rongsheng petrochemical linkedin made in china

As Convent’s 700 workers found out they were out of a job, their counterparts on the other side of Pacific were firing up a new unit at Rongsheng Petrochemical’s giant Zhejiang complex in northeast China. It’s just one of at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity, equivalent to the U.K.’s entire fleet.

One of the key drivers of new projects is growing demand for the petrochemicals used to make plastics. More than half of the refining capacity that comes on stream from 2019 to 2027 will be added in Asia and 70% to 80% of this will be plastics-focused, according to industry consultant Wood Mackenzie.

As refiners in South Korea and Taiwan struggle to break even, new plants that were commissioned in better times are starting up. Hengli Petrochemical Co"s. 400,000 barrel a day refinery in Dalian is already at full capacity. Rongsheng Petrochemical Co"s similar-sized plant in Zhoushan, has begun partial operations, while Hengyi Petrochemical Co is set to start a smaller refinery in Brunei in the third quarter.

"The start-up of Rongsheng"s refinery in Zhoushan, near major oil-consuming cities such as Shanghai and Hangzhou, will intensify a price war among coastal refineries hoping to market fuel into urban areas," said Li Li, an analyst at commodities researcher ICIS-China. This will further squeeze the independent refineries and potentially lead to industry consolidation, she said.

Plans for a joint Saudi Arabia-China refining and petrochemical complex to be built in northeast China that were shelved in 2020 are now being discussed again, according tosources close to the deal. The original deal for Saudi Aramco and China’s North Industries Group (Norinco) and Panjin Sincen Group to build the US$10 billion 300,000 barrels per day (bpd) integrated refining and petrochemical facility in Panjin city was signed in February 2019. However, in the aftermath of the enduring low prices and economic damage that hit Saudi Arabia as a result of the Second Oil Price War it instigated in the first half of 2020 against the U.S. shale oil threat, Aramco pulled out of the deal in August of that year.

Between the end of the 2014-2016 Oil Price War and now, there have been multiple high-level visits back and forth between Saudi Arabia and China, beginning most notably with the trip of high-ranking politicians and financiers fromChina in August 2017 to Saudi Arabia, which featured a meeting between King Salman and Chinese Vice Premier, Zhang Gaoli, in Jeddah. During the visit, Saudi Arabia first mentioned seriously that it was willing to consider funding itself partly in Chinese yuan, raising the possibility of closer financial ties between the two countries. At these meetings, according to comments at the time from then-Saudi Energy Minister, Khalid al-Falih, it was also decided that Saudi Arabia and China would establish a US$20 billion investment fund on a 50:50 basis that would invest in sectors such as infrastructure, energy, mining, and materials, among other areas. The Jeddah meetings in August 2017 followed a landmark visit to China by Saudi Arabia’s King Salman in March of that year during which around US$65 billion of business deals were signed in sectors including oil refining, petrochemicals, light manufacturing, and electronics.

Later, the first discussions about the joint Saudi-China refining and petrochemical complex in China’s northeast began, with a bonus for Saudi Arabia being that Aramco was intended to supply up to 70 percent of the crude feedstock for the complex that was to have commenced operation in 2024. This, in turn, was part of a multiple-deal series that also included three preliminary agreements to invest in Zhejiang province in eastern China. The first agreement was signed to acquire a 9 percent stake in the greenfield Zhejiang Petrochemical project, the second was a crude oil supply deal signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, and the third was with Zhejiang Energy to build a large-scale retail fuel network over five years in Zhejiang province.

Thus, the healthiest sales increases seen in the Global Top 50 came from petrochemical companies. Sabic, Formosa Plastics, PetroChina, LyondellBasell Industries, and ExxonMobil Chemical all clocked in with sales increases of 40% or more. Also riding the crest of the commodity price wave are fertilizer makers such as Yara, Nutrien, and Mosaic, which posted astounding increases in sales.

A few companies in the 2021 ranking fell off in 2022 because they didn’t have enough sales to make the cut. These are the US petrochemical maker Westlake, the US agricultural chemical producer Corteva Agriscience, and the Japanese chemical makers Tosoh and DIC.

Two Chinese newcomers make the ranking: TongKun Group at 48 and Hengyi Petrochemical at 50. Both are polyester producers that make their own raw materials. Hengyi also has a large, integrated nylon 6 business. Both companies join similar Chinese firms, like Hengli Petrochemical and Rongsheng Petrochemical. All these companies have been building massive complexes for aromatics and derivatives, in many cases swamping entire segments of the chemical industry—such as purified terephthalic acid—with new capacity that is well beyond the scale of players outside China.

