Why Should China Be Any Different From The US?

Business, China, Company Strategy, Economics, Fibre Intermediates, Polyolefins, Technology, US


By John Richardson

THE complacent, yesterday’s wisdom about China is that it will remain a major importer of lots of petrochemicals for many years to come.

If you have already stuck your neck out to support a project that will be substantially reliant on exports to China, it might feel like the right choice to stick with yesterday’s thinking.

But for all of us out there who don’t have a vested interest in maintaining the status quo, it is vital that we ask ourselves this very hard question: Will China one day, sooner than many people think, be self-sufficient in polyolefins, via the coal-to-olefins process – and also, as we discussed last week,  even in paraxylene (PX)?

The problem is that if we don’t ask this question, and carry out the necessary new research to find out the answer, we could well be overtaken by events as China will pause for nobody as it develops its economy.

A case in point was that only the day after I had published last week’s post on PX, I was sent the programme for a coal to aromatics conference, organised by Asiachem, which is taking place in Shanghai on 16 and 17 December.

The programme notes make the point that in 2013, China’s net imports of PX surged by 46% from the previous year to 8.87m tonnes.

And the organisers add that this is severely damaging the profitability of the industry, from a Chinese perspective, given that a shortage of local PX, combined with domestic oversupply of purified terephthalic acid (PTA), has resulted  in “profitability being concentrated in PX”.

The solution is not only the refinery route to PX because of environmental objections to PX plants, adds Asiachem. Several refinery-PX projects in China have already been put on the back burner because of environmental protests.

The coal-to-methanol-to-aromatics route, as we discussed last week, is another option, say the conference organisers.

They point out that:

  • ICC-CAS, Sedin Engineering, and Beijing University of Chemical Technology are developing methanol-to-aromatics technologies.
  • Sinopec Yangzi has demonstrated a 200,000 tonnes/year PX project via the route of toluene alkylation with methanol.

People outside China will no doubt dismiss the viability of these technologies given that, of course, they are experimental.

They said the same about CTO, though, and are being proved wrong, as output from new CTO plants in China is a lot higher this year than many observers had expected.

And didn’t people think that George Mitchell  was way off the mark when he kept insisting that hydraulic fracturing could be made to work?

Where there is a will there is a way and there is a strong will, indeed a necessity in China to add value in manufacturing.

Why should China be any different from the US?

The US is close to achieving energy independence by making use of its shale gas and shale oil  reserves, and so why not China also – via coal, its own shale gas reserves one day and “strategic energy corridors” – e.g. cheap pipeline gas from Russia in return for investment in Russia?

And, of course, as the US becomes energy independent, it is greatly increasing its petrochemicals capacities.


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