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Industry News

This section contains information and comments on China´s chemical industry, as posted from January 2020 onwards. 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".

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Feb 28, 2021: China will have a total of 7.9 million tons/year of new PTA production capacity in the first half of 2021.This means that China's PTA production capacity in the first half of 2021 will increase by nearly 14% compared to 2020 (Platts)

Comment MCC: This will most likely mean lower operating rates as the growth of downstream demand lags behind PTA capacity growth.

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Feb 27, 2021: Sinopec plans to establish 1,000 hydrogen refueling stations or oil-hydrogen combined construction stations and 7000 distributed photovoltaic power generation sites.

Comment MCC: This is a massive number given that currently there are only about 476 hydrogen refueling stations worldwide, of which 104 are in China. Sinopec currently has 27 and thus has to add about 970 in the next five years to fulfil its plan.

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Feb 26, 2021: On June 30, 2020, an explosion occurred in a workshop of Jiangxi Songda Pharmaceutical Chemical Co., causing one death and direct economic loss of approximately 830,000 yuan.

Comment MCC: The investigation into the accident highlighted several failures including the use of plastic pipes for exhaust gas, the lack of static electricity removal measures and others. All these seem relatively obvious in retrospect, which may indicate that the current controls are still not strict enough.

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Feb 25, 2021: Jiangsu-based dyestuff producer Yabang will build several plants in a chemical park in Gansu province including a 400 kt sulphuric acid plant, 100 kt 20% nicotinic acid plant, 30 kt 65% nicotinic acid plant, 50 kt chlorosulfonic acid plant and a 10 kt sulfur trioxide plant.

Comment MCC: This is an example of an East China chemical company shifting its production to the west, where it is much easier to get chemical plants approved.

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Feb 24, 2021: Domestic titanium dioxide producer Lomon Baili has established a subsidiary which will focus on battery manufacturing and sales, electronic special materials research and development, manufacturing and sales, and recycling of waste power batteries for new energy vehicles. Another leading titanium dioxide company, China Nuclear Titanium Dioxide will invest in the construction of a 500,000-ton lithium iron phosphate project

Comment MCC: While there is some logic in these investments as titanium dioxide by-products can be used as raw material for lithium iron phosphate, overall this looks like a typical example of Chinese chemical companies rushing into hot new areas without necessarily having the competence to be successful. It is quite likely that many of these attempts will fail or at least lead to overcapacity.

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Feb 23, 2021: The National Development and Reform Commission has defined a list of non-degradable plastics which includes PE, PP, PS, PVC, EVA, PET.

Comment MCC: This is highly relevant as the use of biodegradable materials will become mandatory in some applications and provinces. While PBAT and PLA are biodegradable, PE - even if mixed with starch and degrading agent - is not. Upcoming regulation will thus boost the market for PBAT and PLA.

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Feb 22, 2021: The instrument maker Agilent Technologies has won a $1.25 million patent infringement judgment against J&X Technologies, a gas chromatography firm started in China by former Agilent employees (C&EN)

Comment MCC: This seems to be a straightforward case, particularly as J&X did not defend itself in court or respond in any way. However, it is still only a partial success for Agilent as it is not clear whether it will be able to enforce the judgement given that J&X is based in China.

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Feb 21, 2021: Planning targets related to the chemical industry have been suggested for the period of the 14th Five-Year Plan.

Comment MCC: Some of these are surprisingly specific - an example is the target to achieve a pass rate of ultra-thin bicycle tires of at least 98.5%

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Feb 20, 2021: In 2019, there were 3 549 enterprises above designated size in the rubber industry

Comment MCC: This is a decrease by 154 compared to 2015, or a decline by 4% - only a minor decline, indicating that the industry is still very fragmented and only gradually moving towards consolidation.

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Feb 19, 2021: According to Fu Chungan of the China Industrial Gases Industry Association, China`s gas industry should focus on three main issues during the period of the 14th Five-Year Plan: electronic gases, hydrogen, and equipment serving these two sectors.

Comment MCC: So far, only about 40% of the electronic gas products used in the domestic semiconductor industry have been localized while China depends on foreign companies for seven kinds of commodity gas products used in the semiconductor industry. Given the current focus on self-sufficiency, this explains the prioritization of electronic gases stated by Mr. Fu.

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Feb 18, 2021: Dong Zhanfeng of the Chinese Academy of Environmental Planning lists main thrusts to move the chemical industry towards green development. These include adaptation of a low-carbon system, focus on high-end products, introduction of carbon emission trading and improving governmental supervision.

Comment MCC: While overall, the objectives depicted remain somewhat vague, it is interesting to see that this academy seems to regard a carbon emissions trading market as having a substantial role in reducing carbon emissions by the chemical industry.

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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.

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Feb 16, 2021: Covestro is planning a new production facility for polyurethane dispersions (PUDs) at their Integrated Site in Shanghai

Comment MCC: This is a reaction to the ongoing economic growth in China, in particular for environmentally friendly coatings, such as the company`s waterborne products

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Feb 15, 2021: By the end of 2020, a total of 9 enterprises in Shandong stopped production of synthetic ammonia production with a combined capacity of 1.03 million

Comment MCC: This is part of an overall upgrading of the industry, which includes the elimination of backward technology and the replacement of coal-fired gas with tail gas from steel mills, leading to substantial improvements in energy consumption, waste water and carbon dioxide emissions.

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Feb 14, 2021: Sinochem International will invest in a project providing an annual output of 600,000 tons of PDH, 650,000 tons of phenol acetone, 240,000 tons of bisphenol A, 400,000 tons of PO and 150,000 tons of ECH.

Comment MCC: This seems to be a missed opportunity for Sinochem International to take a distinct positioning, e.g., in specialty chemicals, instead just replicating the projects of other companies.

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Feb 13, 2021: While China accounts for one fourth of the world's total plastic production, China's consumption of biodegradable plastics only takes up 4.6%.

Comment MCC: This is mainly due to the price of biodegradable plastics being close to twice that of traditional plastics. However, this may change as more and more provinces implement policies to reduce plastics pollution, such as the "Plan on Further Strengthening the Treatment of Plastic Pollution" in Shanghai

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Feb 12, 2021: For ethylene oxide, China`s capacity/demand ratio is 148%, the capacity utilization rate is 67%, and there is already overcapacity in 2020.

Comment MCC: In 2025, overcapacity will likely also exist for styrene, with a predicted capacity/demand ratio of 127%, while for other chemicals, the ratio will be somewhat more balanced: 89%, 68%, and 60% for polyethylene, EVA, and ethylene glycol, respectively.

