China Coking Industry Overview

Transcription

1 BAIINFO China Coking Industry Overview China Coal Tar Demand & Supply Analysis Ms. Mi Zhang Cell: BAIINFO Coal Chemical Business Division July, 2018

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8 With coke output accounting for 69% of global volume, China is the largest production base around the world. Thus China s coke and its by-product coal tar gain wide concerns from market players.

9 CONTENTS 目录 1 China Coking Industry Overview 2 China Coal Tar Demand & Supply Situation 3 China Coal Tar Market Analysis 4 China Coking Industry Policies & Outlook

10 China Coking Industry Overview China Capacity Distribution China s Coke Capacity Distribution in H (by Regions) China s Coke Capacity Distribution in H (by Provinces) According to BAIINFO statistics, in August, 2018, China coking capacity was about 568 million tonnes, mainly distributed in Shanxi, Hebei, Shandong, Inner Mongolia, Henan and Jiangsu, accounting for 67.98% of total volume.

11 China Coking Industry Overview Capacity, Output & Production Analysis China Coke Capacity, Output & Operation Rate Analysis in H Capacity Slower Decrease of Capacity 1. Coking capacity peaked in Along with the Supply-side Reform policy as well as environmental protection pressure, coking industry was urged to get rid of the outdated capacity, with merger and recombination of small-sized capacity. Then capacity decreased year-on-year from Operation Rate Low Operation Rate 1. Operation rate of coking industry decreased yearon-year from It was around 75% from Operation rate kept fluctuating around 70% from Output Gradually Stabilizing Output 1. After 2014, coke output started to decrease then remained narrowly range-bound. 2. Coke output was relatively stable from 2016 to now, fluctuating around the level of 430 million tonnes. Similarly, coal tar output kept fluctuating around 16 million tonnes.

12 CONTENTS 目录 1 China Coking Industry Overview 2 China Coal Tar Demand & Supply Situation 3 China Coal Tar Market Analysis 4 China Coking Industry Policies & Outlook

13 China Coal Tar Demand & Supply Situation General Condition First Consumer Coal Tar Distillation Processing In 2017, China coal tar output was totally million tonnes around. Consumption in coal tar distillation processing sector was around million tonnes, accounting for 74% of total volume. Second Consumer Carbon Black In 2017, total coal tar consumption was about 3.45 million tonnes for carbon black production, accounting for 21% around. Others 1. A few percent of coal tar was used in coal tar hydrogenation, fuel oil, reclaimed rubber and stemming materials sectors. Consumption was assessed as 0.71 million tonnes in Under environmental protection policies, later consumption in fuel oil sector would be reduced.

14 China Coal Tar Demand & Supply Situation by Province Coal Tar & Main Downstream Production Capacity Distribution in 2017 (by Province) Unit: Tonne Indeed, China coal tar distillation processing and carbon black capacity are highly matched with coal tar s. Capacity in the three sectors is similarly distributed in Shandong, Shanxi, Hebei and Henan, accounting for 60% around of total volume. Surely, deals are most active in these regions.

15 China Coal Tar Demand & Supply Situation Consumption in Coal Tar Distillation Processing Sector Coal Tar Distillation Processing Capacity & Operation Rate Analysis in Till late June of 2018, China coal tar distillation processing capacity was million tonnes, with average operation rate at 48.7% in H China coal tar distillation processing capacity increased year-on-year at a slower speed, fluctuating around the level of 25 million tonnes. Coal tar distillation processing enterprises postponed commissioning for capital or environmental protection reasons or even halted to wait for market changes, then overall operation rate of coal tar distillation processing industry moved down.

16 China Coal Tar Demand & Supply Situation Consumption in Carbon Black Sector Carbon Black Capacity & Operation Rate Analysis in Till late June of 2018, carbon black capacity was million tonnes, with average operation rate at 53% in H China carbon black production capacity increased year by year but moved down slightly from 2016 for the first time. Going forward, the less competitive carbon black enterprises would be gradually phased out under renewed environmental protection pressure. Carbon black output increase capacity increase. was slower than Operation rate gradually moved down. It was nearly 50% in , indicating that streamlining, reorganization and consolidation within the whole industry are urgently needed.

