The Plastics Blog
By Don Loepp | About The Plastics Blog

Coal-to-olefins may not be an immediate threat

By Nina Ying Sun | July 31, 2014 10:56 am ET

Image By: Shaanxi YanchangShaanxi Yanchang successfully launched polypropylene production on July 1.

China’s coal-derived plastics are unlikely to form any substantial impact in the resin market in the near term, as new capacity projects are running into issues.

The assessment was based on recent field research by futures analysts organized by the Dalian Commodity Exchange, according to a report by Zhang Chi, an analyst at China’s Guotai Junan Futures.

A shortage of talent has become a major issue that’s causing delays and low utilization rates, Zhang said. The root of the problem lies in the fact that many of the investors of coal-to-olefins projects come from a coal mining, power, and oil refinery background. Incentivized by potential high profitability, these companies hastily built coal-to-olefins capacity without having a sufficient reservoir of technicians and engineers.

For instance, two recently launched projects – Shaanxi Yanchang Petroleum Group’s 1.8 million ton methanol-to-olefins (MTO) project and another 1.8 million ton MTO project by China National Coal Group – both are unable to run at full capacity due to talent shortages.

The methanol-to-propylene (MTP) project by China Datang Inner Mongolia Duolun Coal Chemical Co. Ltd. may be facing even bigger challenges. Zhang commented in his July 29 article that the Datang project is “basically failing” due to both talent shortage as well as major flaws with its chemical process.

Zhang believes Datang’s coal gasification process is meeting quality standards, causing problems for downstream processes and products.

Actually, Datang also uses its own MTP catalyst developed in-house, according to previous media reports. But Zhang’s report didn’t mention it as problematic.

In contrast, Zhang said, Shenhua Baotou Coal Chemical Co.’s coal-to-olefins (CTO) project didn’t encounter talent scarcity, because it recruited fleets of experienced engineers and technicians from Sinopec and ChinaPetro.

“Not every company can take talent from Sinopec and PetroChina like Shenhua did,” Zhang noted. Shenhua is widely known as the largest coal producer in China.

But Shenhua Baotou also faces another common issue for its counterparts – environmental protection. It was ordered to suspend operations for violation of environmental regulations last Jan. Production resumed by last April, as Plastics News China (Chinese) reported.

Guotai’s Zhang noted water scarcity will be the decisive factor in limiting coal-based chemical projects, which happen to be concentrated in Northwest China – with much less precipitation than the coastal regions.

Coal-based chemical production consumes an average of 15 tons of water for each ton of final product, Zhang said.

Zhang concluded that coal-based projects will have limited impact on the PE and PP market, at least for the rest of the year.

(Thanks to Nina Ying Sun, managing editor of our Plastics News China website, for today's post.)


Recent Blog Posts

Sometimes the headline doesn't match the story   September 22, 2014 2:56 pm ET
Here's a peek behind our 2014 film & sheet ranking   September 15, 2014 1:22 pm ET
Weighing in on top plastics personalities   September 8, 2014 5:12 pm ET
How's the media treating plastics these days?   August 27, 2014 10:49 am ET
A peek behind our 2014 ranking of rotational molders   August 25, 2014 2:00 pm ET
More reshoring success stories with Wal-Mart connections   August 21, 2014 6:11 pm ET

Comments

Coal-to-olefins may not be an immediate threat

By Nina Ying Sun

Published: July 31, 2014 10:56 am ET
Updated: August 1, 2014 2:41 pm ET

Post Your Comments


Back to story

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events