 months, an increase of 28.20% over the import volume of 203.74 million tons in the same period of the previous year. The import volume was 24.7 million tons in October, a drop of 3.88% year-on-year and an increase of 15.54% over the import volume of 21.41 million tons in October 2012. The total export volume of coal was 6.3 million tons in the first 10 months, a drop of 21.32% from the export volume of 8.03 million tons in the same period of the previous year. The export volume was 404.2kt in October, a drop of 17.53% from the previous month of the same year and a drop of 8.14% from the export volume of 440kt in October 2012. It is estimated that the import volume of coal to China in 2013 was more than 25% higher than in the previous year and the export volume was around 20% lower than the previous year.
Coal imported from abroad affects not only the coal market in coastal areas, but also the coal market in inland areas such as inner Shandong, Henan, Anhui, Jiangxi, Hunan and Hubei. Coal prices in China fell far in 2013. Take the price of 5500 kcal power coal at Qinhuangdao Port for instance. The average price was RMB698/t in 2012, but came down to RMB588/t in 2013, a drop of RMB110/t and around 15.8%.
The price drop of coal has led to a reduction of profits in coal enterprises. Coal enterprises have to cut down their production. In view of this, starting from August 30, 2013 China cancelled the zero provisional import tariff to lignite and restored the 3% most-favored-nation tariff. Owing to the implementation of this policy, the coal price in China started to pick up from July.

Brisk demand for methanol led to an increase of the output, import volume, export volume and prices of methanol

Methanol is an important downstream chemical product of coal. More than 60% of the methanol in China is produced from coal. With the smooth progress of methanol-to-olefin (MTO) projects, the demand for methanol increased in 2013. There was an increase in the output, the import volume and the export volume. And the price also went up.
Data from the National Bureau of Statistics show that the total output of methanol in China was 23.5 million tons in the first 10 months of 2013, an increase of 10.02% over the output of 21.3 million tons in the same period of the previous year. The output was 2.6 million tons in October, an increase of 1.33% over the previous month of the same year and an increase of 23.50% over the same month of the previous year.
According to data released by the General Administration of Customs, the total import volume of methanol was 4.15 million tons in the first 10 months, an increase of around 4.0% over the import volume of 3.99 million tons in the same period of the previous year. The import volume was 295.1kt in October, a drop of around 5.0% from the previous month of the same year and a drop of 37.6% from the import volume in October 2012. The total export volume of methanol was 546.7kt in the first 10 months, an increase of 1 431.14% over the export volume of 35.7kt in the same period of the previous year. The export volume was 61.1kt in October, an increase of 169.16% over the previous month of the same year and an increase of 42 393.5% over the export volume in October 2012.
The average price of methanol in China was around RMB2 785/t in 2012 and around RMB2 814/t in 2013, an increase of 1.0%.

The capacity for acetic acid is in surplus, while the output, foreign trade volume and price all plummeted

The total output of glacial acetic acid in China was 3.55 million tons in the first 10 months of 2013, a slight drop from the output of 3.56 million tons in the same period of the previous year. The output was 383.4kt in October, a drop of 3.06% from the output of 395.5kt in October 2012.
According to customs statistics, the total import volume of glacial acetic acid was 7 989.36 tons in the first 10 months, a drop of 43.92% from the import volume of 14 246.90 tons in the same period of the previous year. The total export volume of glacial acetic acid was 168 374.56 tons in the first 10 months, a drop of 45.65% from the export volume of 309 797.09 tons in the same period of the previous year.
Due to the overcapacity of glacial acetic acid, the construction of new projects was postponed. The 200kt/a glacial acetic acid unit in Henan Yima Gasification Plant originally planned to conduct wet commissioning in April 2013, but it was postponed repeatedly and production was not yet started in early December. The construction of a 400kt/a glacial acetic acid unit in Henan Yongcheng Longyu Coal Chemical Co., Ltd. was also put off.
Despite the price rise of raw material methanol, the price of acetic acid declined instead of increasing in 2013. The average price of acetic acid in China was around RMB3 001/t in 2012 and RMB2 913/t in 2013, a drop of around 3%.

New CTO projects are completed and numerous projects are planned for construction

There were four CTO projects completed in China in 2012. The resulting national capacity was 1.765 million t/a and the output was increased to 1.38 million tons, being almost doubled.
Two CTO projects in China made successful startups in 2013. A 600kt/a MTO unit of Ningbo Heyuan Chemical Co., Ltd. started production in February. The 295kt/a MTO unit in Wison (Nanjing) Clean Energy Co., Ltd. successfully started up on September 26. By the end of 2013, a total of six new CTO units were completed and put on stream in China and their combined capacity was 2.655 million t/a.
The successful operation of commercial demonstration projects has given investors great confidence and boosted enthusiasm in investing in CTO projects. According to incomplete statistics, there are nearly 50 CTO projects under construction or in early-stage preparation in China today. It is expected that the CTO capacity in China will reach 15.00 million t/a in 2015 and 19.00 million t/a in 2017.

