China's Coal-to-Chemicals Push Pays Off With Record Profits
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Author of the article:You can save this article by registering for freehere. Orsign-inif you have an account. fm]x7}qif7fmehjd1jvx)9p7_media_dl_1. pngCompany filings and Bloomberg ca(Bloomberg) — China’s decade-plus quest to replace oil with coal in chemicals production is paying off for industry leader Ningxia Baofeng Energy Group Co. , which pulled in record profits as crude prices soared due to the Middle East War. Subscribe now to read the latest news in your city and across Canada. Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others. Daily content from Financial Times, the world's leading global business publication. Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account. National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. 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Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorBaofeng, which accounts for about a third of China’s coal-to-chemicals capacity, recorded first-half profit of 9. 73 billion yuan ($1. 4 billion), it said in an exchange filing Wednesday. That compares to 5. 72 billion yuan in the same period last year. The second quarter, when oil prices soared to a four-year high amid trade disruptions through the Strait of Hormuz, was particularly good for the company. Its net income was 6. 1 billion yuan, according to Bloomberg calculations, higher than any previous three-month period since the company listed in 2019. Get the latest headlines, breaking news and columns. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Top Stories will soon be in your inbox. We encountered an issue signing you up. Please try again“Crude oil prices rose rapidly and were highly volatile, significantly increasing feedstock costs for oil-based olefins,” Baofeng said in its earnings statement. “Domestic coal prices increased moderately, and feedstock costs for coal-to-olefins production rose only slightly. ”Coal-to-chemicals plants convert the solid fuel into synthetic gas, liquid fuels and chemical feedstocks for products from textiles to building materials. Coal accounts for about 85% of China’s methanol and ammonia production, according to the International Energy Agency. The industry used about 390 million tons of coal in 2024, according to the Centre for Research on Energy and Clean Air. While the technology dates back more than a century, China’s push into the sector began in earnest last decade amid growing concern about the nation’s dependence on imported oil. After a brief slowdown earlier this decade, the sector is once again in expansion phase as Beijing puts supply security at the center of its energy strategy. The sector enjoys government support not only because it helps cut down on oil and gas imports but also because it contributes to economic development in poorer coal-rich regions like Inner Mongolia, Xinjiang and Ningxia, where Baofeng is based. The company has about 5. 2 million tons a year of coal-to-olefins capacity, about a third of China’s total, according to Morgan Stanley analysts inlcuding Jack Lu. Its access to cheap coal resources mean it doesn’t need sky-high oil prices to be profitable — it’s cash generative even when Brent is in the $30s a barrel, Lu said in an April note. On the WireZhu Rongji, who as China’s premier pushed through reforms at state-owned companies and helped engineer China’s entry into the World Trade Organization, has died. He was 97. Ford Motor Co. will stop importing the one model it ships into the US from China, with the automaker shifting production of Lincoln sport utility vehicles to its home market. Extreme weather may lead to drops in output of some cotton and oilseed crops in China, the country’s agriculture ministry said in a monthly report. This Week’s Diary(All times Beijing)Thursday, Aug. 13No major eventsFriday, Aug. 14China’s weekly iron ore port stockpilesSHFE’s weekly commodities inventory, ~15:30EARNINGS: Zijin GoldJoin the ConversationThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more aboutcookies here. By continuing to use our site, you agree to ourTerms of UseandPrivacy Policy.