Countdown to petrochemical capacity clearance: Over 20 Years of Petrochemical Capacity Share Exposed!

Recently, a piece of news from the chemical industry has garnered widespread attention. The Hunan Provincial Department of Industry and Information Technology issued a notice regarding the assessment of old equipment in the petrochemical and chemical industry. Reports indicate that the country is redefining old petrochemical equipment, focusing on major outdated facilities in areas such as refining, coal chemical, chlor-alkali, soda ash, calcium carbide, phosphate fertilizer, tires, and fine chemicals that have either reached their design service life or have been in operation for over 20 years. The initiative aims to promote the green, intelligent, and safe transformation of these old units and accelerate the upgrading of outdated, inefficient, and high-risk equipment, whereas the previous common understanding was that the threshold was 30 years.

On July 18, Friday night, the commodity futures sector saw a significant rise, with the previously weak and range-bound plastic futures also experiencing a notable rebound. Over the weekend, the renovation and elimination of old petrochemical facilities became a hot topic, leading to strong expectations for future speculation.

Multiple institutions have conducted statistics showing that the capacity share of various chemical products, such as short fibers, caustic soda, and urea, reveals shocking data regarding long-term operating capacity. Short fibers account for 47%, indicating that nearly half of the short fiber capacity comes from aging facilities that have been in operation for over 20 years. Caustic soda has a share of 43%, and the number of long-term operating facilities cannot be underestimated. Urea accounts for 20%, while pure benzene and butadiene each account for 18%, with styrene-butadiene rubber at 15%, plastics at 14%, ethylene and PVC each at 12%, and PP at 10%. Although methanol, PX, PTA, and other products have shares below 10%, the base of old capacity should not be ignored.

1) Statistics on the Proportion of Old Installations in the Petrochemical Industry

Data source: ZhuoChuang, Tianfeng Chemical Team

Statistical data on chemical industry old equipment over 20 years in operation.

Source: SteelUnion Data, Shenwan Hongyuan Research