By Chang Xiaoyu
China’s petroleum and chemical industry faced both opportunities and challenges in 2021, the starting year of the nation’s 14th Five-Year Plan (2021-2025). Editorial team selected ten major events as follows:
1. China lifted most fertilizer processing trade curbs
On November 5, 2020, the Ministry of Commerce (MOC) and the General Administration of Customs of China (GACC) issued Announcement on Adjusting List of Products Banned in Processing Trade, allowing 24 kinds of fertilizers to be imported and exported in the form of processing trade and freeing six kinds containing ammonium nitrate from export restrictions, both since December 1, 2020 – an action ending most export restrictions imposed on 34 kinds of fertilizers in 2007.
On December 10, 2020, the MOC and GACC issued List of Goods Requiring Automatic Import License, according to which enterprises – importing fertilizers in the form of processing trade – shall submit the automatic import license to customs since January 1, 2021.
2. CPCIF issued new guide to propel petroleum and chemical industry
On January 15, 2021, the China Petroleum and Chemical Industry Federation (CPCIF) issued Development Guide for Petroleum and Chemical Industry (2021-2025), detailing seven tasks to strengthen the nation’s capability to supply petroleum and natural gas, accelerate adjustment of industrial structure, improve enterprises’ innovation ability, implement green development strategy, propel digital and intelligent development, cultivate enterprises, groups and petrochemical parks competitive in the world, and build a new development pattern (i.e. focusing on domestic market and meanwhile striving for mutual promotion between domestic and international markets).
On December 29, 2021, the Ministry of Industry and Information Technology introduced Development Plan on Raw Material Industry (2021-2025), setting forth four major tasks: 1) adjusting industrial structure continually; 2) taking actions to save energy and reduce carbon emissions; 3) propelling ultra-low emission concentration of air pollutants and cleaner production; 4) improve comprehensive utilization of resources.
3. Sinochem Group and ChemChina merged to form Sinochem Holdings
Approved by the State Council on March 31, 2021, Sinochem Group and ChemChina merged to establish Sinochem Holdings, the world's largest comprehensive chemical enterprise mainly engaged in eight areas of life science, material science, basic chemicals, environmental science, rubber tire, mechanical equipment, urban operation and industrial finance. In addition, Sinochem Holdings has production bases and R&D facilities in more than 150 countries and regions, marketing network systems and 16 listed companies at home and abroad (e.g. Yangnong Chemical, Sinochem International, etc.).
4. New energy import tax policy was issued
While returning a portion of import value-added taxes on natural gas imported for particular projects, China will remove import taxes from equipment, instruments, parts, accessories and special tools – which cannot be produced in China or are not within particular standards – which are used in oil (natural gas) exploration projects in China's specified onshore areas, oil (natural gas) exploration projects and oil and gas pipeline emergency rescue projects both in China's marine areas, and coalbed methane exploration projects in China – as detailed in Import Tax Policies on Exploration, Development and Utilization of Energy Resources During 14th Five-Year Plan Period (2021-2025), issued on April 12, 2021, by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration to improve the nation’s capability to explore oil and gas, conduct emergency rescue, import and utilize natural gas, etc.
5. New document was issued to supervise projects with high energy consumption and high carbon emissions more strictly
On May 31, 2021, the Ministry of Ecology and Environment issued Guiding Opinions on Preventing Environment from Being Polluted by High Energy-consuming and High Carbon Emission Projects (Exposure Draft). Environmental impacts of such projects would come under close scrutiny. In the first half of 2021, energy consumption intensity failed to decrease but increased in nine places – i.e. Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi and Jiangsu, and reduction rate of energy consumption intensity did not meet schedule targets in 10 provinces. Hence necessity of more efforts in saving energy.
6. China-ASEAN Petroleum and Chemical Industry Investment Environment Blue Book (2021) was issued
On September 9, 2021, China-ASEAN Petroleum and Chemical Industry Investment Environment Blue Book (2021) was issued, focusing on possible challenges as well as risks, analyzing impacts of RCEP (Regional Comprehensive Economic Partnership) on petroleum and chemical firms in China and the ASEAN, and aimed at helping these firms upgrade and transform.
7. New plan was issued to reduce plastic pollution
On September 15, 2021, the National Development and Reform Commission and the Ministry of Ecology and Environment issued Plan to Reduce Plastic Pollution (2021-2025), including three major tasks: 1) to propel green design of plastic products, reduce use of disposable plastic products and promote substitutes of plastics; 2) to improve recycling and disposal of plastic wastes, establish rural plastic waste collection, transportation and disposal systems and improve harmless disposal of plastic wastes; 3) to clear plastic wastes in key regions like rivers, lakes, seas, scenic spots and rural areas.
8. Thirty-four petrochemical projects won National Science and Technology Award
On November 3, 2021, a National Science and Technology Award conference was held in Beijing. Thirty-four petrochemical projects won the National Science and Technology Award 2020. Nano confinement catalysis project of Chinese Academy of Sciences and Fudan University’s project regarding production and application of ordered mesoporous polymer and carbon materials won the first prize of National Natural Science Award 2020.
9. Energy consumption calculation standards were adjusted
The central economic working conference was held on December 8-10, 2021, calling for speeding up transition from energy consumption control to carbon emission control (involving both volume and intensity). In addition, energy consumption calculation would exclude new consumption of renewable energy and petroleum, coal, natural gas and power, among others, used as raw materials instead of fuel.
10. Prices of petrochemicals fluctuated sharply
Prices of petrochemicals have increased since November 2020, and surged in the first quarter of 2021 due to factors like recovering market, extremely cold weather in the southern United States forcing many sets of units to stop operation, etc. Ups and downs of crude prices, energy consumption related policies, Covid-19, contradiction between supply and demand, etc. led to dramatic changes in prices of basic chemicals in 2021. In detail, prices of some products (e.g. styrene, epoxy resin, maleic anhydride and PBT) fluctuated sharply, and prices of some bulk commodities (e.g. propylene, BDO, EVA and LDPE) hit record highs in recent years.
