Petrochemical Industry's "Twelfth Five-year Plan" Development Status and Prospects

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China Drying News 2013 is on the lookout for more than half of the 2011-2015 period of the “Twelfth Five-Year Plan”. All walks of life review their performance in planning and implementation, assess development opportunities, and plan their development direction. At this point, it is a key point worthy of grasping. .

For the petrochemical chemical companies throughout the country, the "Twelfth Five-Year Plan" was originally defined as a "strategic period of opportunity" and "a critical period of transition from a petrochemical and chemical giant to a petrochemical powerhouse." Let us review the development situation of China's petrochemical industry in the past two years in the “Twelfth Five-Year Plan” period, and look forward to the future development space and prospects for the next two years.

Petrochemical Chemical Industry's "Twelve Five" essence

The “Twelfth Five-Year Development Plan for Petrochemicals and Chemical Industry” issued by the Ministry of Industry and Information Technology includes four sub-programs for olefins, hazardous chemicals, fertilizers, and pesticides in addition to the main documents. The core content can be summarized as expanding production capacity and adjustments. Structure, focusing on energy conservation and environmental protection and technological innovation in four aspects. Moreover, these four aspects are closely related. In other words, the expansion of production capacity must be carried out on the premise of adhering to an optimized structure. It must also ensure that the indicator requirements for energy conservation and environmental protection are not sacrificed. All this cannot be separated from the important driving force of technological innovation.

The goal of the total economic output determined by the "Twelfth Five-Year Plan" of petrochemicals and chemicals is that the total output value will increase by an average of 13% annually, and by 2015, the total output value will increase to about 14 trillion yuan. It is worth noting that olefins play a key role in it. Qi Min, Information Director of Anxis Chemical Information Department, explained that “as the basic raw material of the chemical industry, olefins are related to the supply of basic raw materials downstream of the chemical industrial chain, but also related to upstream crude oil and parallel refined oil products. This is a balance of supply and demand for petroleum and petrochemicals. Scale and diversification are key words highlighted in the “Twelfth Five-Year Plan” of petrochemicals. These two keywords are also first reflected in the development plan of the olefin industry.”

Olefins Industry Opportunities

China's olefin industry started relatively late, but it has developed rapidly during the "11th Five-Year Plan" period. Since the 1970s, after more than 40 years of development, China’s ethylene industry has surpassed Japan by the end of the “Eleventh Five-Year Plan”, ranked second only to the United States, and ranked second in the world, thus entering the world’s largest petrochemical countries. The annual output accounts for 10% of the world and 30% of Asia. Taking Sinopec Group Maoming Petrochemical Company as an example, as of November 22, 2012, cumulative production of ethylene reached 10.33 million tons in 16 years, becoming China's first ultra-million-ton ethylene refinery.

Anxis analyst Qi Min introduced that “in the initial stage of the development of our olefin industry, due to restrictions on raw materials, production technology, and investment scale, the capacity of new equipment on a single set was generally small. Into the “Twelfth Five-Year Plan”, the state explicitly proposed The new olefins plant should follow the principle of large-scale production and diversification of raw materials.According to the national plan, by the end of the “Twelfth Five-Year Plan”, China’s ethylene production capacity will reach 27 million tons, which is to produce 15 million tons annually in the “Eleventh Five-Year Plan”. On the basis of an additional 12 million tons, the production capacity of a single set of equipment with crude oil/naphtha as the raw material for the new investment and construction in the “Twelfth Five-Year Plan” should not be lower than 700,000 tons/year.For example, Fushun Petrochemical 800,000 tons/year. The ethylene plant has been successfully launched one time ago and realized the completion and production of ten million tons of oil refining and one million tons of ethylene project of Fushun Petrochemical. Of the ethylene projects planned to be put into operation, most of the ethylene production projects will have an annual output of 1 million tons. project.

While emphasizing scale, the “Twelfth Five-Year Plan” also emphasizes diversification, which mainly refers to diversification of raw materials for olefin production.

