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Will China continue to invest in coal- and methanol-to-olefins?

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01 December 2015

Will China continue to invest in coal- and methanol-to-olefins?

Report summary

Coal-to-olefins (CTO) was once regarded as the bright new hope of the olefins industry in China. However, recent low crude oil prices and resultant lower global olefins prices have impacted the economics of such projects very negatively, and CTO margins have been squeezed by over 50% in 2015, compared with 2014. This has cast a shadow of doubt on the viability of these highly capital-intensive investments. We compare the economics of coal- and methanol-based olefins with the traditional naphtha cracking route to olefins in Asia, and examine how their respective cost positions and ROI outlook have changed in the current low crude oil price environment. In addition, we highlight the key policy details of China's 13th five-year-plan draft that will impact the coal-based olefins industry, and discuss how the evolving regulatory framework is expected to shape the future of this still-nascent industry. Ultimately, we aim to answer the question "Will China continue to invest in CTO and MTO?"

Table of contents

    • Existing coal- and methanol-to-olefins operations
    • What has happened to coal- and methanol-to-olefins economics since the crude oil price plunge?
    • Coal- and methanol-based olefins economics
      • Financing problems
    • Impact on CTO/P and MTO/P projects
    • Potential impact of evolving regulatory framework
      • Policy changes
        • 13th FYP (2016-2020) draft
      • Water consumption
      • Carbon taxes
      • Environmental issues
    • Will China continue to invest in coal- and methanol-based olefins projects?

Tables and charts

This report includes 10 images and tables including:

  • China coal- and methanol-based olefins capacity and operating rates
  • 2014 Asia ethylene plant gate cash cost
  • 2015 Asia ethylene plant gate cash cost
  • Typical cost composition of various olefins production routes
  • Will China continue to invest in coal- and methanol-to-olefins?: Table 1
  • Cash cost composition, 2014
  • Cash cost composition, 2015
  • Will China continue to invest in coal- and methanol-to-olefins?: Image 7
  • Status updates of firm/likely projects from H2 2014 view
  • Length of project delays from H2 2014 view

What's included

This report contains:

  • Document

    Will China continue to invest in coal- and methanol-to-olefins?

    PDF 373.41 KB