17 China Coal Tar Demand & Supply Situation Demand-supply Condition of Major Downstream Products Coal tar pitch, anthracene oil and industrial naphthalene are main products of coal tar distillation processing, with reaction yield at 50-55%, 22-25%, and 9-11% respectively. Demand and supply conditions are listed as follows: China Coal Tar Pitch Demand-supply Condition in Unit: Tonne Demand-supply Condition Item Supply Condition Coal Tar Pitch Capacity 13,270,000 12,880,000 13,420,000 Coal Tar Pitch Output 5,550,000 5,528,000 5,583,000 Carbon Industry (Prebaked Anode, Electrode, Needle Coke) 3,470,000 3,260,000 2,900,000 Demand Condition Carbon Black Oil 800,000 1,200,000 1,490,000 Export 680, , ,000 Coal Blending, Fuel Oil 120, , ,000 Others 480, , ,000 China coal tar pitch is mainly used in prebaked anode, graphite electrode, needle coke, and carbon black industries (carbon black oil blending). In recent years, coal tar pitch export kept increasing yearon-year, while consumption in fuel oil and coal blending sectors quickly shrank. Coal tar pitch s future demand growth would still come from carbon industry.

18 China Coal Tar Demand & Supply Situation Demand-supply Condition of Major Downstream Products Demand-supply Condition Item Supply Anthracene oil Output 2,440,000 2,542,000 2,510,000 Demand Demand-supply Condition Item Supply Industrial Naphthalene Output 1,344,200 1,259,000 1,280,000 Demand China Anthracene oil Demand-supply Condition in Unit: Tonne Carbon Black Industry 2,000,000 2,209,000 2,209,000 Anthracene oil Deep Processing 60,000 75, ,000 Anthracene oil Hydrogenation 365, , ,000 Export 19,000 28,000 18,000 China s anthracene oil is mainly used in carbon black, anthracene oil hydrogenation and anthracene oil deep processing sectors. Only a small part is used in export or other sectors. Future demand growth would mainly come from carbon black industry. Anthracene oil hydrogenation production is unstable due to impact from crude oil, but it is also worth attention. China Industrial Naphthalene Demand-supply Condition in Unit: Tonne Naphthalene-based Phthalic Anhydride 938, , ,000 Naphthalene-based Water Reducer (FDN) 275, , ,000 Dyestuff Intermediate 185, , ,000 Industrial Naphthalene Export 6,000 1,000 6,600 China s industrial naphthalene is mainly used in the production of naphthalene-based phthalic anhydride, naphthalene-based water reducer (FDN), naphthalene-based intermediate and so on. Future demand growth would mainly come from naphthalene-based phthalic anhydride industry. Consumption in other sectors would remain largely stable.

19 CONTENTS 目录 1 China Coking Industry Overview 2 China Coal Tar Demand & Supply Situation 3 China Coal Tar Market Analysis 4 China Coking Industry Policies & Outlook

20 China Coal Tar Market Analysis Association between Coal Tar and Crude Oil From the chart, coal tar had basically the same trend with crude oil. But in 2010 and 2017, there were some differences. Policy factor played an important part in it. In 2017, because of the renewed environmental protection pressure on China coking industry, coal tar output decreased. The tight supply kept supporting coal tar price to climb up then hit fresh high.

21 China Coal Tar Market Analysis Association between Coal Tar and Coal Tar Distillation Processing Products China Coal Tar & Downstream Products Price Trend in Prices of coal tar pitch, industrial naphthalene, anthracene oil and other coal tar distillation processing products showed basically the same trend with coal tar due to their close connection and mutual dependence.

22 China Coal Tar Market Analysis Association between Coal Tar and Carbon Black China Coal Tar & Carbon Black Price Trend in In China, carbon black producers mostly adopt monthly-set prices. Raw material price situation plays an important role in carbon black price setting.

23 China Coal Tar Market Analysis Relation with Downstream Profit Condition Gross Profit Margins in Carbon Black Industry Gross Profit Margins in Coal Tar Distillation Processing Industry China carbon black industry generally makes better profits than coal tar distillation processing industry does. Comparatively, production and profit conditions in coal tar distillation processing industry do more impacts on coal tar price.

