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Insight | Time:Dec 23 2016 1:51PM
North China smog leads to curbing methanol production
 
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Heavy smog hits North China and the region is on “red alert”. Chinese government has implemented much stricter pollution control policy in North and Central China since mid-November. Government attempts to curb pollution by closing or reducing the production of coal chemical plants, steel mills, building material plants, etc. Several methanol plants in North and Central China either shut down or cut operating rates according to the government’s orders.

Curbing production in Hebei Province
Company Methanol capacity (kt/yr) Feedstock Status
Dingzhou Tianlu 400 Coke oven gas O/R reduced; 150kt/yr unit closed on Nov 17
Jinniu Xuyang 200 Coke oven gas O/R reduced; production cut to 300 tons per day
Zhengyuan Chemical 250 Coke oven gas O/R reduced on Nov 17; production cut to 300 tons per day
Zhongrun Coal Chemical 200 Coke oven gas Production cut to 400-500 tons per day
Wanfengxing Chemical 100 Coke oven gas O/R reduced to about 50%

Coke oven gas-based methanol production was reduced by 30% in Hebei Province. Producers kept plants running only to sate the appetite for methanol in local downstream plants and to fulfill long-term contracts. Supplies sold to other regions were slashed.

Curbing production in Henan Province
Company Methanol capacity (kt/yr) Feedstock Status
Hebi Coal Chemical 600 Coal Closed on Nov 16
Yubei Chemical 450 Coal Closed on Nov 16; running at low rate since the restart in early Dec
Zhongxin Chemical 350 Coal Closed

About half of coal-based methanol production capacity was closed in Henan Province. The capping of production led to the decrease in supplies for consumers in Shandong and Jiangsu Provinces.

Curbing production in Shanxi Province
Company Methanol capacity (kt/yr) Feedstock Status
Shanxi Coke Chemical 400 Coke oven gas O/R cut 50%
Shanxi Guangda Coking 150 Coke oven gas O/R cut 50%
Shanxi Lubao New Energy 200 Coke oven gas O/R cut 50%
Yangmei Fengxi 450 Coal Low rate running since the restart on Dec 5

Methanol production from Shanxi Province were mostly supplied to Henan, Shandong and other regions, as local downstream plants were lengthy idled. However, curbing methanol production in Shanxi resulted in a whopping drop in supplies for other regions.

Methanol supply turns tight on the reduction of production, which becomes a driving force to prop up methanol price in inland China.
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