“At present, most of the coal to glycol projects are below the break even point, and many enterprises have to reduce production and stop production, so it is inevitable that the industry reshuffle.”
“Coal to olefin is recognized as the ‘most profitable’ segment of coal chemical industry. Even so, most projects cannot withstand the impact of low oil price. If the international oil price is less than $40 / barrel, the project will not make money. ”
“This round of oil price slump is very different from the past. We must not hope that the oil price will rebound in the short term. We must be prepared for a long-term war.”
In the past month, the international oil price has fallen precipitously, and the WTI price has once dropped below $20 / barrel, which has not only affected the oil market, but also alarmed the development of modern coal chemical industry. In an interview with reporters, many industry experts and business people expressed their concerns. Novel coronavirus pneumonia is believed to have been affected by the new surge of oil and the industry is facing the “strongest” impact in recent years. This time, can modern coal chemical industry stand the test?
The industry suffered the biggest impact in recent years
In early March, international oil prices began to fall. As of April 2, WTI crude oil futures and Brent crude oil futures were still under $30 / barrel. The oil price keeps falling, which makes the life of coal chemical enterprises tighter.
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In this regard, the downstream market soon appeared a chain reaction, and the price of several coal chemical products fell. For example, according to Zhongyu information statistics, from March 6 to 10, the prices of crude benzene, industrial naphthalene and high-temperature coal tar have declined by 158 yuan / ton, 77 yuan / ton and 31 yuan / ton respectively. These slight declines are just the beginning.
Taking the most popular coal to glycol project in recent two years as an example, the current project cost is more than 4800-5000 yuan / ton. In addition to the traditional petroleum ethylene process, the capacity of coal to ethylene glycol has accounted for more than 40% of the total capacity. Since the fall of oil price, the price of glycol futures and spot market both fell below 4000 yuan / ton, and the futures price was once lower than 3000 yuan / ton. Just over a year ago, coal to ethylene glycol was still at a high level of 8000 yuan / ton. “Compared with the traditional route, coal to glycol has a strong competitiveness. However, the impact of low oil price still leads to the loss of most projects, and many enterprises have no choice but to reduce production and stop production. ” An unnamed business person admitted.
Wang Yu, director of the energy and Chemical Industry Department of the petroleum and Chemical Industry Planning Institute, further told reporters that according to the product division, modern coal chemical industry has its own “critical point”. In the field of coal to oil, when the oil price is higher than 70-75 US dollars / barrel and 55 US dollars / barrel respectively, the projects that are mainly oil products and chemicals have profitability. When the oil price is higher than $45-50 / barrel, the coal to olefin project can ensure profitability; when the oil price is lower than $40 / barrel, the project basically does not make money. The break even point of coal to glycol is about $55 / barrel.
“If the international oil price is lower than US $45 / barrel for a long time, the modern coal chemical industry will continue to suffer a large loss. If we can return to 50 USD / barrel in the short term, the coal to olefin project still has some profit space. ” Wang Yu believes that compared with the two oil price plummets in 2008 and 2014, the impact of this time is even more serious, “it can be said that this is the biggest impact on the coal chemical industry in recent years.”
Product falling price exposes short board of development mode
The profitability of coal chemical projects is closely related to the oil price, and it is not the first time that the industry has been hit by low oil price. However, many insiders believe that compared with the past, this round of impact is more worthy of vigilance.
“The impact of novel coronavirus pneumonia is very long and extensive, and the impact of the new crown pneumonia epidemic will not be clear. In addition to affecting upstream production, downstream demand is also greatly reduced, and the price of terminal products is rapidly reduced, which has a comprehensive impact on the industry. ” Wang Xiujiang, Deputy Secretary General of the coal chemical industry special committee of the China Petroleum and Chemical Industry Federation, said that drawing lessons from previous rounds of low oil prices, coal chemical enterprises have deeply recognized the importance of technological innovation, management upgrading and other practices, and have made a lot of improvements. However, due to the superposition of multiple factors, it is more difficult to deal with this round of impact.
