Recent research has demonstrated the possibility of transforming plastic waste into advanced materials such as graphene, carbon nanotubes, and porous battery structures, as well as high-quality fuels, through low-temperature conversion processes

Converting coal into petrochemicals is not a new technology, but its large-scale revival by China is redefining the global balance in the production of plastics and industrial raw materials.

The process known as Fischer-Tropsch, developed in the 1920s by German chemists Franz Fischer and Hans Tropsch, transforms coal into synthetic hydrocarbons by combining carbon monoxide and hydrogen under high pressure and temperature. These compounds can be converted into fuels, fertilizers, and, crucially, olefins used to manufacture plastics.

During World War II, this technology was used extensively by Germany to compensate for oil shortages, reaching significant industrial levels. Today, more than a century later, China is modernizing and scaling up this process with a clear objective: to reduce its dependence on imported raw materials.

From Historical Technology to Industrial Strategy: China’s Bet

In recent years, China has approved more than 36 industrial projects focused on converting coal into olefins, the basis for the production of polyethylene, polypropylene, and other key materials for the plastics industry.

Currently, nearly 20 of these projects are already operational, with a combined capacity exceeding 24 million tons per year. These facilities are concentrated in regions with large coal reserves, such as Shaanxi and Inner Mongolia, allowing for the direct integration of production in strategic extraction areas.

The logic is compelling: China possesses abundant coal reserves but depends on imported oil to sustain its petrochemical industry. Converting coal into plastics represents, in practical terms, a critical import substitution.

From an economic standpoint, this model is competitive when the price of oil exceeds $35 per barrel. In the current context—with significantly higher prices—the cost of production using coal can be lower than that of conventional petrochemicals, reinforcing its industrial viability.

Geopolitics of Materials: Self-Sufficiency as a Priority

Beyond chemistry, this strategy responds to a geopolitical logic. China is the world’s largest importer of oil, and its petrochemical industry—key to sectors such as packaging, electronics, and automotive—depends on supply chains vulnerable to international conflicts.

By developing a production base supported by domestic resources, the country reduces its exposure to external disruptions, whether from trade tensions, conflicts in strategic routes like the Strait of Hormuz, or technological restrictions.

This approach is not new: South Africa developed a similar industry during apartheid to circumvent energy embargoes. China has adopted this model, optimized it, and is deploying it on an unprecedented scale.

In this context, self-sufficiency in raw materials becomes a central pillar of its industrial strategy, aligned with the concept of “dual circulation,” which seeks to strengthen both the domestic market and resilience to external factors.

The climate paradox: more emissions in the name of energy security

This progress, however, is not without its problems. The production of plastics from coal generates between two and four times more CO₂ emissions than petroleum-based petrochemicals, depending on the process and the energy source used.

This places China in a complex position: on the one hand, it leads the global expansion of renewable energies; on the other, it promotes a carbon-intensive industry to ensure its industrial independence.

International organizations have pointed out this tension, although China’s stance remains pragmatic: guaranteeing the supply of strategic materials in the short term, even if this implies higher emissions, while advancing the long-term energy transition.

Parallel Innovation: From Plastic Waste to High-Value Materials

At the same time, China is also developing technologies to close the plastics loop from the other end: waste.

Recent research has demonstrated the possibility of transforming plastic waste into advanced materials such as graphene, carbon nanotubes, and porous battery structures, as well as into high-quality fuels through low-temperature conversion processes.

These lines of development point toward a comprehensive strategy: producing plastics from coal, recovering materials from waste, and reintegrating them into high-performance value chains.

Implications for the Plastics Industry in Latin America

For the plastics industry in Mexico and Latin America, this movement has direct implications:

Prices and availability: changes in the global supply of olefins and resins could impact costs in the coming years.
Industrial competition: greater Chinese self-sufficiency may reduce its dependence on imports, affecting trade flows.
Opportunities in advanced recycling: technologies for valorizing plastic waste are gaining strategic relevance.
Nearshoring and substitution: the logic of developing regional value chains based on local resources is reinforced.

A new logic in plastic raw materials

The reactivation of the Fischer-Tropsch process is not simply a technological return, but a clear sign of a change in the rules of the game for the global petrochemical industry.

China is building a model based on material self-sufficiency, geopolitical resilience, and technological diversification. Although this approach entails environmental challenges, it also redefines competitiveness in the sector.

For players in the plastics industry, understanding this transition is not optional: it is key to anticipating risks, identifying opportunities, and making strategic decisions in a market increasingly conditioned by geopolitics and the availability of raw materials.