Next month, chemical activity in and out of China is going to take a hit. The first week the country will be celebrating Golden Week, then from 11 – 28 October, amid the 19th National Party Congress, the government has imposed a short-term restriction on the loading, discharging or transiting hazardous cargoes in the Yangtze River ports. Evidence has emerged that the Chinese government is determined to improve the nation’s air quality, so is this the beginning of a long-term commitment? According to China Daily, China has pledged to cut the PM2.5 (particulates with a diameter of less than 2.5 microns) concentration by at least 15% y-o-y in 28 cities in the northern part of the country during Oct 2017 to Mar 2018 to meet smog reduction targets. The Ministry of Environmental Protection of China recently released an action plan listing detailed targets, controlling measures and punishments. In a document jointly released by the Ministry of Environmental Protection and nine other ministry-level bodies, if a city does not achieve 60% of the emission reduction target, the city’s vice mayor will be held responsible, if less than 30% of its target, the mayor will be held responsible; and if the PM2.5 increases instead of falls over the winter, then the party secretary of the city will be held responsible, with possible punishment of disciplinary or administrative punishments to the party. We have seen the government’s try to clean air before, such as ahead of the G20 summit in 2016, after which everything returned to normal, and although some think that this initiative will dissolve after the National Congress much like before, others think this policy is here to stay. Firstly, it should be noted that the government has, for the first time, come out with specific reduction targets. Secondly, there is a growing Chinese middle class that as they get richer there is more emphasis on the quality of life, with many educated, wealthy people willing to move away to less polluted cities. However, such initiatives obviously have an impact on the chemical and petrochemical value chain. Media reports suggest that many chemical plants have been shut down after inspections, and a few have been relocated away from big cities. The failure to meet safety and environment standards has already seen some 70,000 chemicals and other manufacturing facilities in 18 cities in Hebei, Henan and Shandong being closed by inspectors. A clear example of this is one propylene derivatives plant was asked to relocate from inner city to a chemical industry park within six months. However, modern cracker operators or modern refinery-based and propane dehydrogenation-based Polyethylene plants have not been asked to close as they add value to the economy, and also as their re-start costs are quite high. Even so, for every plant that is closed, postponed or cancelled, there are many implications for the upstream as well as downstream users. Next step, there could be an emphasis on recycling to reduce solid wastes. Along with legislation support, consumers might prefer recycled polymers instead of virgin ones. An increase use of electric battery-run cars and bikes might also reduce demand for many petrochemical products in medium to long term.