For the third consecutive year, BASF heads the Global Top 50. Because it has a home base in Germany, the company was strongly impacted by Russia’s invasion of Ukraine. BASF pledged in April to wind down operations in Russia and Belarus, which represent about 1% of its sales. The company says it will continue supplying agrochemicals to these countries to avoid disrupting the world’s delicate food supply chain. BASF has also been affected by the severe increase in European natural gas prices that the war has exacerbated. In March, BASF chairman Martin Brudermüller told a Houston audience at the IHS Markit World Petrochemical Conference that “European industry really has to rethink” its strategy, given its dependence on natural gas from Russia. The war has also affected the company’s Wintershall Dea energy joint venture, which has extensive operations in Russia. During the first quarter, BASF took a $1.2 billion write-off related to the cancellation of Nord Stream 2, a natural gas pipeline between Germany and Russia that Wintershall helped finance. BASF is also anticipating the coming energy transition. The company is carving out its emission catalyst business, which it acquired with its 2006 purchase of Engelhard. The move is a response to the dim outlook for internal combustion engine vehicles and could be a prelude to a sale. BASF has simultaneously been trying to grow as a producer of materials for electric vehicle batteries and aims to spend $5 billion on production capacity outside Europe.

In 2020, Dow revealed its aspiration to reach carbon emission neutrality by 2050, and at an investor event in October, it detailed its plans to get there. The company aims to spend $1 billion per year, about a third of its capital budget, to decarbonize its petrochemical sites around the world one by one. Topping that list is Fort Saskatchewan, Alberta, where in an industry first, the company will build a carbon-neutral ethylene cracker. An autothermal reformer will process the cracker’s off-gases to generate hydrogen that will be burned in the cracker’s furnaces instead of natural gas. Dow will capture the resulting carbon dioxide and inject it into Alberta’s CO2 pipeline for sequestration. Dow’s sustainability push extends beyond greenhouse gases and into plastic waste. At the October event, for example, the company said it would collaborate with Fuenix Ecogy to build a waste plastics pyrolysis plant in the Netherlands.

The Saudi giant Sabic has a large presence in Europe owing to its acquisition of petrochemical businesses from DSM and Huntsman more than a decade ago. And while the company gained a North American engineering polymer business in 2007 with the purchase of GE Plastics, a US toehold in petrochemicals has been more elusive. Sabic finally accomplished this long-term objective in January when its $10 billion joint venture with ExxonMobil Chemical, Gulf Coast Growth Ventures, started up near Corpus Christi, Texas. The venture produces ethylene and the derivatives polyethylene and ethylene glycol. The project is noteworthy because of how quickly it was erected: in just over 2 years. Some recent US petrochemical projects have experienced delays longer than that.

Formosa Plastics’ proposed $9.4 billion petrochemical complex in St. James Parish, Louisiana, suffered a major setback last year when the US Army Corps of Engineers ordered a full environmental review. That process could take longer than 2 years, according to local activists. The massive project, which would include an ethylene cracker, polyethylene plants, and other facilities, was originally unveiled in 2015. While the complex would be an important diversification move for the Taiwan-based company, S&P Global Ratings noted in a report in October that Formosa’s management could be reaching the end of its patience for delays and local opposition. “We see diminishing probability that the planned mega project in Louisiana will go ahead, given the changing political atmosphere in the U.S.,” the credit rating agency wrote.

Since its inception in the 1990s, Ineos has expanded by acquiring established divisions of large chemical companies. Most recently, in early 2021, it bought BP’s aromatics business, a major producer of purified terephthalic acid, for $5 billion. Since then, Ineos has been focusing on sustainability. In September, it announced a $1.3 billion plan to reduce carbon dioxide emissions by 60% at its Grangemouth, Scotland, petrochemical complex by 2030. It will do so by capturing the greenhouse gas and sending it to the proposed Acorn CO2 system, which aims to inject it under the North Sea. In October, Ineos said it plans to spend $2.3 billion on green hydrogen projects. It will construct a 20 MW electrolyzer, powered by alternative energy, in Rafnes, Norway. And in Cologne, Germany, Ineos wants to build a 100 MW electrolyzer that will make hydrogen for green ammonia. Separately, Ineos is installing a unit in Cologne to extract acetonitrile made during acrylonitrile production. Acetonitrile is a solvent used in butadiene extraction and in high-performance liquid chromatography. Its use is acutely growing as a solvent in the production of oligonucleotides for RNA vaccines.

PetroChina heaped on the growth in 2021, expanding by 42% from 2020 as China’s economy recovered from the effects of the COVID-19 pandemic. New projects in China will only further the company’s expansion. This year, it is due to complete the $10 billion Guangdong Petrochemical project. The massive effort includes a refinery, an aromatics unit, and an ethylene cracker. PetroChina has also finished work on an ethylene project in Tarim that will use domestically produced ethane as its feedstock. In Jieyang, an enormous $1 billion acrylonitrile-butadiene-styrene plant with 600,000 metric tons per year of capacity is in the works.