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Feb 11, 2021: Jiangsu Province has made substantial efforts in reducing its number of chemical companies (from 4,022 to 2001) and chemical parks (closure of 13 parks) in the past few years.

Comment MCC: On the other hand, small and micro sized chemical companies still account for 90% of the total, and and official atlas of chemical safety risks shows that there are almost 10,000 companies using hazardous chemicals in the province. Thus, a substantial risk remains that will be hard to eliminate.

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Feb 10, 2021: WuXi STA, a subsidiary of WuXi AppTec responsible for pharmaceutical production, will acquire Bristol Myers Squibb's plant in Switzerland

Comment MCC: It will be interesting to see whether Chinese producers of APIs will follow a similar strategy, acquiring fine chemicals production sites in, e.g., Europe in order to shorten their supply chains geared towards local customers.

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Feb 09, 2021: Inner Mongolia Jiutai New Material Co. located in Tuoketuo Industrial Park, Hohhot is seeking to fill several positions for its planned production of 1 million tons of ethylene glycol.

Comment MCC: While these jobs are unlikely to be relevant for the readers of this blog, the job posting has a number of interesting aspects. One is that it indicates the shift of basic chemicals away from East China to less populated and coal-rich areas such as Inner Mongolia. The other is the relatively high salaries paid, ranging from an annual 150 to 500 k RMB. This probably reflects both a certain degree of scarcity of qualified personnel and the relatively low attractiveness of Hohot as a place for living.

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Feb 08, 2021: Operating income in China`s oil and gas sector fell by 17.6% in 2020, in refining it fell by 15.5% while in the chemical sector it fell by 3.6%. Profits dropped by 82.3% in the oil and gas segment, by 45.6% in refining but increased by 25.4% in the chemical sector.

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.

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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.

Comment MCC: This suggests a strong recovery of the industry in the second half of the year, particularly in the fourth quarter.

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Feb 06, 2021: Inner Mongolia Yitai Coal stopped a 2 million tons/year coal-to-liquid demonstration project .

Comment MCC: The company will continue two other coal-to-liquid projects but cites the slow progress in getting project approval and the worsening economics due to the low oil price and covid-19 as reasons to stop the project - reasons that are likely to be valid for many other coal chemical projects as well.

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Feb 05, 2021: According to Yu Hai, deputy general manager of Hainan Huasheng New Material Technology, the world's largest PC single unit of 2 x 260 will be put into production in the first half of 2021. The installation of the main equipment of the non-phosgene polycarbonate project has already been completed .

Comment MCC: This is one of the several new PC plants being established in China, with potentially disastrous consequences for the current Western players such as Covestro.

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Feb 04, 2021: In Jilin province, 10 existing chemical parks have passed the certification while 9 have not passed it. The parks that failed will have to rectify their deficiencies within a specified time, otherwise they will have to close down. Meanwhile, the Fujian Provincial Department of Industry and Information Technology announced the list of the first batch of chemical parks (chemical concentration areas), recognizing a shortlist of 9 parks. Guangdong province will close 4 chemical parks due to security risks, while another 30 will be retained.

Comment MCC: This points to the fact that even companies within chemical parks are not safe from closures. Companies should therefore pay close attention to their choice of chemical parks. The threat to individual chemical parks to be closed down is quite real despite the obvious negative impact on local economies.

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Feb 03, 2021: According to CCR, in the Chinese market for automotive coatings, the share of refinish will increase from 42% to 45% between 2019 and 2025. At the same time, the share of waterborne coatings will increase from 46% to 49%.

Comment MCC: This reflects some longer-term trends in China`s market for automotive coatings - the growing importance of the existing fleet compared to new vehicles, and the steady (though in some way, still rather slow) growth of environmentally friendly coatings.

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Feb 02, 2021: In January, Showa Electronics held a groundbreaking ceremony for its high-purity electronic gas expansion project in Shanghai Chemical Industry Zone. As the first project after the opening of the Shanghai Electronic Chemicals Zone, it will provide high-quality and stable materials for domestic chip manufacturing, OLED manufacturing, and other electronic industries.

Comment MCC: The project highlights the importance the Chinese government currently places on localizing the supply of electronic chemicals, which are regarded as strategically important.

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Feb 01, 2021: Sinopec aims to become the largest global supplier of hydrogen energy ( South China Morning Post)

Comment MCC: Of course, in a potential post-petroleum world, the current Sinopec would struggle to justify its existence. Thus the company is actively trying to find new roles in such a scenario.

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Jan 31, 2021: According to Xinhua, 1,084 small and medium-sized and large hazardous chemical companies with major risks as well as 39 large and extra-large hazardous chemical companies were relocated

Comment MCC: While this number sounds large, it is small compared to the overall number of chemical companies in China (about 25,000 with sales above 20 million RMB), indicating that there is substantially more relocation work to be done. For example, the 39 relocated large enterprises are part of a total of 87 such companies, indicating that 48 such companies may still need to be relocated. In addition, the information by Xinhua is confusing as other press releases talk about 8,000 chemical companies having been relocated in the Yangtze River area alone (though presumably this includes even smaller companies and production sites).

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Jan 30, 2021: 17 petroleum and chemical companies, chemical parks, and China Petroleum and Chemical Industry Federation signed and jointly issued the "China Petroleum and Chemical Industry Carbon Peak and Carbon Neutral Declaration" in Beijing.

Comment MCC: This declaration contains a number of commitments including the promotion of clean and low-carbon energy, the improvement energy efficiency, increased supply of high-end and green chemical products, increased carbon capture, and increased relevant R&D. Of course, with such broad declarations, it is hard to say to what extent these are bona fide objectives of the participants or rather just statements to satisfy the Chinese government.

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Jan 29, 2021: On the evening of January 7, 2021, Hunan Bangpu Recycling Technology had a fire and explosion accident due to the fire of waste aluminum foil in the waste dumping workshop

Comment MCC: Apparently, the explosion happened after local staff tried to extinguish the fire using water, which of course is the wrong thing to do with aluminum. This indicates that training of the local staff in emergency response was not done well, despite the government focus on production safety.

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Jan 28, 2021: LyondellBasell and Sinopec announced a 50:50 joint venture company to expand the production of propylene oxide and styrene in Ningbo

Comment MCC: Every now and then, it seems like JVs are gone for good. Announcements such as this one show that such statements are premature.

