Bian Xiaosong, Sublime China Information (SCI)

High temperature coal tar deep processing is not only an important component of modern coal chemical industry, but also one of the effective ways to comprehensively use coal. The products made via the deep processing process are the basic raw materials of dye, rubber, plastic, pesticide, and medicine. Therefore, the high temperature coal tar deep processing industry has great potential.

Capacity increases significantly, operating rate decreases

   China's high temperature coal tar deep processing industry has witnessed four development stages: the infant stage during 2006-2009; the rapid development stage during 2010-2015; the slow phase-out during 2016-2017; the second round of massive capacity release during 2018-2020. With the four stages, the industry has achieved bigger scale and wider market coverage, as shown in Figure 1. The capacity in 2020 is expected to hit 26.78 million t/a, exceeding that in 2015.

   Figure 1 Capacity and operating rates of high temperature coal tar deep processing

   The market utilization rate of China's high temperature coal tar deep processing capacity exhibits a broad inverse relationship with the rapid capacity growth. In the first stage, the market operation ratio maintained at 86%~92%; in the second stage from 2010 to 2015, the market operation ratio decreased rapidly, and even hit a historically low in 2015, down by 38 percentage points than that in 2010. It reflected that the industry was burdened with overcapacity, which was largely because of producers’ business expansion, the flexible operation of high temperature coal tar deep processing units and low access to the industry.

Largely overlapped production and sales areas

   Products in China's high temperature coal tar deep processing consist of coal tar pitch (55%), anthracene oil (22%), industrial naphthalene (10%), absorber oil (6%), carbolic oil (3%), light oil (3%) and crude phenol (1%). The capacities are mainly concentrated in East China, Northeast China, North China, Northwest China, Southwest China, Central China and South China, among which, the top three are: North China, accounting for 36%; East China, accounting for 23%; and Northwest China, accounting for 15%. The consumption of high temperature coal tar deep-processing products is mostly concentrated in North China, East China, Northwest China and Central China, which reflects that the areas for production and sales are largely overlapped.

Higher industry concentration

   China's high temperature coal tar deep processing capacity is increasing, so is the industry concentration. The capacity concentration (R10) reached 25.4%, and the scale became bigger. The capacity of 95 high temperature coal tar deep processing producers surveyed in 2019 totaled 24.72 million t/a, of which, producers with 400 kt/a and above accounted for 17%, producers with 300-400 kt/a took up 31%. Producers with 300 kt/a and below met half of the total demand, of which, producers with 150-200 kt/a accounted for 32%, and those with 100 kt/a or below occupied only 8%. At present, the industry is still in the stage of capacity optimization, as producers are making efforts to upsize themselves, leaving small and medium-sized ones to be challenged to make transformation or to leave the market.

 Figure 2 Production scale of coal tar deep processing producers in 2019

Extending industrial chain

   Table 1 shows the extension of China's high temperature coal tar deep processing industry chain. There are a big number of coking-high temperature coal tar deep processing integrated producers in China. Among the 95 deep processing producers surveyed, the extension of coking-high temperature coal tar deep processing producers reached 41.43%, that of coking-high temperature coal tar deep processing-downstream industrial naphthalene was 5.56%, that of high temperature coal tar deep processing-industrial naphthalene was 15.65%; the extension of coking-high temperature coal tar deep processing-carbon black was 4.21%, that of high temperature coal tar deep processing-carbon black was 9.47%; the extension of coking-high temperature coal tar deep processing-needle coking was 3.16%, and that of high temperature coal tar deep processing-needle coking was 7.37%.

Capacity to be released again

   Around 4.46 million t/a of China’s high temperature coal tar deep processing capacity is scheduled to be put into operation from 2020 to 2021, of which, 2.46 million t/a will be put into production in 2020, as shown in Table 2. In the next two years, China's high temperature coal tar deep processing industry will usher in the second releasing period of the capacity, mainly attributed to the extension of the industry chain and the upsizing of deep processing producers themselves.

   At present, China's high temperature coal tar deep-processing industry is suffering from oversupply. A continuous increase in the capacity will make producers more difficult to survive. In addition, decreasing supply of feedstock high temperature coal tar will intensify the scramble for the raw material. In the context, producers may have to upgrade technology and improve product quality. Therefore, in a longer run, the capacity will be bigger-sized and optimized, the industrial chain will be more concentrated and the production will be more integrated.