Over the past year, ExxonMobil has been advancing sustainability initiatives. In March, it unveiled plans to build a blue hydrogen facility at its refining and petrochemical complex in Baytown, Texas. The project would capture 10 million metric tons (t) per year of carbon dioxide generated in the hydrogen production process, reducing the site’s carbon footprint by 30%. The project would connect to a massive carbon-capture-and-storage hub in the region that ExxonMobil is spearheading. Also in Baytown, the company is building a facility that will use new chemical technology to recycle waste plastics. It hopes to process 500,000 t of plastics annually around the world by 2026 and is also considering projects in Canada, the Netherlands, and Singapore.

Within a year of taking over the helm of Japan’s largest chemical maker, CEO Jean-Marc Gilson, a veteran of Dow Corning and Roquette, launched a major restructuring initiative. Mitsubishi Chemical Group plans to carve out its petrochemical and coal-based chemical businesses as a separate company and then exit them by the end of its 2023 fiscal year. The units, which make olefins, polyolefins, and other bulk petrochemicals, generate about 20% of the company’s sales. Mitsubishi Chemical Group wants to focus on more specialized areas, such as electronic materials and the life sciences.

The expansion program at this Chinese firm is a good illustration of just how massively and systematically the Chinese petrochemical industry has been growing in recent years. For example, Hengli Petrochemical plans to bring on line 5 million metric tons (t) per year of capacity for the polyester raw material purified terephthalic acid (PTA) later this year in Huizhou, China. The company is building a 450,000 t plant to make poly(butylene adipate-co-terephthalate) (PBAT), which will consume some of the PTA as a raw material. Hengli is building a 300,000 t adipic acid unit, also to help feed PBAT production. And it is working on a big polyester fiber expansion and recently opened a large ethylene cracker.

The Indian conglomerate has abandoned plans to put its refining and chemical operations—which it calls Oil to Chemicals—into a stand-alone business. It also walked away from negotiations with Saudi Aramco to sell a 20% stake in the business for $15 billion. Instead, Reliance Industries is undertaking what may turn out to be an even bigger change in direction. Last year, it announced an ambitious goal to achieve net-zero carbon emissions by 2035. Reliance is setting aside 2,000 hectares of land at its massive Jamnagar refinery and petrochemical complex for factories that would make photovoltaic modules, batteries, electrolyzers, and fuel cells. Along these lines, Reliance bought Faradion, a British sodium-ion battery start-up, for $135 million. It will spend another $35 million to bring the new battery chemistry to market. It also purchased the Norwegian solar cell maker REC Group for $771 million.

The Chinese polyurethane and petrochemical maker has been rocketing up the Global Top 50 because of its prodigious growth in recent years. And 2021 was another enormous year for Wanhua Chemical—its revenues nearly doubled from 2020. Ambitious capital expansion projects have helped fuel the growth. In Yantai, China, it opened an ethylene cracker and derivatives plants and revamped methylene diphenyl diisocyanate production. In April, the company announced it would spend $3.6 billion to build a chemical complex in Penglai, China. The project, to be completed in 2024, will feature a propane dehydrogenation unit as well as downstream plants for polypropylene, propylene oxide, and other chemicals. The company also started producing cathode materials and the biodegradable polymer poly(butylene adipate-co-terephthalate).

A Rongsheng Petrochemical subsidiary, Zhejiang Petroleum & Chemical, started up the second phase of its massive refining and petrochemical complex in Zhejiang, China, in 2021. With capacity now doubled, the facility can process 40 million metric tons (t) of oil per year. The facility has a large petrochemical output: up to 6.6 million t of aromatics and 1.4 million t of ethylene per year. The expansion allowed the company to start making specialized polymers, such as acrylonitrile-butadiene-styrene and polycarbonate.

Asahi Kasei has been making a push into biobased chemicals. It plans to make the building-block chemical acrylonitrile from biomass-derived propylene at its Tongsuh Petrochemical subsidiary in South Korea. It will use a mass-balance approach, in which biomass fed into a conventional petrochemical plant is credited to a share of products that are made. And at a conference in Washington, DC, in March, company officials said Asahi would commercialize nylon 6,6 made with biobased hexamethylenediamine from Genomatica. Meanwhile, the Japanese company is exiting one of its old-line operations. In August, the company said it was leaving the clear styrene block copolymer business by 2023 because of deteriorating profitability.

In a transaction that will allow it to focus strictly on petrochemicals and polymers, Borealis received an $870 million offer in June for its nitrogen fertilizer business from the Czech agricultural conglomerate Agrofert. The business had sales of about $1.5 billion in 2021. The deal works out nicely for Borealis, which had an earlier overture of $520 million from EuroChem Group. Borealis walked away from that deal because of the war in Ukraine and EuroChem’s Russian connections. Borealis might have missed an opportunity to be affiliated with a high-end polymer business. OMV, the Austrian refiner that owns 75% of Borealis, put in a bid to purchase DSM’s engineering polymer business. But OMV lost out to a partnership between Advent International and Lanxess.