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Jan 27, 2021: The Ministry of Commerce, the General Administration of Customs, and the Ministry of Ecology and Environment jointly announced the "List of Prohibited Import Goods (Seventh Batch)" and "Prohibited Export Goods (Sixth Batch)". These lists prohibit the import and export of 35 chemicals such as the pesticides chlordane and mirex as well as mercury-containing disinfectants and pentachlorobenzene

Comment MCC: This is to implement the Stockholm Convention on Persistent Organic Pollutants and the Minamata Convention on Mercury.

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Jan 26, 2021: Sinopec Shanghai began the construction of a 48K large-tow carbon fiber project, an investment of 3.5 billion RMB with a scheduled completion in 2024 (Shanghai Daily)

Comment MCC: This will reduce China`s dependency on imports of this material from the US and Japan, which is important for China due to the many high-tech applications of 48K large-tow fiber in aerospace, automotive and military applications.

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Jan 25, 2021: China’s 2020 polyethylene (PE) demand growth over 2019 averaged 10% across the three grades. This comprised a 13% increase in demand for high-density PE (HDPE), a 2% decline in demand for low-density PE (LDPE) and a 13% rise in linear-low density PE (LLDPE) demand (ICIS/Richardson)

Comment MCC: This is indeed a high growth rate given the extraordinary circumstances of 2020.

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Jan 24, 2021: The production license of Anhui Bayi Chemical Co., the largest manufacturer of nitrochlorobenzene in China , was cancelled, and the application for renewal was not approved.

Comment MCC: The domestic annual production capacity of nitrochlorobenzene is about 830 kt. Bayi Chemical has an annual production capacity of 320 kt, accounting for about 39%, ahead of Sinopec Nanjing Chemical Industry (150 kt), Yangnong Chemical Group (100 kt) and others (CICC). While Bayi is working on a new plant, it will not become operational until later this year. In the meantime, nitrobenzene prices are expected to rise.

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Jan 23, 2021: Shandong province has 84 chemical parks which host 30% of the chemical enterprises above designated size, contribute more than 70% of the industry output value, and undertake more than 90% of new projects.

Comment MCC: While the number of enterprises in parks is still low, the large share of new projects located there indicates the strong government objective to shift chemical activities to such parks

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Jan 22, 2021: Mengbaihe Home Furnishing Technology won an anti-monopoly case against four domestic producers of TDI, which were ordered to compensate the plaintiff for economic losses.

Comment MCC: While the plaintiff is happy with the outcome in principle, the company will appeal as the economic losses estimated by the court were presumed to be too low. Finding this news in the Chinese news seems to represent official support for such anti-monopoly action, as the news quotes positive reactions.

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Jan 21, 2021: The China Petroleum and Chemical Industry Federation issued the 14th Five-Year Plan Development Guide for the Petroleum and Chemical Industry. Establishing a targeted self-sufficiency rate for new chemical materials at the end of the 14th Five-Year Plan of 75%

Comment MCC: Key chemical areas to be promoted include high-end polyolefins, engineering plastics, high-performance fluorosilicon materials, high-performance membrane materials, electronic chemicals, bio-based and degradable materials, and key raw materials such as adiponitrile, high-carbon alpha-olefin comonomers, metallocene catalysts, etc. The guidelines also highlight polycarbonate, polyoxymethylene and other engineering plastics, special resins and degradable materials, carbon fiber, para-aramid and other high-performance fibers, perfluorinated ion exchange membranes, high flux nanofiltration membranes, and membranes for lithium batteries. These are all areas that can expect political support in the future.

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Jan 20, 2021: China's sales of storage batteries to power new energy vehicles rose 56.9 percent year on year in December (Xinhua)

Comment MCC: Obviously, this makes China by far the most important and fastest-growing market for chemical materials required for these batteries.

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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: It is still sometimes surprising to me how much of China`s policy is happening on the provincial level. Presumably, this allows the country to try different approaches in different places, though in reality provincial policies tend to be relatively similar from place to place, at least on paper.

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Jan 18, 2021: For anode, cathode and separator material and electrolytes for lithium-ion batteries, Chinese enterprises have a combined global share between 60% and 70% (Nikkei)

Comment MCC: China is quite successful in positioning itself as a leader in the field of electric vehicles and the associated chemical products.

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Jan 17, 2021: Wanhua Chemical`s 2020 net profit is expected to be about 5% lower than in the previous year.

Comment MCC: At the same time, the stock market value of Wanhua rose further and reached 300 billion RMB, indicating that the market sees the 2020 profit as satisfying given the circumstances.

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Jan 16, 2021: 27 companies related to the chemical business have entered the list of the top 500 Chinese companies by market value in 2020 list.

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.

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Jan 15, 2021: According to Luo Guosan, director of the Department of Basic Affairs of the National Development and Reform Commission, more than 8,000 chemical companies along the Yangtze river have been relocated.

Comment MCC: This is another indication that the current environmental efforts of China`s government are to be taken seriously, even if this does some damage to the economy.

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Jan 14, 2021: China`s producers of epoxy resins achieved an estimated operating rate of about 66% in 2020. However, local production cannot meet the demand for high-end epoxy resins for use in, e.g., aviation and wind turbines.

Comment MCC: At the same time, there are substantial capacity additions planned which are to increase domestic capacity by about 50%. Without an upgrade of products to allow import replacement, this will lead to substantially lower utilization rates.

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Jan 13, 2021: The production equipment of the 300,000 tons/year ethylene glycol project of Inner Mongolia Cornell Chemical Industry Co., Ltd. will be auctioned off

Comment MCC: This is the consequence of the company going bankrupt - not very surprising given the economics of such projects in times of low oil prices.

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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: Though 4 out of 10 indicates a relatively strong standing of the Chinese players, none of these four are among the top 4 - these positions are held by Western companies such as Shell.

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Jan 11, 2021: In early November, the eight major Chinese shipping hubs, including Shanghai and Ningbo, saw container throughput rising by 13.1 percent year on year, according to China Ports and Harbors Association data. Container throughput for foreign trade increased by 11.5 percent from a year earlier (Xinhua)

Comment MCC: Another indicator of the economic recovery, and possibly also of the even greater dependence on exports from China in countries struck by Covid-19.

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Jan 10, 2021: China remains strongly dependent on imports of POM - an estimated 48% of 2020 consumption will come from imports.

Comment MCC: China`s capacity of about 410 kt is sufficient to produce about 338 kt of POM, a high utilization rate of 82% by Chinese standards, but the government will certainly promote further buildup of domestic capacity.

