Chinese chemical industry struggling

April 4, 2016

After the end of the third session of 12th National People's Congress (NPC) on March 15th 2015, Prime Minister Li met Chinese and foreign journalists. When answering to questions from the Huffington Post on China's environmental pollution problems, the Prime Minister said Chinese government had a large determination and will put in much effort to curb environmental pollution for the chemical industry.

Why is the Chinese Chemical industry struggling? “There is still large gap in result between the reality and expectation. We really need to curb pollution such as haze. The priority of this year is to carry out the new environmental laws strictly”, Prime Minister Li said. “The illegal emission of enterprises will be seriously investigated for responsibility according to new environmental laws. They will pay the price of responsibility.”

Enforcing the environmental laws

The Chinese government should give more support to the Environmental department. Including the capacity building and to law-enforce regulations, according to Prime Minister Li. “No-one has permission to interfere with this enforcement. The Environmental department will take on more responsibility. The implementation of environmental laws is not a cotton swab, but the Sunday punch”, the Prime Minister said figuratively.

The revision of environmental laws aims on 12 aspects:

  • Strengthen the environmental protection propaganda;
  • Improve citizen environmental consciousness;
  • Define the red line of ecological protection;
  • Clarify the legal status of the environmental monitoring agency;
  • Perfect the administrative compulsory measures;
  • Encourage and organize the research on the effects to the public health by environment quality;
  • Link up the sewage charge and environmental protection tax;
  • Perfect the regional limited approval system;
  • Perfect pollution discharge license management system;
  • Protect the whistle blower;
  • Expand the main body of environmental public interest litigation;
  • Strengthen environmental responsibility.

The chemical industry in motion

According to analysts the environmental law amendment will affect the chemical industry greatly. In the short term small and medium-sized chemical companies will be affected by this law significantly. Enterprises that perform environmentally substandard, will be ordered to rectify or face being closed directly.

In the long term this amendment aims to develop the chemical industry into energy-saving, environmental and high-tech industry. With strict application of the new environmental laws, the industry of chlor-alkali, plastic and calcium carbide will face a reduced market supply.

Impact on export

The chemical industry is facing the following difficulties in 2015:

  1. Lead time

Park-associate-punishment system (If there is one enterprise break the rule, all the industry park will be ordered to close) and the no-work without EIA system make the factory shutdown irregularly. Being unable to control the start time for production makes it difficult to guarantee the lead time. The factories which have commenced, now operate under capacity due to the substandard sewage treatment. Regular two week lead time could even be delayed five to six weeks. We strongly suggest the customer to stock up in advance to avoid the inconvenience of production due to the postpone delivery.

  1. Pressure of price and payment term

Higher environmental request results in higher environmental input. This part of input will be calculated into the production cost, which ends in a higher purchase cost. The suppliers may recoup funds urgently to buy or update their sewage treatment equipment to be able to meet the new national requirements. This may result in suppliers shortening the payment period to take back the money.

Responding to the new environmental law, suppliers are looking for the positive solution to treat sewage and improve the emission standard. Advanced equipment for sewage and gas treatment needs to installed, to improve the production costs. See the official website for more information on the third session of the Twelfth National People’s Congress.

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