PTT Global Chemical rejoins the Global Top 50 after a 1-year absence. The Thai petrochemical maker made a major diversification play late last year when it purchased the German coatings resins maker Allnex for $4.8 billion from the private equity firm Advent International. Allnex has annual sales of about $2.4 billion. PTT’s backing, Allnex management hopes, will help it expand into Asia. In the US, PTT has had a large petrochemical complex on the drawing board since 2015. But its air permits from the state of Ohio expired in February. The company said at the time that it was seeking new permits that aligned with its goals of achieving net-zero carbon emissions by 2050. It subsequently unveiled a plastics recycling project for the state.

The main issue at Sasol for several years was a petrochemical complex in Lake Charles, Louisiana, that went $4 billion over budget and led to a major management shake-up. Another recent setback for the firm came in November, when South African regulators blocked the sale of its business in sodium cyanide to Draslovka, already a strong player in that field. Now there are signs of green shoots at the South African firm. Sasol and South Korea’s Lotte Chemical are studying the construction of a plant to make battery electrolyte solvents in Lake Charles or at Sasol’s complex in Marl, Germany. Sasol would provide the raw materials.

This is the first year in the Global Top 50 for Hengyi Petrochemical, a Chinese firm that primarily makes polyester and nylon 6. Hengyi affiliates recently started a massive refining and petrochemical complex in Brunei. The 2.1 million metric tons per year of p-xylene and benzene made in this new complex is being sent to China for conversion into the polyester raw material purified terephthalic acid and the nylon precursor caprolactam. The company is planning a second phase of the Brunei project, which will include an ethylene cracker and derivatives units.

Saudi Aramco today signed three Memoranda of Understanding (MoUs) aimed at expanding its downstream presence in the Zhejiang province, one of the most developed regions in China. The company aims to acquire a 9% stake in Zhejiang Petrochemical’s 800,000 barrels per day integrated refinery and petrochemical complex, located in the city of Zhoushan.

The first agreement was signed with the Zhoushan government to acquire its 9% stake in the project. The second agreement was signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, who are the other shareholders of Zhejiang Petrochemical. Saudi Aramco’s involvement in the project will come with a long-term crude supply agreement and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region.

An integral part of the project includes a third agreement with Zhejiang Energy to invest in a retail fuel network. The companies plan to build a large scale retail network over the course of the next five years in the Zhejiang province. The retail business will be integrated with the Zhejiang Petrochemical complex as an outlet for the refined products produced.

This section contains information and comments on China´s chemical industry, as posted from January 2020 onwards to December2021. Entries are not revised later. For older entries, see separate sections. For daily updates, please join the LinkedIn group "News and Trends in China´s Chemical Industry".

Comment MCC: The catalog includes 34 water-saving technologies in the petrochemical and chemical industry which range from very general ("chemical waste water recycling") to very specific ("a dry trapping device for isophthalonitrile")

Dec 06, 2021:During the period of the 14th Five-Year Plan, Jiangxi province has specific targets for the chemical industry, including 150 billion yuan for the petrochemical industry, 100 billion yuan for the fine chemical industry, 80 billion yuan for the new chemical materials industry, and 80 billion yuan for the chlor-alkali chemical industry.

Nov 29, 2021: The China Petroleum and Chemical Industry Federation is working on the establishment of a carbon accounting system for the petrochemical industry and related standards for carbon neutrality. The likely threshold for inclusion is annual carbon dioxide emissions of more than 26,000 tons in any year during 2013-2018. The Petrochemical Federation is conducting pilot projects in some sub-sectors such as oil refining, chlor-alkali, and calcium carbide.

Nov 25, 2021: Sinopec"s crude oil steam cracking to ethylene industrial test jointly developed by Beijing Research Institute of Chemical Industry, Engineering Construction Co., Ltd. and Tianjin Petrochemical Company showed a single-pass chemical yield of 48.24% based on crude oil.

Nov 11, 2021:While in 2019 about 60% of all petrochemical products in the Chinese market faced excess supply or severe excess supply, this share is expected to rise to 75% by 2025.

Oct 01, 2021:Shenghong Group"s Serbon Petrochemical and Iceland Carbon Recycling Company signed a contract in Beijing for a carbon dioxide capture and utilization project.

Sep 14, 2021:During the period of the 14th Five-Year Plan, Shandong province aims to reach an output value of the chemical industry of 2.65 trillion yuan, higher than Guangdong"s petrochemical industry scale of over 2 trillion yuan and Zhejiang"s 1.8 trillion yuan expectation.

Sep 13, 2021: Several private domestic companies including Zhejiang Hongji Petrochemical and Baofeng Energy have entered the field of metallocene polyolefins.