The construction of CTG projects was accelerated, two CTG projects were completed and the total capacity of incomplete approved projects reached 49.5bm3/a

The number of CTG projects approved by the National Development and Reform Commission has already reached nine. The total capacity is 49.5 bm3/a and the total investment is more than RMB29 million. All these projects have entered the stage of full-fledged construction. Projects that have made the most rapid progress include one of China Datang Corporation and one of Xinjiang Qinghua Coal Chemical Co., Ltd. The first phase (2.0 bm3/a) of the Hexigten-based CTG project in China Datang Corporation and the first phase (1.35 bm3/a) of the CTG project in Xinjiang Qinghua Coal Chemical Co., Ltd. were completed by December 2013 and the capacity reached 3.35 bm3/a. In the first phase of the Hexigten-based CTG project of China Datang Corporation, the whole process flow was run through at the end of July 2012 and started to supply natural gas to Beijing at the end of 2013. In the first phase of a 5.5 bm3/a CTG project of Xinjiang Qinghua Coal Chemical Co., Ltd., the installation of machinery was totally completed at the end of 2012, qualified natural gas was trial-produced in June 2013, natural gas produced entered the west-east gas transmission grid on August 20, and production was to have reached the design capacity at the end of 2013.
In addition to the above-mentioned nine projects, numerous new CTG projects are under planning. According to incomplete statistics, there are more than 40 CTG projects (including projects completed, being under construction, approved and submitted for approval) in China and the total capacity already reaches 190.25 bm3/a. Projects are mainly distributed in Xinjiang and Inner Mongolia. Xinjiang is an important region for CTG development and there are nearly 30 CTG projects under construction or planning with a combined capacity of over 100.0 bm3/a. The combined capacity of CTG projects in Inner Mongolia is 40.0 bm3/a.

The first CTA demonstrative project was completed and has passed state appraisal

The research into CTA technologies in China was started in 2003. Tsinghua University took the lead in the world and developed a catalyst for MTA and the continuous reaction regeneration technology for fluidized-bed MTA now used in large-scale commercial production. China was one of the leading countries in the world to make breakthroughs in CTA commercial production technology. The FMTA technology developed by Tsinghua University and the MTA technology developed by CAS Shanxi Institute of Coal Chemistry have already been used in commercial production.
By the end of 2013, there were only a 10kt/a CTA pilot unit in Shaanxi Huadian Yuheng Coal Chemical Co., Ltd. and a 100kt/a MTA unit in Inner Mongolia Qinghua Group Co., Ltd. in China, and the total capacity was 110kt/a. The CTA demonstration project of Shaanxi Huadian Yuheng Coal Chemical Co., Ltd. started construction in March 2011. A 10kt/a CTA pilot unit was constructed first, and a commercial demonstration project with a scale of 3.00 million t/a CTM and 1.00 million t/a MTA was launched at the same time. The 10kt/a MTA pilot unit was completed in Shaanxi Yulin Coal Chemical Industry Base in 2012. The pilot technology passed a research achievement appraisal organized by the National Energy Administration and China Petroleum and Chemical Industry Federation. Pilot tests show that 3.07 tons of methanol can produce 1 ton of aromatics, great quantities of hydrogen are also co-produced, process waste water contains no ammonia nitrogen and waste gas contains no sulfur nitrogen. The 100kt/a MTA unit of Inner Mongolia Qinghua Group Co., Ltd., designed by Sedin Engineering Co., Ltd. and using the technology jointly developed by Sedin Engineering Co., Ltd. and CAS Shanxi Institute of Coal Chemistry, conducted successful commissioning and started smooth production in March 2013. There are also five CTA projects being constructed or planned for construction in China. Their combined capacity is 4.45 million t/a and the capacity of projects now under construction is 1.65 million t/a.

The construction of CTL projects was in full swing

In the years before, 2010 only three indirect-liquefaction CTL projects, all owned by Sasol of South Africa, made commercial production in the world, and the total capacity was around 7.50 million t/a. The operation of CTL demonstrative units in China made new breakthroughs in 2012. The Ordos-based direct-liquefaction CTL unit of Shenhua Group Co., Ltd. and indirect-liquefaction CTL demonstrative units of Lu’an Group Co., Ltd. and Yitai Group Co., Ltd. all achieved long-time stable operation. The capacity was still 1.75 million t/a, being equal to the capacity in the previous year. The ability for stable production in production units of these enterprises was however improved and the operating rate reached 91.4%. The output was 1.60 million tons, up 28.4% year-on-year. With the stable operation of demonstration units, the technology and economy of CTL have already been verified. Several large CTL projects in China all have expansion plans. The Ningxia-based 4.00 million t/a CTL project of Shenhua Group Co., Ltd., the 5.40 million t/a CTL project of Lu’an Group Co., Ltd. and the 2.00 million t/a direct-liquefaction CTL project of Yitai Group Co., Ltd. got approval from the National Development and Reform Commission in 2013. According to incomplete statistics, the capacity of projects being constructed or planned for construction is 20.98 million t/a and most of these projects will be completed in 2015 or so.