24 CONTENTS 目录 1 China Coking Industry Overview 2 China Coal Tar Demand & Supply Situation 3 China Coal Tar Market Analysis 4 China Coking Industry Policies & Outlook

25 China Coking Industry Policies & Outlook 1 Impacts from Macro Economy on Coal Tar Market As an energy-intensive, high-pollution and resource-based industry with clear overcapacity, coking industry becomes focus in environmental protection campaign and Supply-side Reform.

26 China Coking Industry Policies & Outlook Macro Policies 13th Five-Year Planning Outline of Coking Industry Specific Goals: (1)all the outdated capacity in coking industry should be eliminated, with 70% capacity or above to meet permit standard. (2)Without diminishing quality of coke, high-class coking coal ratio in blending should be reduced by 4%. (3)Coking enterprises with capacity at 2 million tonnes/year or above should be managed in centralized and information-based management mode. (4)Above 90% steel mills should have coke dry quenching system. (5)Coke oven gas utilization rate should be above 98% and water circulation rate should be above 98%. Fresh water consumption should be reduced to 1.5 tonnes below for each tonne of coke. (6)50 million tonnes of excess capacity should be eliminated. (7)For coking enterprises meeting approval standards, pollutant discharge should reach the standards specified in Pollutant Emission Standards of Coking Chemical Industry. In general, apart from excess capacity elimination, there are specific requirements as comprehensive planning and policies on streamlining and upgrading coking industry.

27 China Coking Industry Policies & Outlook Macro Policies Key Policies in 2018: Policy Document Environmental Tax Law Announcement of Special Emission Limits of Air Pollutants in Beijing-Tianjin-Hebei Region as Air Pollutants Transmission Channel 3-year Action Plan on Blue Sky Protection Campaign Source the NPC Standing Committee Ministry of Environment al Protection the State Council Enforced Date effective from Jan. 1, 2018 from Oct. 1, 2019 released on Jul. 3, 2018 Content Impact Environmental tax is imposed formally increasingly stricter regulation instead of pollution and supervision discharge fees. All the coking enterprises should abide by the special emission limits of pollutants. It aims at sharply reducing total emission of major air pollutants in three years. Enterprises not up to the standards should be halted. Fenhe Plain and Weihe Plain are included in the list of key areas.

28 China Coking Industry Policies & Outlook Macro Policies 3-year Action Plan on Blue Sky Protection Campaign (Part): Extension of Key Areas: Apart from 2+26 cities of Beijing-Tianjin-Hebei Region and surrounding regions as well as Yangtze River Delta region, relatively severe areas like Fenhe and Weihe Plain are included. More uncompetitive independent coking enterprises in key areas would be phased out then. In Beijing-Tianjin-Hebei Region and surrounding regions, coke capacity would be determined according to steel capacity, trying to realize the goal of ratio of coking capacity to steel capacity as 0.4 around till 2020 and preventing the coming-back of low-quality steel products. New steel, coking and aluminum capacity is strictly forbidden in key areas. Heavy polluting enterprises in urban built-up areas would be urged to relocate with transformation or even halt, to control output and use new energy resources. According to BAIINFO statistics, totally 288 million tonnes of coke capacity is involved in the above mentioned key areas, accounting for 50.7% of total volume. In the heating season in , coal tar monthly output would be reduced by million tonnes.

29 China Coking Industry Policies & Outlook Supply Outlook According to the entry criteria of 13th Five-Year Planning Outline of Coking Industry, potential eliminated capacity in each province in 13th Five-Year period is listed as follows (based on BAIINFO statistics): Province Potential Eliminated Capacity in the Future Three Years Potential Eliminated Capacity (Million Tonnes) Province Potential Eliminated Capacity (Million Tonnes) Hebei 20 Sinkiang 5 Shanxi 34 Qinghai 0.7 Shandong 6.2 Gansu 0.6 Jiangsu Heilongjiang 1.8 Anhui 0.6 Liaoning 0.6 Jiangxi 1.2 Yunnan 2.5 Henan 4.7 Guizhou 2.4 Hunan 0.8 Sichuan 1.5 Shaanxi 0.6 Ningxia 2 Total