Comment MCC:The list reflects several trends - the growing relative importance of the Chinese companies (all 6 Chinese top 50 companies rose in the rankings), the growing importance of some of the independent players (e.g., Hengli rose from rank 27 to rank 14) and the strong position of Sinopec (ranked 2) and ChemChina (ranked 7, from8). It also raises some questions with regard to its accuracy. On rank 44, there is a new entrant, Shanghai Petrochemical. It is somewhat puzzling that this should be a separate entrant as it is a Shanghai-based petrochemical subsidiary of Sinopec and thus presumably already included with its sales in the Sinopec entry.

Sep 01, 2021:Saudi Basic Industries, a world-renowned diversified chemical company, and Fujian Petrochemical Group will establish a JV to build and operate a 40 bn Yuan petrochemical complex at the Gulei Petrochemical Base in Fujian Province, China. Planned output includes 1.5 million tons of ethylene as well as downstream production of PE, PP, PC and EG.

Aug 26, 2021:The Ministry of Industry and Information Technology announced the first batch of technologies and product catalogs encouraged to be promoted and applied by the petrochemical and chemical industries.

Aug 01, 2021: A recent report comparing the petrochemical industry in China and the US sees advantages for China related to low project investment costs, the concentration of downstream markets, and reduced operating costs due to large-scale optimization capabilities.

Comment MCC:The authors of the report believe that these advantages can compensate for the lack of local raw materials, and are particularly optimistic about the large integrated private companies such as Hengyi Petrochemical, Hengli Petrochemical, Rongsheng Petrochemical, Dongfang Shenghong.

Jul 09, 2021: Sinopec launched the construction of China"s first megaton-level CCUS (Carbon Dioxide Capture, Utilization and Storage) project, the Qilu Petrochemical-Shengli Oilfield CCUS project .

Jul 06, 2021: Kanghui Dalian New Material Technology Co., Ltd., a subsidiary of Hengli Petrochemical, plans to invest 1.8 billion yuan to build a 450,000-ton PBS biodegradable plastic project

Comment MCC: This is in line with government targets to finish relocalization of even the biggest chemical plants by 2025. It also offers PetroChina the opportunity to shift Dalian Petrochemical"s focus from being a fuel-based to a chemical-based refinery. This step will assure that the refinery will remain relevant even if the demand for fuel decreases.

Jun 13, 2021:Wanhua Chemical and Hengyi Group will cooperate in all aspects of petrochemical downstream industrial chain projects, research, and development, trade, overseas project operations, etc. Both parties will establish a JV in Brunei as the main investor to carry out cooperation business.

Jun 05, 2021: Several cities and provinces have set requirements for the operation time of coatings, chemical, petrochemical, and other production enterprises and the spraying process to reduce VOC emissions particularly during the hottest time of the day.

Comment MCC:As a consequence of government measures to promote biodegradable plastics, major petrochemical players such as Hengli now are entering the market despite these materials so far accounting for less than 1% of plastics consumption

May 13, 2021: Zhejiang province has issued the 14th Five-Year Plan for the petrochemical industry, aiming at increasing refining capacity of more than 100 million t/a, olefin capacity of 15 million t/a and aromatics capacity of 14 million t/a by 2025

May 08, 2021:The Oriental Fortune Research Center released the 2020 China Top 500 List of Listed Companies in Revenue. 23 chemical-related production companies are on the list: Sinopec, PetroChina, China Shenhua, Yanzhou Coal, CNOOC, Hengli Petrochemical, China Coal Energy, Rongsheng Petrochemical, Hengyi Petrochemical, Zhongtai Chemicals, Shanghai Petrochemical, Wanhua Chemical, Sinochem International, Yuntianhua, Xinfengming, Kingfa Technology, Huajin Co., Ltd., Donghua Energy, Huayi Group, Qixiang Tengda, Oriental Shenghong, Tianyuan Co., Ltd., Sinochem Fertilizer . Among them, Sinopec and PetroChina are ranked first and second, while Hengli Petrochemical, Rongsheng Petrochemical, and Kingfa Technology have risen by more than 20 places

Comment MCC: As the long-term future of the petrochemical industry will probably depend more on producing chemicals than fuel, Sinopec already adapts its portfolio accordingly in order to stay relevant. Of course, one could also call this "mission creep".

Apr 26, 2021:Many chemical plants of LG Chem, Yanshan Petrochemical, CNOOC, Fushun Petrochemical, Sinopec Mitsubishi and others are scheduled to be shut down for maintenance or under maintenance in May. May is historically the month with the highest overhaul intensity.

Apr 22, 2021: 6 Chinese companies (12%) are among the top 50 chemical companies listed by C&EN, namely Sinopec, Formosa Plastics, PetroChina, Hengli Petrochemical, Syngenta and Wanhua Chemical.

Comment MCC: Given that Sinopec"s EBIT in chemicals shrank by about 47% in 2020, the increased investment indicates a strong long-term focus on chemicals. Presumably, partly this is due to the partial shift of Sinopec"s focus on the hydrogen economy, which will have a much larger impact on fuel demand than on demand for petrochemicals.

