The battle against air pollution around Beijing-Tianjin-Hebei region officially kicks off.

As the heating season approaches, the Beijing-Tianjin-Hebei region and surrounding areas have rolled out a comprehensive action plan for tackling air pollution during the 2017–2018 autumn and winter period, aimed at easing environmental pressures. Following this, local governments along the key pollution transmission corridors in Beijing-Tianjin-Hebei have successively introduced detailed implementation plans, signaling that the curtain is about to rise on staggered production restrictions. From the details of these local plans, several chemical-related industries—such as coking, tire manufacturing, and fertilizer production—have been identified as priority sectors for implementing off-peak production measures. The production control period will primarily span from November 15, 2017, to March 15, 2018, lasting a total of four months. Among these industries, the coking sector is likely to be the most significantly impacted.

Release date:

2017-10-25

  As the heating season approaches, the Beijing-Tianjin-Hebei region and surrounding areas have rolled out a comprehensive action plan for tackling air pollution during the 2017–2018 autumn and winter periods, aimed at easing environmental pressures. Following this, local governments along the atmospheric pollution transmission corridors in Beijing-Tianjin-Hebei have successively unveiled detailed implementation plans, signaling that the curtain is about to rise on staggered peak-time production restrictions.

  Based on the implementation plans released across various regions, several chemical-related industries—including coke production, tire manufacturing, and fertilizer production—have been designated as key sectors for implementing staggered peak-production measures. These production adjustments will primarily take place from November 15, 2017, to March 15, 2018, spanning a period of four months.

  The coking industry may be the chemical sector most severely affected. In Shanxi, a major coking-producing province, local regions have been rolling out production restriction policies since late August. For instance, the Taiyuan area has mandated that all coking plants in Qingxu County reduce output by 20%, while key coke-producing areas such as Lüliang, Linfen, and Changzhi have recently introduced stringent production-cutting measures one after another. Meanwhile, Hebei and Henan provinces have stipulated that, from October 1, 2017, to March 31, 2018, coking enterprises must extend their coke-making cycles to at least 36 hours—or even more than 48 hours for those located within urban built-up areas. In the Handan region, a preliminary 30% production cut has been enforced starting September 20, and the Wu'an area has already dispatched an environmental inspection team of over 80 members to conduct on-site monitoring at various factories.

  The production suspension and restriction measures will undoubtedly impact the supply-and-demand dynamics of the coke industry. According to statistics, the "2+26" cities are home to more than 110 coking enterprises, with a combined annual production capacity of 166.37 million tons. Based on the aforementioned staggered-production regulations, it is estimated that coke supply in the Beijing-Tianjin-Hebei region will decline by over 18 million tons during the staggered peak periods, resulting in an average daily output reduction of approximately 100,000 tons. Meanwhile, daily consumption of metallurgical coal is expected to drop by around 133,000 tons.

  During the tire manufacturing process, high-temperature vulcanization is required, and many tire companies either build their own or utilize existing heating boilers from other enterprises. According to the staggered peak-production plan, before the 2017 heating season, the "2+26" cities were tasked with retiring 72 generating units totaling 3.98 million kilowatts of coal-fired capacity. Industry insiders believe that, amid escalating environmental pressures, tire manufacturers may be forced to stagger production during the heating season—or even face mandatory shutdowns altogether.

  Additionally, the manufacturing processes of synthetic rubber, carbon black, and additives—key raw materials in tire production—also generate pollutant emissions. This year’s environmental inspection efforts have placed particular emphasis on these industries. As the peak heating season of winter approaches, tire manufacturers will face a severe challenge in securing their critical raw material supplies.

  Fertilizer production will also be affected by staggered production schedules. The author obtained the latest "Emergency Response Operation Plan for Severe Pollution Weather" issued by a fertilizer company in Texas. During the entire heating season, under the lowest-level, Level 4 response, the company will stagger maintenance on its two nitro-based compound fertilizer production lines, ensuring output remains no more than 50% of normal production capacity. Meanwhile, when the highest-level, Level 1 response is activated, all fertilizer and chemical production lines will be restricted to 30% of their usual output.

  Based on the specific production restriction targets and key enterprises announced by various regions so far, the impact on refining and chemical companies remains limited—primarily affecting just a few major oil refineries in the Zibo area. Zibo has mandated that, from December 1, 2017, to February 28, 2018, large-scale petrochemical enterprises maintain a production load no higher than 50%. According to statistics from industry research firms, the operating rates of atmospheric and vacuum distillation units at Shandong's independent refineries have generally stayed within the 50%–65% range, currently standing at 63%. From this, it can be inferred that the staggered production schedule during the heating season will affect these independent refineries' operating rates by less than 10%. However, it’s important to note that Zibo has imposed strict controls on cargo transportation flows, requiring key transportation companies involved in the movement of bulk raw materials and finished products to implement off-peak shipping schedules. Additionally, the city has enforced stringent emission standards for vehicles used in logistics. Industry insiders believe that even without formal production restrictions, controlling transportation volumes will inevitably constrain the flow of both finished products and raw materials, indirectly impacting the operational loads of related refining enterprises as well.