In the past few years, the global coal chemical industry has accelerated its restructuring. Europe is accelerating its "stall" under the dual pressure of energy costs and carbon policies, while China is relying on its resource endowment and strategic investment to achieve a "leap". The balance of global coal chemical competition has irreversibly tilted towards the east.
1, Europe 'stalls': Upstream contraction, carbon tax pressure increases
From 2022 to 2025, the cumulative production capacity of European chemical industry will be shut down by 37 million tons (accounting for 9% of the total production capacity), with a single year shutdown of 17.2 million tons in 2025. Ethylene production capacity has been reduced by about 2 million tons per year compared to 2021, while synthetic ammonia and methanol have also contracted simultaneously.
Root cause: After the shutdown of Gazprom, the cost of LNG in Europe was 3-4 times that of Gazprom, and the price of industrial gas in Germany once exceeded 10 times before the war. In 2026, the EU CBAM will be fully implemented, with a carbon price of about 70-80 euros/ton, while China's carbon price is only 60-80 yuan/ton, putting significant carbon cost pressure on coal based product exports.
2, China's' leap ': leading in production capacity, exports, and investment comprehensively
China is the only country in the world with large-scale industrialization of modern coal chemical industry. By 2025, the global coal chemical market size will exceed 800 billion US dollars, with China accounting for 42%.
1. Capacity: Approximately 11 million tons of coal to oil, 10 billion cubic meters of coal to gas, and 16 million tons of coal to olefin, basically achieving the "14th Five Year Plan" target. Methanol coal production accounts for 78%, urea 73%, PVC 79%, Ethylene glycol 40%, olefin 25%.
2. Export: By 2025, urea exports will reach 4.894 million tons (+17.8 times year-on-year), with an average price of 410 US dollars per ton. National Energy Group's chemical product exports increased by 74% year-on-year, covering 41 countries.
3. Investment: The total investment for major projects in the chemical industry in 2026 is 837.8 billion yuan, with coal to olefin projects under construction exceeding 300 billion yuan. The cumulative investment for the four major bases in Xinjiang, Inner Mongolia, Shaanxi, and Ningxia exceeds 600 billion yuan.
Cost advantage: Baofeng Energy's largest coal to olefin project in Inner Mongolia, with an annual output of 3 million tons, has a stable olefin gross profit margin of 30%.
3, Global Landscape: From 'Following' to 'Leading'
1. China's coke production accounts for over 65% of the world's total, and new coal chemical technologies continue to iterate: coal to aromatics, coal based biodegradable materials, and coal to alpha olefins are accelerating industrialization.
2. The "15th Five Year Plan" for the first time explicitly states "strengthening coal to oil and gas production capacity and technological reserves" and incorporates it into the national energy security strategy. In 2027, the chemical industry will be included in the national carbon market, and carbon constraints will accelerate the clearance of outdated production capacity, expanding the advantages of leading enterprises.
4, Outlook: From scale expansion to value leap
1. High end: Upgrading from basic chemicals to new materials and fine chemicals, biodegradable materials and alpha olefins have become new growth poles.
2. Greenization: Green hydrogen coupled with coal chemical industry (such as Baofeng Energy's Inner Mongolia project) and carbon capture and storage technology have become key pathways for carbon reduction. The 2026 government work report sets the first carbon emission intensity target, and fully implements carbon dual control during the 15th Five Year Plan period.
3. Globalization: CBAM drives green transformation, and the geopolitical turmoil in the Middle East highlights the value of China's stable supply chain. China is moving from a "chemical powerhouse" to a global chemical "core hub".
List of Core Highlights
Europe's' stall ': 37 million tons of production capacity will be shut down from 2022 to 2025, and 17.2 million tons will be shut down in a single year in 2025; CBAM carbon price of 70-80 euros/ton creates cost pressure on coal chemical exports
China's' leap ': China accounts for 42% of the global coal chemical market, with a coal to olefin production capacity of 16 million tons and a methanol/urea/PVC coal to olefin ratio of over 70%
Investment explosion: The total investment in chemical projects in 2026 is 837.8 billion yuan, with coal to olefin exceeding 300 billion yuan, and the four major bases accumulating over 600 billion yuan
Cost advantage: Baofeng Energy Inner Mongolia project olefin gross profit margin of 30%
Export volume increase: By 2025, urea exports will reach 4.894 million tons (+17.8 times), with China National Energy Corporation's exports increasing by 74%, covering 41 countries
Policy reshaping: Incorporate the "15th Five Year Plan" into the energy security strategy, enter the carbon market in 2027, and "strictly control the total amount and improve quality"
In the past few years, the global coal chemical industry has accelerated its restructuring. Europe is accelerating its "stall" under the dual pressure of energy costs and carbon policies, while China is relying on its resource endowment and strategic investment to achieve a "leap". The balance of global coal chemical competition has irreversibly tilted towards the east.