Mar 27, 2021:SK Global Chemical has partnered with Chinese chemicals firm Zhejiang Satellite Petrochemical to build an eco-friendly packaging plant in Lianyungang, China (Chemical Technology). The 60/40 JV will produce ethylene acrylic acid (EAA), an adhesive copolymer widely used in packaging materials. The planned capacity is 40 kta.

Mar 24, 2021: In a recent speech, Fu Xiangsheng of the CPCIF discusses the challenges of the chemical industry to meet the "2030 peak carbon" and "2060 carbon neutrality" targets, pointing out that the petrochemical industry accounts for about 10% of all of China"s emissions.

Comment MCC:Interestingly, he sees the relatively low targeted GDP growth figure of 6% as an indicator of a shift from volume to quality. He also highlights the opportunities to innovate in the petrochemical industry, e.g., new technologies for energy conservation and emission reduction, new green technology, and the production of chemicals using carbon dioxide as raw materials.

Mar 02, 2021:Xu Wenhua, a representative of the Municipal People"s Congress, deputy secretary of the Party Working Committee of Ningbo Petrochemical Development Zone, promotes establishing a China Chemicals Futures Exchange in Ningbo.

Feb 17, 2021: Brand Finance, a brand valuation company, valued Rongsheng Chemical at number 11 of its most recent ranking of global chemical companies. The next Chinese entry is Xinjiang Zhongtai.

Comment MCC: According to the company, Rongsheng`s brand value is about 1.6 bn USD compared to leading BASF`s 7.3 bn USD. To me, the exercise of determining these values seems relatively murky, and I doubt anybody would pay that much for Rongsheng as a stand-alone brand name (BASF might be a different matter). Still, the valuation company achieves its goal of getting some publicity, such as getting mentioned in this post.

Comment MCC:This indicates a shift of profitability towards the more specialized, more downstream parts of the petrochemical value chain. Even within the chemical segment, this shift is visible as the annual operating income and profit of basic chemical products decreased (-5.2%, -2.6%) while that of pesticides (+6.1%, +0.5%) and specialty chemicals (+1.6%, +13.4%) increased.

Feb 07, 2021: Ongoing 2020 performance forecasts by domestic listed chemical companies show substantial increases in profit margin. For example, the profit of Rongsheng Petrochemical is expected to increase by about 230% yoy.

Jan 19, 2021:Hunan Province issued a "Five-Year Action Plan for the Industrial Chain of New Chemical Materials in Hunan Province (2021-2025)", focusing on new petrochemical synthetic chemical materials, fluorine chemical materials, functional coatings, new chemical materials, and rail transit applications. The target is to achieve a total output value of 120 billion yuan, with 480 new chemical material companies that have passed the certification, 3 companies with more than 10 billion yuan, and 20 companies with more than 1 billion yuan.

Comment MCC: While the rankings of the three major petrochemical SOEs are somewhat lower than before, several others have gone up the ranks, including Tianci Materials, Dongfang Shenghong, Xinyubang and Sankeshu. This indicates that the market views companies active in new materials and related areas very favorably.

Jan 12, 2021: According to a ranking of the world`s top brands, there are 10 oil and petrochemical brands among the top 500. Four of these are Chinese: Petrochina, Sinopec, CNOOC, Sinochem

Comment MCC: The activities of the major state-run petrochemicals will have a significant impact on China`s performance regarding carbon dioxide emissions, making this an encouraging development.

Dec 05, 2020:According to data from the National Enterprise Bankruptcy and Reorganization Case Information Network, in recent years there have been more than 4,000 bankruptcy cases in the Chinese chemical industry, including segments such as coatings, petrochemicals, coal chemicals, biochemicals, dyes and other fields.

Nov 28, 2020: Among the top 100 companies in the Yangtze River Delta, 11 are petrochemical and chemical companies, including Hengli Group ranked fourth

Nov 17, 2020: Shandong Provincial Development and Reform Commission published a list of 9 leading high-end chemical companies: Shandong Huifeng Petrochemical Group Co., Ltd., Shandong Shouguang Luqing Petrochemical Co., Ltd., Luxi Chemical Group Co., Ltd., Shandong Rongxin Group Co., Ltd., Shandong Shangshun Chemical Co., Ltd., Shandong Linglong tire Co., Ltd., Yankuang Lunan Chemical Co., foreshore Group Co., Ltd., Shandong Taihe water treatment Technology Co., Ltd .

Comment MCC:This is part of a policy of the provincial government to replace small independent refiners - some of which may have to close depending on their size - with large, integrated petrochemical complexes.

Comment MCC: Probably this number will be reduced in the future, following the lead of Shandong province, where only 85 of the original 199 chemical parks were identified as worth keeping. On the other hand, the current rate of petrochemical enterprises in chemical parks is only about 50%, meaning there will be much more demand for locations in parks if the relocation policy is to be implemented in full.

