Methanol-to-olefins (MTO) projects in China are subject to more disagreement over viability than any other group of petrochemicals investments, said HSBC in a report released last month.
HSBC, for example, takes a pretty negative view of the economics of MTO projects. This applies both to planned investments based on locally-sourced coal - which would be first gasified into syngas and then converted in to methanol and on to olefins and polyolefins - and those that would depend on imported methanol to make olefins and polyolefins.
This contrasts with Singapore-based methanol consultant Mark Berggren's view that the returns will be good for coal-based projects versus naphtha cracking.
Underling our point, a former petrochemicals industry executive is in agreement with Berggren.
He told us:
"The MTO coastal projects employ local Dalian Institute of Chemical Physics technology. It is similar to the UOP process in that it yields a higher a percentage of higher olefins and less of the lower olefins and fuel oil etc than some of the other technologies. This gives them one advantage.
"Further, the project proponents are looking at virtual integration through taking shares in overseas natural gas-based methanol projects in the Middle East, Africa and North America, where the gas has low alternative value or is stranded. As a result, this would make the imported methanol very competitive.
"Plus, the coastal projects have better economies of scale than coal-based facilities.
"The Chinese also have a good habit of learning very effectively as they build and operate projects and so there is every chance that capital costs will fall for these and all MTO projects over time, along with lower running costs.
"I would be less bullish over inland projects because of the possibility of China taking more of a serious approach to the environment, leading to a cost on CO2 emissions and further restrictions on approvals because of the large amount of water required in the syngas step (water supply is lower inland than on the coast).
"But the big advantage of inland projects over those on the coast is feedstock costs. Coal is as little as $25/tonne."
We think the second-to-last point is extremely important because China's approach to economic growth is evolving. The focus is on the quality rather than the quantity of growth.
As little as 12 months ago, the political and social drivers of petrochemicals projects (see the chart above) remained job creation and the dash for growth via industrial development.
Now, because rebalancing has begun, everything has changed.