Why Going Global Is Crucial for China’s Petrochemical Producers
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The Hengyi Petrochemical Brunei Duri Island Integrated Refining and Petrochemical Project in November 2019. Photo: Xinhua
China’s petrochemical companies should speed up their overseas expansions, with a focus on building up capacity to withstand fierce domestic competition and rising trade barriers, an industry group leader said.
“Internationalization has become a strategic choice for China’s petrochemical industry as it confronts global trade tensions and supply chain restructuring,” Fu Xiangsheng, vice chairman of the China Petroleum and Chemical Industry Federation, said at a press conference last week.
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- Chinese petrochemical firms are encouraged to expand overseas to counter domestic overcapacity and international trade barriers amid geopolitical tensions and supply chain restructuring.
- The U.S.'s "small yard, high fence" strategy and tariff hikes have led to China's retaliatory tariffs, impacting oil and gas prices and heightening trade frictions.
- Some companies have started overseas production, like Hengyi Petrochemical with its Brunei refinery, to exploit trade agreements and evade anti-dumping investigations.
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Who’s Who
- Hengyi Petrochemical Co. Ltd.
- Hengyi Petrochemical Co. Ltd. is partnering with the Brunei government to build a refinery. The initial phase, with an annual capacity of 8 million tons, began operations in November 2019, and expansion is underway. The company's initiatives are part of China's strategy to internationalize its petrochemical industry and mitigate trade challenges by leveraging overseas opportunities, aligning with China's broader efforts to expand amidst global trade tensions.
- Tongkun Group Co. Ltd.
- Tongkun Group Co. Ltd. is working with Xinfengming Group Co. Ltd. on a refining and petrochemical project in Indonesia's North Kalimantan province. Initially planned for a 16-million-ton capacity, they reduced it to 10 million tons and cut investment to $5.9 billion due to changing political and economic conditions.
- Xinfengming Group Co. Ltd.
- Xinfengming Group Co. Ltd. is a Chinese petrochemical company involved in a project with Tongkun Group Co. Ltd. to develop a 16-million-ton integrated refining and petrochemical facility in Indonesia's North Kalimantan province. As of May last year, they reduced the project's planned capacity to 10 million tons and cut the investment by over 30% to $5.9 billion due to changing domestic and international political and economic conditions.
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What Happened When
- By November 2019：
- The first phase of Hengyi Petrochemical Co. Ltd.'s refinery project in Brunei started running.
- May 2022：
- Tongkun Group Co. Ltd. and Xinfengming Group Co. Ltd. decided to cut their project's planned annual capacity and investment due to shifts in political and economic conditions.
- June 2023：
- Tongkun Group Co. Ltd. and Xinfengming Group Co. Ltd. announced plans for an integrated refining and petrochemical project in Indonesia.
- Since February 10, 2025：
- China imposed additional tariffs on selected U.S. products.
- This month in 2025：
- The U.S. announced tariff hikes on all imports from China, Canada, and Mexico.
- Before Last week in 2025：
- Fu Xiangsheng made remarks on internationalization of China's petrochemical industry.
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