Oct 30, 2020: In the first half of 2020, the petrochemical industry"s operating income fell by 11.9%, total profits fell by 58.8%, and total imports and exports fell by 14.8%, a consequence of Covid-19.

Oct 29, 2020: Chen Jianhua and Fan Hongwei, the owners of Hengli Petrochemical, are the wealthiest Chinese with activities in the chemical segment. They rank no. 20 in the list of wealthiest Chinese people according to the "Hurun Rich List", with a wealth of 135 billion RMB.

Oct 25, 2020: In the first eight months of 2020, the number of enterprises above designated size in the petrochemical industry has decreased by nearly 500 while last year, the number of enterprises above designated size in the petrochemical industry dropped by 1,500.

Comment MCC:The list clearly shows that rich provinces coastal provinces such as Shanghai, Jiangsu and Zhejiang will primarily focus on higher-end, R&D-oriented specialties (with some exceptions for coastal petrochemicals) while the bulk of basic chemical production is to be done in inland provinces such as Anhui and in the Western provinces.

Oct 12, 2020: Hailun Petrochemical, a subsidiary of Sanfangxiang, plans to expand its current production capacity of 1.8 million tons of PTA to 5 million tons

Oct 03, 2020: According to the Ningbo Municipal Bureau of Economics and Information Technology during the "14th Five-Year Plan" period, Ningbo will invest nearly 400 billion yuan to build a batch of major new chemical materials projects and become a world-class green petrochemical industry cluster.

Comment MCC:The goal is to triple the current petrochemical output of the city. Ningbo is well placed, as environmental policy favors coastal sites over those on the Yangtze river. However, from the information available so far, it is hard to see what is particularly green about this plan.

Sep 29, 2020: Hengyi Petrochemical is planning to spend USD 13.65bn to build the second phase of a refinery and petrochemical complex in Brunei, adding (among others) 2.5 million t/a of PTA capacity.

Sep 28, 2020: Currently about 20 polycarbonate projects are in progress in China with a combined production capacity about 3.15 million tons per year, including Zhejiang Petrochemical and Pingmei Shenma, Cangzhou Dahua, Hainan Huasheng, Zhongsha Petrochemical, and Shell.

Comment MCC:This is increase supply security for these petrochemicals and includes activities in Russia (PE, PP, NBR), Saudi Arabia (YASREF refinery project), the Netherlands (VESTA liquid bulk storage project) and Singapore (lubricants plant and supporting jetty project)

Sep 13, 2020:In the first quarter of 2020, three private Chinese refining companies substantially increased their yoy net profits: Hengli Petrochemical (+324%), Rongsheng Petrochemical (+103%) , Hengyi Petrochemical (+83%).

Sep 09, 2020: Fu Xiangsheng of the China Information Weekly describes four main points of the upcoming 14th Five-Year Plan for the chemical industry: strengthening the overall power of the petrochemical industry, pursuing innovation and environmental improvement, focus on high-quality development, and dealing with both domestic and international markets (which includes the aspect of local self-sufficiency).

Aug 30, 2020: The trial against Baota Petrochemical Group Co., Ltd. and Sun Hengchao has started. Both are accused of bill fraud while some other people involved in the case are accused of bribery or accepting bribes.

Comment MCC:Sun Hengchao, the chairman of the privately owned Baota Petrochemical Group, had already been arrested in Nov 2018. Apparently, since 2013, Baota Petrochemical Group had experienced large-scale losses, which the chairman tried to cover up by establishing a finance company. As I am not an accountant, I will leave it at this rather superficial level.

Aug 27, 2020:Saudi Aramco has suspended plans to participate in a JV to build a $10-billion refining and petrochemicals complex at Liaoning, China, as the company cuts spending in response to continued low oil prices (Bloomberg)

Aug 13, 2020:BASF acquired alkoxylates production assets from Sinopec Shanghai Petrochemical Company (SPC). This includes SPC"s land, buildings and assets that are located adjacent to its facility in Jinshan, China.

Aug 11, 2020:After a hazardous chemical leakage event at Changlian Petrochemical in Jan 2020, the GM was barred from leading a production unit for 5 years.

Aug 11, 2020:Wanhua Petrochemical, a subsidiary of Wanhua Chemical, and ADNOC L&S, a shipping logistics company under the Abu Dhabi National Oil Company, announced the establishment of a strategic joint venture company AW Shipping

Aug 07, 2020: The Shandong Provincial Department of Industry and Information Technology announced the " Top 100 Shandong Private Enterprises in 2020 ". 32 were petrochemical and pharmaceutical companies.

Jul 29, 2020:The C&E 2019 list of the top 50 global chemical companies has four Chinese entries: Sinopec (2, same as in 2018), PetroChina (13, from 12 in 2018), Hengli Petrochemical (26, not listed in 2018) and Wanhua (32, from 40).

