SHANGHAI \u2014 Coal-based polyethylene could give a big boost to China\u2019s plastics industry through 2020 and become a relatively low-cost alternative to material from the Middle East and the new low-price challenger, North American shale gas-based plastic.<\/p>\n
At least that\u2019s according to recent analyst reports and presentations, which said that coal-to-olefins (CTO) technology will grow rapidly in the next five years to account for a significant portion of China\u2019s PE production.<\/p>\n
In an April 24 presentation at the Chinaplas trade fair, held April 23-26 in Shanghai, global consulting firm IHS Chemical said that most of the CTO-based PE in China is likely to be used domestically.<\/p>\n
\u201cOur view suggests that up to 25 percent of the domestic capacity in China will move toward this coal to olefins technology during the [2013-2018] period,\u201d said Nick Vafiadis, senior director, global olefins and plastics at IHS Chemical. \u201cThe vast majority of the new capacity will be linked to this lower cost, more competitive [CTO] technology.\u201d<\/p>\n
A March 24 report from global pricing and information provider Platts said China will add 14 million metric tons of PE capacity by 2021, much of that based on coal-to-olefins derived ethylene feedstock.<\/p>\n
Global PE demand last year, to put that figure in perspective, was about 82 million metric tons.<\/p>\n
\u201cWe hear a lot of talk about how shale gas is a \u2018game changer\u2019 in the petrochemical industry,\u201d said Jim Foster, editorial director of petrochemical analysis at Platts, in a statement. \u201cAnd it certainly is. But coal-to-olefins has the potential to have an even greater impact than shale gas, if China moves forward as planned.\u201d<\/p>\n
Platts said there are more than three dozen coal-to-olefins and methanol-to-olefins projects which could come on stream in China by 2020. It said the amount of new ethylene produced from coal in China could match the amount of ethylene production expected to be added from shale gas in North America.<\/p>\n
Other analysts have questioned whether some of that announced CTO capacity will ultimately not be built, because most of the CTO plants are located near mines far from China\u2019s plastics processing centers, and because of environmental concerns, including the large amount of water CTO technology requires.<\/p>\n
IHS suggested the Chinese CTO material may not be quite as cheap as the North American or Middle Eastern PE, but it will still have a strong cost position.<\/p>\n
\u201cWe now have the development of two low-cost regions, in the Middle East and North America,\u201d said Vafiadis. \u201cIt\u2019s the first time we\u2019ve had this situation. In the past it\u2019s just been the Middle East.<\/p>\n
\u201cIn addition to that, we now have China adding very competitive [material] with this coal-to-olefins based technology,\u201d he said.<\/p>\n
Last year, CTO technology accounted for less than 0.025 percent of an estimated 133 million metric tons of global ethylene production, IHS said.<\/p>\n
But China\u2019s demand for PE is projected to continue growing faster than world markets, fueling demand for local production, IHS said.<\/p>\n
China\u2019s PE consumption will grow 7.1 percent a year through 2018, compared with global average of 4.8 percent, the consultancy said.<\/p>\n
Vafiadis suggested that even with the abundant coal in China, the shale-gas based North American PE producers could be more effective exporters than the Chinese.<\/p>\n
\u201cNorth American producers have the ability to ship product profitability to virtually every region around the world,\u201d he said.<\/p>\n
The North American shale gas could also help make processors there more competitive against Asian competitors in \u201cexport-friendly\u201d plastic products, IHS said.<\/p>\n
\u201cNorth America, with this newly competitive capacity, will begin to compete with China for finished goods sales around the world,\u201d Vafiadis said. \u201cThe North American producers of what I\u2019m calling export-friendly types of products that pack well, that pack efficiently, and can be shipped economically, will begin to gain market<\/p>\n","protected":false},"excerpt":{"rendered":"
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