Petrochemicals Giant Cooks Up Major Expansion for China Venture
* Memorandum of understanding will allow BASF to use its joint venture with Sinopec to invest in new ethylene cracker
* Deal also will explore opportunities in China’s electric-battery market, which is another area likely to see major growth in the future
(Beijing) — BASF SE has raised the stakes in its bet on China’s burgeoning petrochemicals market by announcing a major expansion of its joint-venture facility near Nanjing, Jiangsu province, as more international giants seek a foothold in the country.
The world’s biggest petrochemical company announced that it has signed a memorandum of understanding (MOU) with state-owned China Petroleum and Chemical Corp. (Sinopec) to use their existing joint venture to invest 50% in a new ethylene cracker capable of producing up to 1 million tons a year of the chemical, which is used to produce a wide range of plastics and solvents.
The rest of the investment will come from Sinopec’s wholly owned subsidiary, Sinopec Yangzi Petrochemical Co. Ltd.
The new cracker will expand production near the site of its current “verbund” model joint venture, which integrates the various stages of the production chain at one site. The MOU did not estimate a price for the project.
International petrochemical giants have been scrambling to take a larger share of the Chinese market this year. China is expected to account for a third of global petrochemicals demand over the next decade, according to IHS Markit, and analysts believe the international interest is being driven by companies looking to secure a market foothold at a crucial time.
At the same time, private companies are taking the lead in developing the market as the state-owned chemicals giants focus on improving environmental standards at their existing plants and on developing fuel to support China’s growing middle class, said Steve Jenkins, the vice president of chemicals, polymers and fibers consulting at Wood Mackenzie.
“BASF’s move to expand its chemicals footprint in China serves to secure a share of the largest global growth market for petrochemicals and at the same time strengthen key strategic ties with Sinopec,” Jenkins said. “The company is positioning itself to capture higher value consumer and industrial chemical markets in the future,” he added.
In July, BASF announced it will build a wholly owned petrochemical facility in Guangdong province that could cost up to $10 billion. In September, Saudi Basic Industries Corp. announced plans for a facility in East China’s Fujian province, while fellow Saudi Arabian company Saudi Arabian Oil Co. (Saudi Aramco) gave its backing to China’s largest independent refinery with $25 billion in East China’s Zhejiang province earlier this month.
Aramco’s investment in the Zhejiang Petrochemical Co. Ltd. refinery project is similarly motivated by a desire to establish a foothold in the market while providing a place for its crude oil sales, said Oceana Zhou, a senior writer with S&P Global Platts. “The investment will not only help it to secure crude sales but also allow it to share in the profits from the project, which enjoys large economic scale, as well as a good product slate and logistical location,” she said.
The BASF MOU also said it will explore opportunities in China’s electric-battery market, which is another area likely to see major growth in the future, Jenkins said. “Getting first-mover advantage could be key, especially in a market such as China, where long-term relationships are highly valued,” he said.Contact reporter Ke Dawei (email@example.com)
Jul 26 07:29 PM
Jul 26 06:04 PM
Jul 23 08:14 PM
Jul 23 06:25 PM
Jul 23 02:46 PM
Jul 22 07:00 PM
Jul 22 05:51 PM
Jul 22 04:59 PM
Jul 21 06:36 PM
Jul 21 05:33 PM
Jul 21 03:48 PM
Jul 20 08:43 PM
Jul 20 07:06 PM
Jul 20 05:27 PM
Jul 20 05:15 PM
- 1Japan Government Pension Fund Copycat Bucks Trend to Invest in China Debt
- 2Cover Story: The Rocky Path Facing Chinese Companies Tapping U.S. Markets
- 3Tsinghua Unigroup’s Bankruptcy Restructuring Sets Back China’s Chip Dreams
- 4Bankrupt HNA Group Struggles to Repay 60,000 Retail Investors
- 5Shenzhen Court Issues Landmark Ruling on Personal Bankruptcy
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas