China's coal tar industry is facing significant challenges despite its growing production. Most of the country’s coal tar is a byproduct of the coking process, and with the expansion of domestic coke production, output has surged to around 7 million tons annually. However, the industry remains fragmented, technologically backward, and largely used as fuel, leading to inefficiencies and resource waste.
One of the most pressing issues is the "small and scattered" nature of the sector. Many companies still use outdated equipment from the 1950s, with processing capacities below 100,000 tons per year—far behind international standards, where mature operations exceed 200,000 tons annually. In some regions like Shanxi and Inner Mongolia, numerous small-scale plants have emerged, often without proper environmental controls. This disorderly growth has led to severe pollution and inefficient resource utilization.
Domestic technology is also lagging. While advanced foreign methods can extract over 200 organic compounds from coal tar, Chinese facilities typically extract fewer than 40. Companies are reluctant to invest in upgrades, preferring short-term profits over long-term development. As a result, the industry has stagnated, missing out on potential value-added opportunities.
Another concerning issue is the wasteful use of coal tar. With rising oil prices, some companies have turned to burning unrefined coal tar, which is cheaper but highly inefficient. This not only wastes valuable resources but also contributes to environmental degradation.
The export of raw coal tar has further complicated matters. China's lack of restrictions on exports has allowed foreign countries, such as Japan, to refine and re-import high-value products like industrial naphthalene and carbon black. In 2005, China imported over 500 tons of industrial naphthalene from Japan, costing $24.24 million. This "back-selling" phenomenon highlights the loss of economic value due to poor domestic processing capabilities.
Moreover, heavy exports have driven up domestic prices. In 2005, coal tar prices doubled, reaching as high as 2,200 yuan per ton. This has caused downstream industries to suffer, with some companies losing millions monthly and even halting operations. Safety risks have also increased due to unstable supply chains.
To address these issues, experts recommend several measures. First, the government should promote industry consolidation, support technological innovation, and develop large-scale processing complexes. Second, export policies need revision—reducing tax rebates and increasing specific taxes could curb excessive exports. Third, strict regulations on burning coal tar should be enforced to prevent waste.
Finally, establishing an industry association would help regulate the market, promote information sharing, and ensure sustainable development. Without these changes, China's coal tar industry will continue to face inefficiencies, environmental harm, and missed economic opportunities.
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