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Jan 09, 2020: Shandong province currently has 2,847 chemical companies above designated size in the province, of which 4 are over 50 billion yuan and 47 are over 10 billion yuan.

Comment MCC: Shandong is still the leading producer of chemicals in China despite focusing more on commodities than Eastern China. For the province, chemicals are vital as they account for about 25% of regulated industries.

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Jan 08, 2021: On December 26, 2020, the 24th meeting of the Standing Committee of the 13th National People's Congress passed the "Law of the People's Republic of China on the Protection of the Yangtze River". Primarily, the law forbids to build or expand chemical parks and chemical projects within one kilometer of the shoreline of the Yangtze River's trunk and tributaries

Comment MCC: Some of the fines listed for violating the regulations still seem on the low side, being apparently limited to a 2 million RMB maximum

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Jan 07, 2021: On December 23, 2020, Jiangsu Huaer Chemical Co., Ltd. passed the on-site inspection by relevant departments of Guannan County. The company will resume production after obtaining the approval of the municipal chemical industry safety and environmental protection improvement leading group.

Comment MCC: The company had to suspend production in May 2019 due after a failed safety investigation. In November 2020, the company announced progress, which was now followed by passing the inspection.

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Jan 06, 2021: Shandong Yuhuang Chemical announced to creditors a draft of its bankruptcy settlement agreement.

Comment MCC: Bankruptcies now also affect relatively large companies such as Yuhuang, which is ranked among the "Top 500 Chinese Enterprises". Similarly, domestic fertilizer producer Jin Zhengda also filed for bankruptcy in December.

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Jan 05, 2021: From January to November 2020, there were a total of 127 chemical accidents and 157 deaths across the country, a decrease of 16 and 96 people from the same period last year, down 11.2% and 37.9% respectively.

Comment MCC: However, whenever accidents happen, the analysis of the causes tends to indicate relatively broad neglect of regulation rather than just an accumulation of bad circumstances - so there is still a lot of progress to be made.

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Jan 04, 2021: China accounted for 48% of the global consumption of boron carbide (CCR).

Comment MCC: Many markets for chemicals used in industrial goods (such as abrasive materials, the main application of boron carbide) are even more dominated by China than the global chemical industry as a whole, of which China accounts for about 38%. Another typical aspect is that domestic output reached less than 40% of capacity.

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Jan 03, 2021: The National Development and Reform Commission and the Ministry of Commerce issued the "Catalogue of Industries Encouraging Foreign Investment (2020 Edition)"

Comment MCC: Within the field of chemical products, the catalogue includes materials such as
high-purity electronic grade hydrofluoric acid, hydrogen fluoride, special glass fiber, polarizer base film, diffusion film, masks, polyethylene polyamine, high-performance fiber, etc., thus emphasizing China`s objective of getting more self-sufficient in areas deemed strategic for the country, such as electronic materials.

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Jan 02, 2020: Global investment bank Torreya released the "Global 1000 Top Pharmaceutical Companies Report", of which 208 are Chinese.

Comment MCC: However, only one of the Chinese companies is among the top 25, Hengrui at no. 21.

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Jan 01, 2021: With efforts from both sides, negotiations on China-EU investment agreement have seen major progress with promising prospects, a Chinese foreign ministry spokesperson said (Shanghai Daily)

Comment MCC: This could give European firms - including chemical ones - better access to the Chinese market, better competition conditions and protections for investments.

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Dec 31, 2020: Yongcheng Coal last month failed to repay a bond valued 1 bn RMB (Caixin)

Comment MCC: The probable root cause is that Yongcheng produces ethylene glycol from coal, a process that at current low oil prices is not competitive with oil-based production. This is despite China consuming about half of the world`s global amount of ethylene glycol.

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Dec 30, 2020: The Shanghai Chemical Industry park will establish an electronic chemicals zone of Shanghai Chemical Industry Park to focus on the development of three categories of products including photoresist and supporting materials, electronic special gas and wet electronic chemicals.

Comment MCC: This is to increase the self-sufficiency for these chemicals. The target is to achieve 70% self-sufficiency in chemicals for integrated circuits in 2025 and 90% in 2030.

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Dec 29, 2020: Two subsidiaries of Yabang, namely Jiangsu Jiamai Chemical and Lianyungang Yabang Acid Manufacturing, will be expelled from Jiangsu Lianyungang Chemical Industrial Park for not meeting the requirements of the park's future industrial chain integration development.

Comment MCC: The companies will receive a substantial compensation of about 300 million RMB - it seems the park is quite clear about its development objectives, and willing to pay for moving towards them.

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Dec 28, 2020: The Producer Price Index for the chemical industry in China rose by 2.2% mom but declined by 3% yoy in November.

Comment MCC: This is comparable to the overall Producer Price Index for Industrial Products (+ 0.5% mom, -1.5% yoy)

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Dec 27, 2020: The Shandong Provincial Chemical Special Action Office issued an announcement on the elimination of refining capacity below 2 million tons. 13 enterprises with a refining capacity of less than 2 million tons had been dismantled.

Comment MCC: This is a reminder that apart from improving environmental protection, the other main thrust of China`s current policy affecting the chemical industry is one towards the reduction of capacity and particularly the decrease in fragmentation, to be achieved by elimination of smaller players.

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Dec 26, 2020: China's electricity consumption rose 9.4 percent year on year in November

Comment MCC: Probably Li Keqiang would agree that this is a sign of a solid recovery from Covid, even though some business segments such as tourism still suffer.

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Dec 25, 2020: Air Liquide signed a cooperation agreement with Sichuan National Nuclear Guoxing Technology to develop the hydrogen energy industry chain in SW China.

Comment MCC: While personally I still have my doubt about nuclear energy, reputable sources such as the Economist see it as a valuable tool in reducing global warming. The use of nuclear energy to produce hydrogen without carbon dioxide emissions could indeed further reduce global emissions in some applications for which the direct use of electricity is not feasible.

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Dec 24, 2020: Guangdong province issued a Carbon Emission Quota Allocation Plan which includes coverage of 12 petrochemical companies.

Comment MCC: As the percentage of free quota is 97% of the historical emissions, the initial impact will be low but it is a starting point that may lead to broader measures eventually.

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Dec 23, 2020: China`s capacity of adipic acid is almost double its production, and self-sufficiency in 2018 was 134%. Or in other words, less than 40% of China`s capacity are needed to for domestic consumption.

Comment MCC: A situation that is a bit extreme but otherwise not untypical for commodity chemicals in China. No wonder that Western chemical companies try to exit such markets.