30 China Coking Industry Policies & Outlook Supply Outlook Province Coking Capacity under Construction & Planned Expansion in Future Three Years Capacity (Million Tonnes) Shanxi 29.5 Shandong 6.1 scheduled to be built in Remarks 1.5 million tonnes of capacity are planned to go into operation in late 2018; the rest would be built in Hebei 2.1 second-stage in construction; scheduled to go into operation in late 2018 Henan 5.6 second-stage 2.6 million tonnes of capacity in construction; scheduled to see output in late 2018 Fujian 1.5 scheduled to go into operation in late Gansu 2 1 million tonnes of capacity under construction Total 46.8 Coking Capacity & Output Forecast in Future Three Years Coke Capacity (Million Tonnes) Output (Million Tonnes) Coal Tar Output (Million Tonnes)

31 China Coking Industry Policies & Outlook Supply Concentration Ratio According to BAIINFO statistics, till 2020, China coking capacity would reach 520 million tonnes. A large part of capacity is distributed into Shanxi, Hebei, Shandong, Inner Mongolia, Henan and Jiangsu. Till 2020, capacity in these six provinces would account for 68.4% of total capacity, which would be higher than the figure in 2018.

32 China Coking Industry Policies & Outlook 2 Impacts from Being Listed as Hazardous Wastes Policies would also do impacts on product flow, such as Hazardous Wastes.

33 China Coking Industry Policies & Outlook Being Listed as Hazardous Wastes Coal tar has been listed as hazardous waste. According to National Hazardous Waste List released in 2016, In the production process of coke, residue and tar produced in the process of coal gas purification are classified as hazardous wastes, with code as Acid tar oil and other tar products produced in the production process of coke are classified as hazardous wastes, with code as Coal tar produced in the process of condensation of coal gas is classified as hazardous waste, with code as

34 China Coking Industry Policies & Outlook Being Listed as Hazardous Wastes Meantime, Exemption Management List of Hazardous Wastes was released, with following content related to coal tar: No. Code Hazardous Wastes Exemption Link Exemption Condition Specific Content coal tar produced in coal gas purification Use up to Coal Tar Standard YB/T ; used as feedstock in coal tar distillation processing industry to produce naphthalene, wash oil, anthracene oil, and so on not treated as hazardous waste in this process

35 China Coking Industry Policies & Outlook Impacts from Hazardous Wastes Treatment Market Survey: Currently, environmental protection supervision departments in partial regions treat coal tar as hazardous waste, requiring carbon black enterprises to get the dangerous waste transportation and disposal permit, which does some impacts on feedstock purchase in carbon black enterprises. (mainly in Sichuan, Ningxia and regional Sinkiang) In some provinces, coal tar sales outside the province are forbidden. (mainly in Guangdong+Qinghai) From long-term perspective, it may impact the consumption structure of coal tar with possibly increasing demand structure ratio in coal tar distillation processing sector, which could not be ignored.

36 China Coking Industry Policies & Outlook 3 Impacts from China-US Trade War China coking industry development is impacted not only by domestic policies but also international situation and policies.

37 China Coking Industry Policies & Outlook Impacts from China-US Trade War Background: On Jun. 15, 2018, US government released the tariff list of China goods at worth of US$50 billion to slap additional 25% tariff then. On Jun. 16, China Customs Tariff Commission of the State Council announced to impose retaliatory additional 25% tariff on US$50 billion worth of American goods, including coal chemical products like coal tar (HS code ) and coke (HS code ). Customs Tariff Policy on China Coke and Coal Tar in 2018 Industry Product HS Code Import Tariff Export Tariff Coal Chemical Coke % 0% Coal Chemical Coal Tar % 10% Remarks: China has reduced export tariff of coal tar to 10% from 15% since Jan. 1, 2018.

38 China Coking Industry Policies & Outlook Impacts from China-US Trade War Judging from 2017 statistics and chart, China had no import and export trades of coal tar with USA, with import country mainly as Vietnam and export country mainly as Japan. Remarks: Data Source: China Customs Carbon black oil was included in coal tar import & export.

39 China Coking Industry Policies & Outlook Impacts from China-US Trade War Statistics revealed that in 2017, China only imported coke at 21 tonnes from USA, accounting for 0.2% of total import volume. And there was no coke export to USA. In 2017, China only imported million tonnes of steel from USA, accounting for 0.6% of total import volume. Export volume of steel was only 1.18 million tonnes to USA, accounting for 1.1% of total export volume. From the above data, China-US trade war would do little impact on China coal tar market as well as steel and coking industries. The most troubling concerns for domestic coking enterprises are still the environmental protection problems and policies.

40 Thank you!