FocusChina wants bigger, more cost-efficient petrochemical plants

29 April 2011 07:26  [Source: ICIS news]

By Fanny Zhang

GUANGZHOU (ICIS)--China has set higher capacity requirements on new petrochemical projects as part of its effort to restructure the industry and improve its competitiveness, analysts said on Friday.

The National Development and Reform Commission (NDRC), China’s regulatory body that approves major investment projects, issued an "Industrial Restructuring Catalog" early this week containing the raised minimum capacities for specific plants that will take effect on 1 June.

The government body last issued the industry catalogue in 2005.

Plants with very small capacities will be weeded out for a more efficient use of energy and resources.

“There’s no surprise that capacity thresholds are raised, with innovations on technology and science [being required],” said Qiu Xiaofeng, an analyst at Shanghai-based broker China Galaxy Securities.

Production at these plants must be as centralised as possible given their high potency to pollute the environment, he said.

New refineries must at least have a 10m tonne/year capacity, up from the 8m tonne/year minimum set in 2005, according to the NDRC catalog.

“All the new refineries currently [being] planned for construction in the next five years could meet the 10m tonne/year capacity requirement,” said Amy Sun, an analyst at C1 Energy, an ICIS service in China.

NDRC’s plan to eliminate refineries with capacities below 2m tonnes/year before 2013 will mean an estimated loss of 26.1m tonnes/year in refining capacity, according to C1 Energy.

For new naphtha crackers, NDRC set the minimum capacity at 800,000 tonnes/year from 600,000 tonnes/year previously.

Meanwhile, new purified terephthalic acid (PTA) plants should at least have 1m tonne/year of capacity, more than four times the 225,000 tonne/year minimum capacity set six years ago, according to the NDRC catalog.

“Today’s economic environment calls for [big-]scale operations for efficiency and cost control, which companies nowadays are all seeking to stand competitive ” said Qiu of China Galaxy Securities.

	2011	2005
To encourage
	no mention	Big  aromatic plants
	no mention	Cracker over 800,000 t/yr
	no mention	Big  synthetic resin plants, new technology/new products
	no mention	Big CPL, MEG, ACN plants
	200,000 t/yr gas-based MEG	no mention
To restrict
refinery	below 10m t/yr	below 800,000 t/yr
catalytic cracker	below 1.5m t/yr	below 500,000 t/yr
continuous reformer	below 1m t/yr	below 400,000 t/yr
hydrogenation cracker	below 1.5m t/yr	below 800,000 t/yr
acrylonitrile	below 130,000 t/yr	below 100,000 t/yr
PTA	below 1m tonne/yr	below 225,000 t/yr
MEG	below 200,000 t/yr
PP	below 70,000 t/yr
PE	below 200,000 t/yr
To oust
refinery	below 2m t/yr	below 1m t/yr
Source: NDRC

 Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Fanny Zhang
+65 6780 4359

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