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Dec 22, 2020: Japan and China will launch a joint project to create one of the world's largest methane production facilities in northern China that reuses carbon dioxide and surplus hydrogen from industrial production in the Yulin Economic and Technological development zone in Shaanxi Province (Nikkei)

Comment MCC: It is good to see this kind of cooperation to work on climate change, though conversion into methane is probably not a suitable solution to atmospheric carbon dioxide content due to the limited availability of hydrogen.

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Dec 21, 2020: The list of China's top 100 fine chemical firms includes 77 enterprises in east China, 14 in central China, seven in west China and two in northeast China. The top three companies in the list are Zhejiang Longsheng, Zhejiang NHU and Hebei Chengxin.

Comment MCC: This shows that fine chemicals are concentrated in Eastern China. Generally, these companies are doing well, with revenue up by 7% in 2019, and are spending a relatively large share of sales (4.1%) on R&D, giving them good prospects for the future.

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Dec 20, 2020: China aims to restrict the use of plastic, particularly the use of disposable plastic products.
Among the measures taken are bans on importing waste plastic, on non-degradable plastic bags in supermarkets, on disposable tableware, and on express plastic packaging, effective between 2020 and 2025 depending on the province and type of plastic.

Comment MCC: This should have a material effect on sales of such plastics - and also on the sales of alternatives such as degradable plastics.

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Dec 19, 2020: Chinese chemical company Hongda Xingye Group failed to repay a 950 million yuan bond but avoided getting it labeled a default by having more than 90% of the bondholders accept a cancelation of the bond.

Comment MCC: The company`s activities mostly are in the Chloralkali value chain and include caustic soda, PVC and calcium carbide, all fragmented, competitive markets with overcapacity.

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Dec 18, 2020: The Jiangsu Provincial Emergency Management Department recently cancelled the "Safety Production License for Hazardous Chemical Production Enterprise" for 88 hazardous chemical manufacturers

Comment MCC: The success of China`s environmental protection and safety improvement depends on its penetration to the local level. It seems that at least it has already reached the central and provincial level by now.

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Dec 17, 2020: Sinope has established strategic cooperation with three top institutions to achieve a CO2 emissions peak before 2030

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.

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Dec 16, 2020: The Ministry of Ecology and Environment, the National Development and Reform Commission, the Ministry of Public Security, the Ministry of Transport and the National Health Commission have revised and released the "National Directory of Hazardous Waste (2021 Edition)"

Comment MCC: One interesting aspect of the scope clarification in the list - at least for chemists - is the distinction between hazardous chemicals and hazardous waste. While for example liquid oxygen and liquid nitrogen are certainly hazardous chemicals, they can be discarded without creating hazardous waste.

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Dec 15, 2020: In Jiangsu, 1116 illegal chemical companies have been shut down, reducing the number of hazardous enterprises by about 28%.

Comment MCC: As elsewhere, the measures focus on small companies as these are both disproportionally unsafe and contribute relatively little to the overall economy.

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Dec 14, 2020: According to ICIS, in PP, China's share of global net imports is estimated at 43%, at 69% for SM and at 90% for PX.

Comment MCC: This highlights the danger for export-oriented producers outside of China as the country increases its self-sufficiency

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Dec 13, 2020: China's manufacturing purchasing managers' index rose from 51.4 in October to 52.1 in November, the highest in more than three years

Comment MCC: Another indication that China is recovering from covid-19 shutdowns

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Dec 12, 2020: The Intermediate People's Court of Yancheng City, Jiangsu Province dealt with 22 cases involving the "3.21" mega-explosion accident of Jiangsu Xiangshui Tianjiayi Chemical Co., Ltd. A total of 60 defendants were sentenced.

Comment MCC: This large number of sentences indicates either very extensive breaches of regulation or a rather broad perspective of responsibility (or both)

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Dec 11, 2020: On September 14, 2020 , a large hydrogen sulfide gas poisoning accident occurred in the sewage treatment plant of Zhangye Yaobang Chemical Technology located in Yanchi Industrial Park in Gaotai Industrial Park , Gansu , causing 3 deaths.

Comment MCC: An investigation of the accident determined that the company conducted illegal trial production and operated an illegal waste water treatment process. As before, the main issue thus is strict implementation of existing laws rather than a lack of laws in the first place.

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Dec 10, 2020: For its Shanghai production, Tesla is in the process of localizing its supply chain, including companies such as Huayu Automobile (seats, bumpers, battery boxes, etc.) Tuopu Group (interior parts, chassis, subframes, etc.), Ningbo Huaxiang (Interior and exterior decoration) Sanhua Intelligent Control (thermal management components) Xusheng Co., Ltd. (aluminum alloy high-pressure casting parts) Joyson Electronics (BMS system, interior and exterior decoration system) Fuyao Glass (automotive glass) Daimei Co., Ltd. (Sun visor) Hongfa (relay)

Comment MCC: In turn, these suppliers are more likely to source their chemical raw materials locally, potentially increasing the domestic demand for these chemicals and shifting demand to local chemical companies.

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Dec 09, 2020: According to the statistics of the Key Laboratory of Fine Chemicals, the rate of fine chemicals in developed countries such as Europe, the United States, and Japan is as high as 68% to 69% in 2018 while in China, the rate is only about 45%

Comment MCC: This is a big reason for the annual chemical trade deficit of 283.3 billion U.S. dollars in 2018, 268.3 billion U.S. dollars in 2019, and 103.07 billion U.S. dollars in the first half of 2020. Gaps are particularly evident in areas such as innovative pesticides, coatings, paper chemicals, adhesives, electronic chemicals and chemical reagents

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Dec 08, 2020: The Ministry of Ecology and Environment accepted and publicized the "Environmental Impact Assessment Report of China Coal Yulin Coal Deep Processing Base Project". The project uses coal as the raw material to produce 2 million tons/year methanol, 350,000 tons/year poly Ethylene, and about 400,000 tons/year polypropylene

Comment MCC: This is an expansion of an existing project of similar size, which was completed in July 2014, presumably indicating that the existing project is deemed successful.

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Dec 07, 2020: According to the US Environmental Protection Agency, the herbicide glyphosate is likely to adversely affect 93% of threatened and endangered species despite having little acute toxicity to animals.

Comment MCC: Such findings may lead to ever-tightening restrictions on the use of glyphosate. This could considerably lower sales of the herbicide, which accounts for a substantial share of sales of several Chinese pesticide producers.

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Dec 06, 2020: According to the International Energy Agency, while the United States has been the country with the largest global oil refining capacity for the past half century, China will surpass the United States as early as next year.