Traditionally, raw materials for olefin production in China mainly come from naphtha, which naturally consumes a lot of crude oil, while China’s crude oil needs large imports. At the same time, China is also a country rich in coal resources. Therefore, in the “Twelfth Five-Year Plan”, the country proposed diversification of olefinic raw materials, mainly to encourage the development of coal to olefins. The pilot project in this area has already begun during the “Eleventh Five-Year Plan” period. In the two years that have passed since the “Twelfth Five-Year Plan” period, China’s coal-to-olefins gradually transitioned from the demonstration stage to the commercialization stage. For example, the Shenhua Baotou project achieved good economic benefits and verified the feasibility and economy of coal-to-olefin technology.

Qi Min said: “In order to reach the goal of producing 27 million tons of ethylene per year at the end of the 12th Five-Year Plan period in 2015, the olefin industry in China will continue to develop rapidly over the next three years. The total production capacity of coal through methanol to olefins will reach 400-500 million tons, accounting for more than 20% of the total ethylene production capacity in China."

Fertilizer industry opportunities

China is a big country in agriculture and has the fourth largest amount of cultivated land in the world. However, due to the large population, China's per capita arable land area is only 1.4 mu, which is less than half of the world average. Therefore, for a long period of time, the Chinese government has basically encouraged the development of agriculture and related industries. Under such circumstances, China's chemical fertilizer industry has also experienced rapid growth. In 2010, China produced 66.2 million tons of chemical fertilizers, an average annual increase of 5.0% during the “Eleventh Five-Year Plan” period.

Especially since 2000, China's urea has undergone a period of rapid development due to the double stimulation of domestic demand growth and increased export opportunities. Domestic urea production increased from 30.35 million tons in 2000 to 57.755 million tons in 2011, an average annual increase of 10.1%.

Anxis data shows that during the period of the 11th Five-Year Plan period, China's production of major fertilizer products maintained rapid growth, and the average annual increase in production of urea, ammonium phosphate, and potassium chloride reached 4.7%, 16.7%, and 6.3% respectively. Among them, urea, ammonium phosphate and other fertilizer products have already experienced excess capacity, but the production of potassium chloride is still unable to meet demand. After entering the “12th Five-Year Plan”, the growth rate of urea production capacity has slowed down significantly, and the development rate of potassium chloride will gradually increase.

In general, there are structural surpluses and deficiencies in China's fertilizer production capacity. Qi Min said, “At the beginning of the development of the fertilizer industry, in order to speed up the pace, there are no strong restrictions on which smaller, less competitive manufacturing companies, making the industry's concentration is very low. For example, there are too many urea-production small companies. Moreover, it is relatively decentralized, and some of them are often open, closed, and stopped. However, due to resource limitations, potash fertilizers are insufficient for production and supply, and large quantities of imports are needed to meet domestic agricultural production needs."

In order to optimize the structure, reasonable developments have been proposed in the 12th Five-year Plan of the fertilizer industry to control the requirement for excessive growth of production capacity. For the nitrogen fertilizer production equipment with a production capacity of 200,000 tons or less, shut down and speed up the scale and intensification of the fertilizer production industry.

In 2011, the amount of urea oversupply in China has reached 4 million tons, while the urea industry continues to expand in 2012-2015 and is expected to reach more than 5 million tons. Although the growth rate of production capacity is less than 1%, it has obviously slowed down, but the increase in production volume is still relatively obvious. This is basically in line with the requirement of controlling the excessive growth of production capacity proposed in the 12th Five-Year Plan. Qi Min said, "According to the scale of the nearly 200 urea production companies that ICIS Anxis has mastered, more than 70% of the enterprises account for only 30% of the total production capacity, indicating that the scale of the enterprises is generally small. In the period of the 12th five-year plan, urea companies will have a merger, and the scale of the devices that will be put into operation will be larger. Those SMEs that do not have market competitiveness will be eliminated and industry scale and concentration will be eliminated. Further increase.For example, large fertilizer companies such as Hubei Yihua and Chongqing Jianfeng have technological advantages and scale advantages, and are planning to expand production capacity.”