This low number of major domestic chemical companies indicates the relative fragmentation and lack of global reach of China`s chemical segment. It also means that the Chinese market is the one that will be the most fought over by the global players as it is fragmented and still shows strong growth compared to Western markets. While part of this growth is being captured by Chinese players such as Wanhua, which has become the world`s biggest MDI producer, and Hengli Petrochemical, which at rank 26 now ranks one higher than the chemical sales of a company as established and traditional as Bayer at 27, there is still substantial room for foreign players to increase their sales. This is particularly true in specialty chemicals, an area which is not the strength of any of the four Chinese players, though Wanhua is increasingly directing new investment in this direction.

Comment MCC: In this list, the chemical segment lags behind other segments by number of entrants, e.g. finance (76 companies), medical and biological (61 companies), information technology (59 companies), and electronics (46 companies). And excluding petrochemical companies, the biggest chemical player, Wanhua, only comes in at number 104. This indicates the relatively high degree of fragmentation and low relative market value of the chemical segment in China.

May 24, 2020: Shell and CNOOC will expand their petrochemical joint venture in Huizhou, China. The project will include a 1.5 million-metric-ton-per-year ethylene cracker, as well as styrene, propylene oxide, polyols, ethylene glycol, polyethylene, and polypropylene units (C&EN).

May 22, 2020: In 2019, among 325 major listed Chinese basic chemicals companies, Wanhua had the highest profit, reaching 10.1 billion RMB followed by Hengli Petrochemical with 10.0 billion RMB.

May 10, 2020:Among the listed companies in the Chinese basic chemical industry in 2019, Hengli Petrochemical ranked first in operating revenue of 101 billion yuan; Rongsheng Petrochemical ranked second with operating revenue of 83 billion yuan; and Hengyi Petrochemical ranked third in operating revenue with 80 billion yuan.

Comment MCC: That puts these companies solidly into the global top 100, even though none of them was included in the 2019 ICIS list of top 100 chemical companies. For example, Hengli Petrochemical would roughly rank no. 25, slightly below Shin-Etsu but above illustrious companies such as DSM and AkzoNobel.

margin of the petrochemical sector (which includes PX production) was as high as 22%, while that of other sectors was only 5%. Likely, this will strengthen the already strong believe among China`s chemical companies that upstream integration is almost always beneficial.

Comment MCC: Not surprisingly, Covid-19 had a substantial negative effect both on average MDI prices and on volumes sold. The much bigger impact on profits than on revenue is partly due to the high fixed costs of petrochemical business.

Apr 24, 2020: On April 22, the ExxonMobil Huizhou Ethylene Project with a total investment of 10 billion US dollars started construction in the Daya Bay Petrochemical Zone in Huizhou, Guangdong. The wholly foreign-owned foreign investment has a planned capacity of 1200 kt/a metallocene PE, 470 kt/a LDPE and 860 kt/a PP.

Mar 06, 2020: Wanhua and state-owned Fujian Petrochemical Group are setting up an 80-20 joint venture diisocyanate business. The JV will build a planned 400 kt/a MDI plant in Fuzhou.

Comment MCC: However, he also mentions some of the challenges to the industry, namely the competition from petrochemical products due to rising local refining capacity and low oil prices, and environmental issues. The latter seems particularly relevant as China aims to increase the sustainability of its economy. For example, coal-to-oil projects emit about 7-8 times more carbon dioxide than oil refining projects. Any expansion of coal chemical projects thus contradicts China`s efforts to protect the environment.

Comment MCC:From Jan to Oct 2019, sales of the petrochemical industry in Hubei province increased by 3.2% while profits increased by 25.3% year-on-year, indicating that the companies not closed down seem to profit from the government measures. On the other hand, 28% of the companies affected were closed down. Also, the funds budget looks relatively small, with only about 3 million RMB per company, which may be sufficient for some smaller upgrades but certainly not for a full-scale relocation.

Comment MCC: While this is somewhat below china GDP growth (6.2% in 2019, 5.7% forecast for 2020), it is still much higher than in the other big chemical markets. The relative increase of chemical growth compared to GDP growth (2020 vs. 2019) primarily reflects the localization of petrochemical production in China, a strategic objective of China`s government.

MOSCOW – Zhejiang Petrochemical, a private Chinese company, plans to commission a new polypropylene (PP) plant in Zhejiang Province (Zhejiang, China) in November this year, a source close to the company told NCT .

It was noted earlier that at the end of last year, the company began test production at refineries with a capacity of 400 barrels per day at the new Zhoushan petrochemical complex in eastern China and intends to increase its capacity utilization to 100% in the fourth quarter.

In addition, as noted earlier, Zhejiang Petrochemical plans to commission a new paraxylene plant at the site in the fourth quarter. The capacity of the new enterprise will be 4 million tons of paraxylene per year.

Private company Zhejiang Petrochemical is building a new petrochemical complex in eastern China. 51% of the company is owned by the majority shareholder of Rongsheng Petrochemical. Other shareholders are the Chinese Juhua Group and Tongkun Group.