Comment MCC: As refineries are also the start of many important chemical value chains, this suggests that China`s share of global chemical production will increase further.

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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.

Comment MCC: A field particularly affected is coatings, where the switch to environmentally friendly products pushed many companies to rapidly enter the field without sufficient knowledge. Overall, customers and suppliers particularly to smaller chemical companies in China need to be aware of the risk of bankruptcy.

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Dec 04, 2020: India has extended anti-dumping tariffs on imports of fluoroelastomers from China by 5 years beginning November 27. India had first imposed the responsibility in January 2019, which was prolonged in July these 12 months until October 27, then to November 27.

Comment MCC: Antidumping tariffs are always primarily politically motivated, not economically. Given the current tensions between China and India, these duties thus are not surprising.

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Dec 03, 2020: The establishment of 5G networks will substantially increase the demand for high-end engineering plastics such as polyphenylene sulfide, polyimide, polysulfone, aromatic polyamides, polyarylate, polyphenylester, polyether ether ketone, liquid crystal polymers and fluororesins

Comment MCC: This explains some of the recent antidumping measures of the Chinese government, e.g., as applying to PPS. The government wants to ensure that China does not substantially depend on imports for materials vital for 5G networks.

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Dec 02, 2020: According to Du Xiangwan of the Chinese Academy of Engineering, China's energy consumption per unit of GDP is still 1.5 times the world average, and therefore energy-saving and efficiency improvement is the most important pathway to reducing China`s carbon footprint

Comment MCC: This should be good news for the large variety of chemical materials (such as polymers, catalysts, and lubricants) that help reduce energy consumption

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Dec 01, 2020: China has an estimated 70 domestic polyimide film producers (CCR)

Comment MCC: Despite (or maybe because of) this large number, China` producers mainly serve the lower end of the market. They mostly have small production capacities of only around 100 t/a each, a utilization rate of only around 60%, and an annual combined output of electronic grade PI film below 1 kt, indicating their low average quality and scale.

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Nov 30, 2020: While China`s self-sufficiency for polycarbonate currently is only about 50%, many plants are currently being built and started up.

Comment MCC: As a consequence, domestic Chinese PC capacity will probably exceed domestic consumption within a few years, putting pressure on global markets as Chinese producers seek exports. Not a very promising perspective for companies such as Covestro.

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Nov 29, 2020: Chinese chemical producer prices declined by 6% year on year in October 2020.

Comment MCC: This is to a large extent due to the decline in oil prices - the Producer Price Index for petroleum and gas extraction declined by 30% in the same period.

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

Comment MCC: This shows that this industry is still quite important for the region, even though it seems to face tightening restrictions.

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Nov 27, 2020: On November 17, 2020, an explosion occurred at Ji'an Haizhou Pharmaceutical and Chemical Co., Ltd., located in Futan Industrial Park, Jinggangshan Economic and Technological Development Zone, Ji'an City, Jiangxi Province, causing 2 deaths and 6 injuries. As a consequence, the Ji'an Emergency Bureau revoked the Haizhou Pharmaceutical Company's safety standardization three-level certificate and suspended production.
The main products of the company include ethyl formate, p-toluene sulfonylurea, hexamethylphosphoric triamide, mehedralin naphthalene disulfonate, and cyclopropyl Methyl ketone and tert-butyl dimethyl chlorosilane.

Comment MCC: According to an initial investigation, three problems were identified so far - limited safety awareness of the person responsible for these matters, lack of risk control and lack of change management. Which to some extent makes one wonder how this company got its production license in the first place.

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Nov 26, 2020: In October 2020, year-on-year exports from China increased substantially in a number of segments, e.g., garments and clothing accessories (+6.8%), home appliances (+39.6%), plastic products (+34.6%), auto parts (+18.8% (J. Miller/TDM, J. Richardson/ICIS)

Comment MCC: Of course, this boosts demand for the chemical raw materials needed to produce these export materials.

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Nov 25, 2020: The Chinese Academy of Sciences released the "Research Frontiers 2020" report. In the field of chemistry and materials science , the Top 10 frontiers are in organic synthesis, optical materials, gas separation and purification, energy storage materials, battery materials, and two-dimensional materials. Specifically highlighted are the preparation and application of catalysts, batteries, nano-biomaterials, biodegradable materials, chemical processes and wastewater treatment.

Comment MCC: This offers information on which areas the government will favor in the 14th Five-Year Plan, and thus on areas that companies might focus on as well

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Nov 24, 2020: Guangxi province has approved a first batch of 11 chemical parks

Comment MCC: More and more provinces follow Shandongs example to gradually approve some qualified chemical parks. This will also mean that some parks will not qualify and will eventually be forced to shut down. Companies active in chemical parks not on the earlier list of approved parks therefore are in danger of losing their production site.

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Nov 23, 2020: Four months after the first trial in June, the Puyang Intermediate Court found that Defeng Chemical had illegally disposed waste acid, causing serious pollution of water bodies in Puyang, and sentenced it to compensate Puyang Municipal Government for emergency disposal fees, evaluation fees, and environmental damage compensation fees totaling 5,516,394 yuan.

Comment MCC: This is the amount claimed by the government, indicating that the court fully sided with the claimant and against the chemical company.

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Nov 22, 2020: Between 2015 and 2019, the operating rate for China`s PPG production has increased from about 56% to 62% as output grew faster than capacity increases.

Comment MCC: However, there will be substantial capacity expansions in the period from 2020 to 2024 while further domestic growth will be limited. China`s PPG producers will therefore have to rely on strong export growth.

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Nov 21, 2020: Chinese prices for chemical raw materials including MDI, TDI, polyether, isopropanol, DMC, acetone, bisphenol A and PC have risen dramatically in the last few months.

Comment MCC: This is due to the quick recovery of many downstream industries after the pandemic, an increase in exports as well as the oligopolistic producer structure for some of these products, particularly MDI.

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Nov 20, 2020: China has built nearly 700,000 5G base stations, more than twice the total installation in the rest of the world (Shanghai Daily/Xinhua)

Comment MCC: This means that China should also a large market for those chemicals needed for the production of base stations, including many high-end engineering plastics.

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Nov 19, 2020: Tianqi Lithium, a Sichuan-based lithium producer may not be able to repay a US$1.88 billion loan this month

Comment MCC: The company used the loan to partly finance the US$4.1 billion acquisition of Chilean producer SQM in May 2018, just before lithium prices crashed. M&A required proper timing.

