Published on March 31, 2018

In last two years Chinese government has become very strict in regard environment policies. The government is letting no stone unturned to curb the pollution and improve the environment. With shutdown of many inefficient factories, consistent inspections and applying of ‘green tax’ has resulted in supply-side pressures on China’s petrochemical industry.

The impact of China's environmental inspections have led to short-term production stops, while longer production stops may result as a consequence of chemical firms being forced to relocate. "The tightened environmental regulation will lead to industry consolidation as the weakest and smallest players will not be able to afford the necessary production upgrades. This will also lead to a reduction in overall capacity along with the improvement in technological level". Shandong province, one of the country's biggest petrochemicals bases, is targeting to halve the number of petrochemical industry parks to 100 and close 20% of the 4,930 chemical plants in the province.

Jiangsu province plans to shut 2,077 chemical plants within this year and Hebei officials have said that they will implement new emission limits on water pollutants from July this year which is expected to reduce emission of chemical oxygen demand (COD) by 32.9% and ammonia nitrogen by over 58% from the 840 chemical firms in the province.