1, Europe 'stalls': Upstream contraction, carbon tax pressure increases
From 2022 to 2025, the cumulative production capacity of European chemical industry will be shut down by 37 million tons (accounting for 9% of the total production capacity), with a single year shutdown of 17.2 million tons in 2025. Ethylene production capacity has been reduced by about 2 million tons per year compared to 2021, while synthetic ammonia and methanol have also contracted simultaneously.
Root cause: After the shutdown of Gazprom, the cost of LNG in Europe was 3-4 times that of Gazprom, and the price of industrial gas in Germany once exceeded 10 times before the war. In 2026, the EU CBAM will be fully implemented, with a carbon price of about 70-80 euros/ton, while China's carbon price is only 60-80 yuan/ton, putting significant carbon cost pressure on coal based product exports.
2, China's' leap ': leading in production capacity, exports, and investment comprehensively
China is the only country in the world with large-scale industrialization of modern coal chemical industry. By 2025, the global coal chemical market size will exceed 800 billion US dollars, with China accounting for 42%.
1. Capacity: Approximately 11 million tons of coal to oil, 10 billion cubic meters of coal to gas, and 16 million tons of coal to olefin, basically achieving the "14th Five Year Plan" target. Methanol coal production accounts for 78%, urea 73%, PVC 79%, Ethylene glycol 40%, olefin 25%.
2. Export: By 2025, urea exports will reach 4.894 million tons (+17.8 times year-on-year), with an average price of 410 US dollars per ton. National Energy Group's chemical product exports increased by 74% year-on-year, covering 41 countries.
3. Investment: The total investment for major projects in the chemical industry in 2026 is 837.8 billion yuan, with coal to olefin projects under construction exceeding 300 billion yuan. The cumulative investment for the four major bases in Xinjiang, Inner Mongolia, Shaanxi, and Ningxia exceeds 600 billion yuan.
Cost advantage: Baofeng Energy's largest coal to olefin project in Inner Mongolia, with an annual output of 3 million tons, has a stable olefin gross profit margin of 30%.
3, Global Landscape: From 'Following' to 'Leading'
1. China's coke production accounts for over 65% of the world's total, and new coal chemical technologies continue to iterate: coal to aromatics, coal based biodegradable materials, and coal to alpha olefins are accelerating industrialization.
2. The "15th Five Year Plan" for the first time explicitly states "strengthening coal to oil and gas production capacity and technological reserves" and incorporates it into the national energy security strategy. In 2027, the chemical industry will be included in the national carbon market, and carbon constraints will accelerate the clearance of outdated production capacity, expanding the advantages of leading enterprises.
4, Outlook: From scale expansion to value leap
1. High end: Upgrading from basic chemicals to new materials and fine chemicals, biodegradable materials and alpha olefins have become new growth poles.
2. Greenization: Green hydrogen coupled with coal chemical industry (such as Baofeng Energy's Inner Mongolia project) and carbon capture and storage technology have become key pathways for carbon reduction. The 2026 government work report sets the first carbon emission intensity target, and fully implements carbon dual control during the 15th Five Year Plan period.
3. Globalization: CBAM drives green transformation, and the geopolitical turmoil in the Middle East highlights the value of China's stable supply chain. China is moving from a "chemical powerhouse" to a global chemical "core hub".
List of Core Highlights
Europe's' stall ': 37 million tons of production capacity will be shut down from 2022 to 2025, and 17.2 million tons will be shut down in a single year in 2025; CBAM carbon price of 70-80 euros/ton creates cost pressure on coal chemical exports
China's' leap ': China accounts for 42% of the global coal chemical market, with a coal to olefin production capacity of 16 million tons and a methanol/urea/PVC coal to olefin ratio of over 70%
Investment explosion: The total investment in chemical projects in 2026 is 837.8 billion yuan, with coal to olefin exceeding 300 billion yuan, and the four major bases accumulating over 600 billion yuan
Cost advantage: Baofeng Energy Inner Mongolia project olefin gross profit margin of 30%
Export volume increase: By 2025, urea exports will reach 4.894 million tons (+17.8 times), with China National Energy Corporation's exports increasing by 74%, covering 41 countries
Policy reshaping: Incorporate the "15th Five Year Plan" into the energy security strategy, enter the carbon market in 2027, and "strictly control the total amount and improve quality"