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Nov 18, 2020: The 400 kt adiponitrile project of Invista at the Shanghai Chemical Industry Park has obtained all the construction permits for the project and has entered the full construction stage. According to the company, this "will bring INVISTA's most advanced and energy-efficient adiponitrile production technology to China to meet the strong local demand for adiponitrile"

Comment MCC: This highlights a number of aspects of China`s chemical industry, the continuing demand growth particularly at the higher end of the product spectrum, the ongoing investment of foreign players and the adoption of the most recent technologies, making China`s new plants the most modern in the world.

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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 seems like a transfer of the central policy of creating national champions down to the level of provinces.

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Nov 16, 2020: Phase I of an agrochemical project by Yifan Biotechnology in Ningxia has begun operation, encompassing the production of 3,000 tons of clethodim, 500 tons of bromacil, 500 tons of prothioconazole and 450 tons of flumioxazin. Two more phases are planned.

Comment MCC: Yifan Biotechnology is an agrochemical producer headquartered in Wenzhou, Jiangsu. Driven by the environmental policy implemented in 2018 aimed at promoting the transfer of the agrochemicals industry to that part of the country, it is now shifting production to Ningxia. Other companies will follow.

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Nov 15, 2020: According to ICIS, mainland China accounts for about 27% of the global consumption of specialty chemicals followed by North America with about 20%. Out of 25 specialty segments listed by ICIS, China is the largest consumer of 12, namely antioxidants, catalysts, construction, feed additives, printed circuit board and semiconductor packaging, plastics additives, paper chemicals, rubber-processing chemicals, specialty coatings, specialty polymers, textile chemicals, and water management chemicals.

Comment MCC: This indicates some of the strengths of China`s industry. North America is leading in other segments such as cosmetic chemicals and food additives while Western Europe leads in nutraceuticals and flavors&fragrances, indicating other strengths.

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Nov 14, 2020: Hubei province will invest 141 billion RMB in 257 chemical projects between 2020 and 2020. The main objective is to get chemical firms along the Yangtze river to shut down, upgrade or transform.

Comment MCC: These are impressive sums indeed, indicating that provincial governments take the environmental policy envisioned by the central government seriously.

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Nov 13, 2020: ChemChina Hauhua Gas inaugurated a 4.6 kt/a fluorine-containing electronic gases project.

Comment MCC: Electronic chemicals are seen as vital for the production of advanced electronics, and the Chinese government is trying to get China more self-sufficient in this area. Thus the activities by ChemChina, an SOE.

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Nov 12, 2020: CCR has an interesting list of production indicators for PTA in China, showing that between 1995 and 2019, key parameters such as PX consumption, acetic acid consumption, unit energy consumption and processing costs declined substantially, with some decline occurring just between 2015 and 2019.

Comment MCC: This is impressive and will probably continue to some extent as long as capacity expansions continue. As these capacity extensions are much more limited in the Western chemical industry, the latter is likely to fall behind.

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Nov 11, 2020: In order to reduce winter air pollution, Shanxi province will implement staggered production applying to enterprises discharging waste gas.

Comment MCC: This includes not only coking companies but also chemical companies.

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Nov 10, 2020: In October, the Ministry of Commerce imposed antidumping duties on EPDM and on PPS.

Comment MCC: The antidumping tariffs imposed on US companies are much higher (more than 200%) than those imposed on companies from other countries (well below 100%), indicating that the duties are part of the broader trade conflict between the US and China. This follows the imposition on similar duties on n-propanol from the US in July. One of the reasons then given by MOFCOM was "systemic distortion of the chemical market by longtime governmental financial aid" in the US.

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Nov 09, 2020: In September, law enforcement officers of the Anhui Drug Administration inspected 46 drug manufacturers. While 7 fully met the requirements and 37 basically met the requirements, one did not and one was found not to produce.

Comment MCC: While not particularly interesting on its own, it is remarkable that provincial governments these days continuously issue public information like this one, indicating that it is important for them to be viewed as guarantors of public safety rather than as a relentless promoter of the economy.

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Nov 08, 2020: Jiangsu province issued a notice on the management of chemical parks in the province. Among other items, it states that businesses that physical compounding enterprises that do not use toxic and hazardous chemicals may not enter the chemical zone

Comment MCC: This acknowledges the fact that the number of chemical parks is limited and that the space therein needs to be reserved for those projects which really require the tight supervision of potentially dangerous or polluting chemical activities.

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Nov 07, 2020: From January to June, China's total export of dyestuffs decreased by 16.9% by weight from the same period last year while imports decreased by 18.9%

Comment MCC: One of the more obvious consequences of Covid-19 and its impact on the global textile industry

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Nov 06, 2020: Construction of a 400,000 b/d Yulong refinery in China's Shandong province will start, an investment of 21.1 bn USD.

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.

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Nov 05, 2020: The Zhongtian Hechuang Ordos Coal Deep Processing Project is currently running at 110% capacity, and is targeting the production of 3.8 million tons of methanol and 1.22 million tons of polyolefins in 2020.

Comment MCC: This is the largest coal chemical plant in the world. Still, given low oil prices and China`s longer-term commitment to fight global warming, it is doubtful whether projects such as this one are sensible.

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Nov 04, 2020: Chang Hong Tech will establish a biodegradable new material industrial park with an initial annual output of 300 kt of biodegradable plastics including PBAT / PBS / PBT in Shengzhou, Shaoxing, Zhejiang

Comment MCC: While domestic demand for these materials is still low, this could change quickly if the government enacts supporting policies - and China`s policy of supporting promising new industries may make this likely.

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Nov 03, 2020: In the first half of 2020, China`s total import and export volume increased by 2.5%. Export value was US$4,460 million, up 4.1% year-on-year, and import value was $237 million, down 21% year-on-year.

Comment MCC: China increasingly relies on glyphosate exports, which increased by about 10%, while the export value of paraquat, imidacloprid and clethodim decreased by more than 20%

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Nov 02, 2020: At the end of 2019, global annual MDI capacity was 9.3 million tons, with Wanhua having the highest market share at 23% and the top 5 players accounting for a combined 89%.

Comment MCC: The players in MDI benefit from high technological barriers of entry, making this a highly attractive market. Wanhua plans to expand capacity by 1.6 million tons by 2024, which would increase their market share to 28%.

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Nov 01, 2020: Chinese pesticide production is shifting away from the coastal provinces, particularly Jiangsu, and towards China`s northwest and central regions, particularly towards Inner Mongolia and Ningxia.

