Warned to consider risks
Consulting and advisory firm Deloitte forecasts China's olefin capacity will reach 56 million tons at minimum by the end of 2015, including 51 million tons of oil-based capacity. That compares with annual demand of 50 million tons.
China's feedstock diversification strategy supports the development of the coal-to-olefins business, said Yann Cohen, Shanghai-based national leader for the chemicals industry at Deloitte China. But he has warned market entrants to consider risks, such as overcapacity, price and quality consistency of coal, and water supply accessibility and costs.
The coal-to-olefins capacity projected by Deloitte is conservative because it doesn't include projects that haven't yet secured final government approval, he said. For example, Dow Chemical Co and top Chinese coal producer Shenhua Group have been waiting for years for approval on a US$10 billion coal-to-chemicals project in Shaanxi Province.
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