With the international crude oil prices running at a high level, the contradiction between China’s resource development and reserves and economic development has become increasingly prominent. Crude oil imports have continued to increase, and the issue of energy security has become apparent. In this regard, we believe that the development of coal chemical industry to reduce the dependence on oil is very necessary, which is conducive to the implementation of China's oil alternative energy strategy and structural adjustment of the chemical industry. If oil prices stay above 50 U.S. dollars or 60 U.S. dollars per barrel, coal chemical industry is expected to develop into a big industry in China within 10 years.
The industry has broad prospects First of all, the competitiveness of high-priced coal chemical products has become increasingly prominent. Since the middle of the 20th century, when oil replaced coal as the dominant part of the world's energy consumption structure, it still accounts for about 40% of the energy consumption structure. The oil is highly sensitive to changes in the international situation. The international oil price often fluctuates sharply. The world has experienced three oil crises. The current international crude oil price has exceeded 130 US dollars per barrel. Taking into account the scarcity of oil resources, we expect that it will be difficult for crude oil to fall significantly in the future. Under such circumstances, coal chemical products become an inevitable choice for the market in the context of high oil prices.
Second, the development of coal chemical industry is in line with China's national conditions and energy structure. China's crude oil reserves account for only 1.4% of the world's total and are oil-deficit countries. Due to the restriction of resource endowments, China’s domestic oil production is at most about 200 million tons. According to the “China Energy Development Report 2008” released by the Chinese Academy of Social Sciences, the average annual growth rate of oil demand from 2007 to 2010 is 4.5%. By 2010 and 2020, China’s oil consumption will reach 407 million tons respectively. 563 million tons. If no major oil fields are discovered in the next 10 to 20 years, the bottleneck of oil resources will endanger domestic energy security. China’s coal reserves are relatively high. In 2007, China’s coal production was 2.523 billion tons, which was calculated based on the available life of coal resources that was directly utilizable for approximately 90-100 years. By regulating the production and import and export of coal, China’s coal resources can basically Meet the needs of energy production and coal chemical development. Coal-to-methanol, dimethyl ether, coal olefins, and coal-to-oil will be the focus of investment in the next 15 years.
Traditional coal chemical industry has cost advantages Traditional coal chemical industry includes coal coking, calcium carbide acetylene chemical, PVC, coal chemical fertilizer and so on. These industries themselves exceed supply, but they still have a cost advantage in the current situation of high oil costs. The trend of future industry development is to emphasize the control of resources and the derivation and expansion of the downstream industry chain. Enterprises with integrated resource advantages will stand out in the fierce competition.
Coke is one of the most important products in the coking coal industry. The coke industry itself has a low degree of concentration and is a typical resource processing industry. The ability to control coal is the key to the sustainable development of coal coking industry, and it is the key to obtain a strong competitiveness. Where In the future, coking enterprises must promote coking to the coal chemical industry model to extend the industrial chain and achieve sustainable development. The cost advantage of the calcium carbide process under high oil prices is also very obvious, but the biggest problem is high energy consumption and environmental pollution. It is expected that China's PVC demand will increase at an average annual rate of 13% from 2008 to 2010, which is still far below the growth rate of production capacity. Overcapacity is inevitable and it is recommended to invest prudently. The future of industrial investment lies in the derivative and co-production of downstream products, technology upgrades, and cost control. For coal-based chemical fertilizers, although the price of chemical fertilizers is currently high, due to the rising prices of coal and other industries, the cost of the industry is under great pressure. Therefore, companies with resources and technologies have obvious cost advantages, and are also the investment targets we favor, such as Hubei Yihua, Hualu Hengsheng, and Liuhua.
The prospect of new coal chemical industry is good The development direction of new coal chemical industry includes alcohol ether fuel, coal oil, natural gas, and coal to olefins. We believe that the alcohol ether fuel is an alternative energy source with huge potential. The demand for methanol as a gasoline alternative fuel will increase substantially. Coal liquefaction is currently in the pilot stage, but there are investment and technology risks, and the country is still cautious about this. Methanol to olefins Because of its low cost, the dependence of domestic olefins imports is large, which is also our very promising direction for the development of coal chemical industry.
The price of coal has a great impact on the cost of methanol production. Therefore, the low cost of coal resources is very important for the competitive advantage of methanol companies. The large-scale production equipment can reduce the cost of methanol production to a relatively low level. Shenhua in China, for example, the production cost of self-produced coal is only 72 yuan / ton, the cost of outsourcing coal is only about 210 yuan / ton, large companies have obvious cost advantages in the development of coal chemical industry. In addition, due to strong demand, the contradiction between supply and demand for diesel fuel in China has been relatively serious. The production of diesel oil from coal-to-oil can alleviate this tension. According to the estimate of Eastman, the investment value of chemicals such as coal-to-liquids is extremely attractive as long as crude oil prices remain above US$40-45/barrel. Although the current price of coal has risen rapidly, the link of price increases has been mainly in transportation and circulation, and the price of pits has risen very little. Large enterprises such as Shenhua and Yancoal have great advantages in coal costs. The state is currently very cautious about this type of project. It only approved the coal-to-oil projects of Yankuang, Shenhua, and Luan, but we believe that after nearly 40 years of industrial exploration, the technological risk is not large. It is expected that coal liquefaction construction will continue in the future. The expansion of existing enterprises will be the mainstay, which will bring a leading effect and huge profits to these three companies. However, coal-to-oil is a huge system project involving coal resources, water resources, ecology, environment, technology, capital, and many social supporting requirements, and the requirements of the conditions are relatively high. Therefore, we should attach great importance to risk.
The king of resources is the technology leader. Most of the single products in the coal chemical industry have the risk of overcapacity. The simple low-cost strategy will inevitably be difficult to form the core competitiveness in the future international chemical market. We believe that the future direction of the investment in the coal chemical industry will be mainly multi-product production. And scale. Optimizing and combining different processes to achieve polygeneration can form a closed industrial chain, make full use of resources, and reduce pollution emissions. The main investment bodies are still coal mine enterprises and large and medium-sized chemical companies. The threshold for entry of most products in the industry will increase, and the trend of industrial concentration is obvious. It is expected that there will be a group of world-class coal chemical companies.
Under the current conditions of rising coal prices, it is extremely important for the coal chemical industry to control coal mine resources. At the same time, coal gasification (shares, market, and information) technology is the core of coal chemical industry and is the forerunner of industrial development. In addition, the development of coal chemical industry should also pay attention to environmental protection, take the necessary technical and governance measures in the project construction, fully implement the recycling economy, and strive to achieve zero emissions. As a coal chemical industry is emerging, the pace of future development will also depend on the promotion of national policies.

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