Yang Yue, chairman of Shaanxi Yanchang oil (Group) Co., Ltd., also said that this round of oil price slump is affected by many factors, which is quite different from the past. We must not hope that the oil price will rebound in the short term, and we must be prepared for the thought and action of a long-term war.
In addition to the “immediate” difficulties, a senior person told reporters that previously, although the coal chemical industry has withstood several rounds of tests and some projects have achieved better economic benefits, the risk of falling oil prices is still underestimated. “After the sharp fall in 2014, the oil price has picked up, modern coal chemical industry has become hot again, and a large number of projects are competing. In fact, affected by the world economic situation, crude oil production costs, technological progress and reduced oil consumption, the probability of maintaining low and medium oil prices in the long run is greater. ”
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According to the above people, the underestimation of the risk of low oil price is also reflected in the fact that the existing projects are more duplicated and less innovated, which leads to the industry as a whole winning by volume and not dominant. “For example, the coal to glycol project has a high degree of marketization and rapid development. However, a large number of devices are on the way before the technology is mature. Some investments are obviously blind, and some product quality cannot meet the downstream demand. The number of projects is large, but the application field and scope are limited, and the competitiveness is weaker under the low oil price. ”
In an interview with reporters earlier, Zhang Jiming, assistant general manager of national energy group, also said that more and more projects are built, but the plans are the same, the layout is scattered, there is no cluster effect, and the investment and cost are not gradually reduced. “Taking coal to olefin as an example, when there is a gap in the market, the benefits are still considerable. When the market is saturated, can it withstand the impact of large-scale and low-cost capacity in coastal and overseas markets? ”
The key is to be competitive at low and medium oil prices
The reporter further learned that some enterprises are actively coping with the impact of low oil prices by increasing the variety of products, increasing the proportion of high value-added products and comprehensively adjusting the load.
In the short term, Wang Yu said that the international oil price will run at a low level for a long time, and coal chemical enterprises should be prepared to live a “tight life”. “The economy and competitiveness of coal chemical projects are not only affected by the oil price, but also closely related to the price of raw coal. With the decline of international oil price, the price of oil-based products will decline, but the price of domestic raw coal will not fluctuate obviously, or the reaction of coal price will lag behind compared with the change of oil price. In order to avoid the coal chemical project being hit by both sides, it is suggested that enterprises think about ways in terms of coal price. ”
Wang Yu said that for enterprises with their own coal resources, lowering the price of coal for chemical industry is equivalent to reducing the profits of coal mines, from “left pocket” to “right pocket” to overcome the immediate difficulties. For other enterprises, they can try to negotiate with the supplier to adjust the coal price properly to achieve periodic mitigation. “In the face of shrinking downstream demand and fluctuating international oil prices, coal chemical projects need to survive first.”
In the long run, how to be competitive at low and medium oil prices is a key issue facing the industry. Zhang Jiming said that if we do not return to the era of “high oil price”, modern coal chemical industry will also face the impact of new coastal refining and chemical integration projects. In contrast, the unit capacity investment of coal chemical project is large, which is 5-10 times of the investment intensity of petroleum refining unit capacity; the existing project scale is limited, which can only produce 1-2 main products, so it is difficult to realize cascade utilization. “In the future, the core is the competition of cost and characteristics. The modern coal chemical industry is short of low-cost or unique products, so it is urgent to find the right position. According to its own characteristics, it is necessary to couple the technical route, optimize the system, and consider as a whole, so as to form a product system with distinct differentiation characteristics and outstanding comparative advantages. ”
The above-mentioned senior experts also said that based on the improvement of industrial competitiveness, the modern coal chemical industry should seek technological breakthroughs, implement classified policies and develop moderately. “For a long time, when it comes to coal chemical industry, it’s about how many ten thousand tons of projects have been planned. Next, can we consider changing that to focus on both quantity and quality instead of quantity?”
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