As the contradiction of oversupply in China's urea market will further increase, how to ease the contradiction between supply and demand by increasing exports will be a problem that urea producers face during the 12th Five-Year Plan period. In previous years, in order to protect the domestic demand for agricultural production, the government's export of urea was strictly controlled. It is expected that during the 12th five-year period, the government will appropriately adjust its export policy and increase the export volume of urea. It is reported that the government may promote domestic exports of nitrogen fertilizers in the form of tariff adjustments next year, such as using peak season tariffs and off-season tariffs, and appropriately encourage the export of large-scale nitrogen fertilizer companies.

Unlike urea and ammonium phosphate, domestic supply of potassium chloride is far from meeting demand due to resource constraints. Therefore, during the 12th Five-Year Plan, the state plans to vigorously increase the production capacity of potassium chloride. First of all, in recent years, China has increased the exploration and development of potash resources and launched a number of large potash fertilizer projects with an annual output of over 500,000 tons. After the Qinghai Salt Lake Potash Fertilizer, Xinjiang Lop Nur, and other one million tons of potash fertilizer bases, the current potash projects under construction and planning include Xinjiang Luobupo Phase II 1.7 million tons/year potassium sulfate, Qinghai Salt Lake 1 million tons/year potassium chloride, CITIC. Guoan 1 million tons/year potassium magnesium fertilizer, Sichuan Hongfeng 1 million tons/year potassium chloride, Yatai Group 500,000 tons/year potassium magnesium fertilizer, Bindi Potash Company 780,000 tons/year potassium magnesium fertilizer. In addition, this year's China Geological Survey announced on October 9th that China’s newly discovered 100 million tons of extremely large potash salt mines, and China’s highly dependent on the global potash salt situation is expected to accelerate change.

From the newly added projects, we can also see that the scale is relatively large. It is estimated that by 2015, the production capacity of potassium chloride in China will reach 7 million tons and the self-sufficiency rate will increase to more than 60%. At the same time, the government also encourages potash companies to “go global” and establish production bases in areas where potassium is abundant overseas, such as Canada, Russia, and Thailand, to meet domestic demand in China.

Coal Chemical Industry Opportunities

Crude oil and coal are basic chemical raw materials. On the whole, China’s crude oil is heavily dependent on imports, while coal is relatively abundant. Therefore, Guofa [2011] No. 47 “Industrial Transformation and Upgrading Planning (2011-2015)” documents pointed out that it is necessary to actively develop efficient and clean conversion of coal, diversify the sources of organic chemical raw materials, and orderly develop coal-to-olefin, coal-based natural gas and other modern technologies. Coal chemical industry promotes organic integration of chemical production and energy conversion; encourages coal-based polygeneration; moderately develops coal-to-natural gas projects; and strictly controls coal-to-oil projects.

As a typical example, Henan Coal Chemical Industry Group uses existing coal gasification technologies and different types of coal to make syngas, separates carbon monoxide and hydrogen, oxo synthetic oxalate, and oxalate esters for further hydrogenation. The diol product has opened up a non-oil route that uses coal as a raw material to produce ethylene glycol to replace and supplement the shortage of ethylene glycol in the oil route. It has completed the innovation and revolution of the ethylene glycol process route and has an important strategy. Meaning and economic significance.

Therefore, Qi Min suggested that “strong enterprises can seize the opportunity of the “Twelfth Five-Year Plan” to integrate and develop MTO or MTP, and use lignite and other inferior coal as much as possible to reduce the cost of methanol production. If possible, they should strive to obtain coal. - Natural gas combination, so as to reduce both the cost of methanol and CO2 emissions, plus the full use of coal slag to produce building materials and other three wastes using recycling economy, while vigorously expanding the industrial chain and developing coal-MTO-ethylene production EG, propylene development of downstream products, There is a great chance to achieve better economic benefits and play a more critical role in the economic ecology of the country as a whole."

In short, as the "Twelve Five-Year Plan" is about to come to an end, if all companies can compare their own business development in the past two years against the goals set by the plan, it will be easier to find and seize the opportunities in front of them.

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