By CaiZongkun, OilChem China

Current status of medium-temperature coal tar industry

China's medium-temperature coal tar production capacity is relatively concentrated, mostly close to coal production areas, and mainly distributed in six regions (see Figure 1). In detail, the total production capacity of medium-temperature coal tar in China is 14.3 million t/a, of which Shaanxi province reaches 7.51 million t/a, accounting for 50% of the total; Xinjiang ranks second, with a production capacity of 3.9362 million t/a, accounting for 31%; Hebei province ranks third, accounting for 7%, which is due to the existence of Hebei Longcheng Group boasting a production capacity of about 1 million t/a; Followed by Inner Mongolia, Ningxia and other places own relatively smaller production capacity, accounting for 5%, 3%, and 4% respectively.

Figure 1 Regional distribution of medium-temperature coal tar production capacity 

in China

It can be seen from Figure 2 that China's medium-temperature coal tar production capacity increased slightly from 2018 to 2022. In stages, from 2018 to 2020, the production capacity had fewer changes, and the output had a slight decline, mainly because of the closure of some semi-coke plants under the high pressure of environmental protection policies and policy of shutting down small thermal power units and promoting large ones in Shaanxi province; From 2021 to 2022, the production capacity of medium-temperature coal tar in China had a significant increase, mainly because of the launch of the supporting semi-coke units of downstream hydrogenation enterprises and the operation of some large-scale semi-coke plants in Xinjiang.

Figure 2 Trend of the production capacity of medium temperature coal tar in China    from 2018 to 2022

From 2018 to 2022, China’s output of medium-temperature coal tar showed an upward trend in overall, but the capacity utilization rate declined. And due to the existence of some “zombie” production capacity, the utilization rate of medium-temperature coal tar production capacity has been maintained at around 50% for a long time (see Figure 3). The increase of output was mainly due to the successive launch of some large-scale semi-coke plants in Xinjiang and the supporting semi-coke plants of hydrogenation unit. It is worth noting that due to the impact of the domestic pandemic, the load of the semi-coke plant in 2020 was lower than that in 2019, and the output and capacity utilization rate dropped significantly. In 2022, due to high coal prices and low semi-coke prices, semi-coke plants didn’t have much enthusiasm for operation. Coupled with the impact of environmental protection and other policies, the operation of semi-coke plants dropped significantly in overall. In addition, Yiwu Jiangna New Energy Technology Co., Ltd. resumed production in the second half of the year, and Xinjiang Guanghui New Energy Co., Ltd. carried out maintenance in the second half of the year, and these were also important reasons for the decline of medium-temperature coal tar production and operating rate in 2022.

Figure 3 Comparison between the domestic production and capacity utilization of    medium-temperature coal tar

At present, the medium-temperature coal tar basically has 3 applications in the downstream, of which the coal tar hydrogenation industry accounts for the largest proportion, reaching 82%; water fuel regulation and ship fuel 180 accounts for about 10%; and the ignition oil accounts for 8%.

Development trend of medium temperature coal tar industry

In the next five years, the planned production capacity of medium-temperature coal tar industry will reach 5.78 million t/a, and there is no exit plan for production capacity (see Table 1). All new production capacity is concentrated in northwest China, among which there are 8 enterprises with a capacity of 200 000 t/a. In addition, there are 5 enterprises with supporting downstream unit, which aim through the large-scale development of the industrial chain to reduce operating costs such as procurement and transportation.

In the past five years, the price of domestic medium-temperature coal tar showed a "V" trend in general. The market demand has continued to increase, but the supply has grown slowly, resulting in a serious pattern of weak supply and strong demand. From 2018 to 2022, the lowest price was RMB1 300 per ton in March 2020 in Xinjiang market, and the highest price was RMB5 250 per ton in November 2022 in Shaanxi market. (See Figure 4).

Figure 4 Domestic price trend of medium-temperature coal tar from 2018 to 2022

The domestic coal tar hydrogenation industry has gradually started up since 2016, and medium-temperature coal tar has gradually transformed from a cheap fuel to an important raw material for the oil refining industry. The demand for coal tar has continued on the rise. Although medium-temperature coal tar is only a by-product of semi-coke plants, it is now the main raw material for coal tarhydrogenation. In addition to the supply-demand relationship, its own price trend has infinitely approached that of international crude oil and domestic refined oil.

Problems in the industry

First, the collection of consumption tax for hydrogenation enterprises is currently the primary factor restricting the medium-temperature coal tar industry. Due to the consumption tax, the profits of the hydrogenation industry have been severely squeezed, and the price of medium-temperature coal tar has been affected as well to a certain extent.

Second, new units in Shaanxi market will be no longer approved except that those have been approved in previous period and the capacity replacement. As a result, the production capacity and output of medium-temperature coal tar in Shaanxi have decreased, and the development has been caught up into trouble.

Third, new projects in Xinjiang are mostly new and most of them are semi-coke production units. The supply of medium-temperature coal tar will have a significant increase in the next few years, and the sales competition for coal tar will become increasingly fierce.

Fourth, it is difficult to meet Shaanxi local market demand even under the high-load operation of coal and firewood plants and coal tar hydrogenation. Although there is relatively sufficient supply in Xinjiang market in the later stage, it is difficult to supply Shaanxi market from Xinjiang under high freight costs.

Fifth, medium-temperature coal tar has been regarded as hazardous waste, and relevant policies have been implemented in some areas, making it more difficult to transport across provinces.

Suggestion

At present, the key issues restricting the development of medium-temperature coal tar are still brought about by the macro policies. The subsequent development will have to rely on the industrial chain extension of its own and the industry profits can be increased through the construction of downstream supporting equipment.