Comment MCC: This is a consequence of the clampdown on the industry, which is particularly severe in Jiangsu, where there is a prohibition on new manufacturers of pesticide technicals via chemical synthesis.

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Oct 31, 2020: Among China`s approximately 676 chemical parks, 405 have an output value less than 10 billion RMB.

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.

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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.

Comment MCC: It is unprecedented in the history of China`s petrochemical industry to have these three sets of data fall sharply at the same time

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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.

Comment MCC: Maybe this is a comfort to those of us - most likely all of us - who will not get extremely wealthy from the chemical industry.

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Oct 28, 2020: Wanhua Chemicals third-quarter results announcements showed a revenue increase of 1.4% yoy while net profit decreased by 32.3%.

Comment MCC: While the Covid-driven decline in demand for its products hit profits, the slight increase in revenue despite falling oil prices shows that Wanhua is still on a longer-term growth path.

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Oct 27, 2020: Dow and Johnson Matthey have won a trade-secret lawsuit in a Chinese court against Shanjun Clean Energy Technology over their jointly owned oxo alcohol technology. The two companies expect to be compensated with an undisclosed but significant amount of money.

Comment MCC: According to Liu Wei, an associate professor of intellectual property rights law at Shanghai Jiaotong University, the ruling indicates a growing professionalism in Chinese courts. Still, according to an IP index of the US Chamber of Commerce, China still ranks relatively low (at 28th) among industrial nations, leaving room for further improvement. More and more, as Chinese companies develop own technologies, this will be in their interest, too.

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Oct 26, 2020: China still relies heavily on imports for high-end products. For example, in 2018, adiponitrile and polyolefin elastomers (POE) had a degree of foreign dependence as high as 100%; ethylene-vinyl acetate copolymer (EVA) of 60%; polycarbonate of 59.7%; and synthetic rubber of 49.9.%

Comment MCC: Even though for some materials such as PC, the reliance on imports is rapidly decreasing, it still typically applies to the highest-end grades.

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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: This is primarily a consequence of the forced relocation of chemical companies into chemical parks - many of those not making this move have to shut down.

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Oct 24, 2020: At of the end of 2018, there were about 15,000 enterprises above designated size in the national chemical parks, accounting for 51% of the total number of petroleum and chemical enterprises in the country, an increase of 6 percentage points from the beginning of the 13th Five-Year Plan.

Comment MCC: While this is an increase from 2016, it is a relatively modest one given that the final target is to get almost all chemical enterprises into chemical parks.

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Oct 23, 2020: In 2019, the trade deficit of the Chinese petrochemical industry exceeded US$260 billion while in 2018 it was more than US$280 billion

Comment MCC: This masks the difference between a substantial surplus in basic and bulk chemicals coupled with a strong reliance on imports of high-end chemicals. This is currently regarded as the greatest shortcoming of the industry, and is likely to be addressed in the 14th Five-Year Plan

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Oct 22, 2020: According to Fu Xiangheng, VP of CPCIF, the 14th Five-Year Plan for chemical parks will include the implementation of five key projects.

Comment MCC: These are industrial upgrading/innovation projects, green projects, smart projects, standardization projects and high-quality demonstration projects. The first one, industrial upgrading, is regarded as the most important due to the deficiencies of the existing parks. The others in some way are more interesting but will probably receive less attention.

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Oct 21, 2020: A total of 117 universities are on the list in chemistry subject rankings in China, with four universities leading: The University of Science and Technology of China (Hefei), Peking University (Beijing), Fudan University (Shanghai), and Nankai University (Tianjin)

Comment MCC: This large overall number hints at the large number of chemists available to the industry. However, according to the evaluation, there is a big gap in the quality of the different universities, so choosing chemists from the better institutions may be important.

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Oct 20, 2020: Unpleasant interior smells and excessive road noise are the top problems for China's auto industry in 2020, according to a JP Power report

Comment MCC: Both issues sound like superior chemical materials could very well be a solution.

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Oct 19, 2020: MIIT published a list of prioritized chemical segments by province.

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.

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Oct 18, 2020: Wacker Chemie will spend about $100 million to build two new plants at its Nanjing site, adding a reactor for vinyl acetate-ethylene copolymer dispersions and a spray drier for dispersible VAE polymer powders

Comment MCC: The project is expected to more than double the site's capacity for the products, which are used in construction, coatings, and adhesives. This indicates the good prospects Wacker sees in the Chinese market

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Oct 17, 2020: Zhejiang Petrochemical will establish a 200 kt DMC plant, the largest single-unit capacity globally.

Comment MCC: Apart from taking the lead globally in unit capacity, the project is also notable for using technology developed in China. As global chemical production shifts to China, the country will more and more also be the site of the biggest and most modern production facilities.

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Oct 16, 2020: The plan of Zhejiang province for the chemical industry forbids the establishment of new chemical parks, prohibits the construction and expansion of high-pollution chemical projects outside the chemical parks and restricts new production capacity in high-pollution and excess industries such as fertilizer, calcium carbide, caustic soda, and polyvinyl chloride.

Comment MCC: The last point highlights the way the central government uses the environmental campaign as a way to actively manage the chemical industry rather than just to improve its environmental impact

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Oct 15, 2020: A timetable for the closing down of chemical enterprises in various provinces has been released

Comment MCC: It is interesting to see that for most Eastern provinces, the end of 2020 is the key date for the closure of polluting companies. In contrast, for other provinces such as Sichuan and Shaanxi, the timeline is longer.

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Oct 14, 2020: An explosion at a chemical plant of Chutian Biotechnology Co., Ltd. located in Tanhu Industrial Park caused 6 deaths

Comment MCC: According to the website of the company, it is a pharmaceutical and chemical enterprise engaged in the research, development, production and sales of pharmaceutical intermediates.

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Oct 13, 2020: An action plan for Guangdong's chemical industry and its 6800 regulated enterprises cites a number of existing challenges that also apply to the Chinese chemical industry in general.

Comment MCC: These include lack of industrial scale, insufficient expansion of the industrial chain (particularly with regard to high-end products), lack of innovation, and weaknesses regarding safety and environmental protection - common issues of China`s chemical industry.

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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

Comment MCC: There are many PTA expansions coming onstream and being announced, with some sources indicating that while capacity will soon hit 70 million tons, demand is only about 50 million tons. In that case, late expansions such as that of Hailun may not be sensible. On the other hand, according to ICIS, operating rates of PTA plants in China were about 90% in April 2020, indicating that demand was sound at least at that point in time.

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Oct 11, 2020: Anhui province will certify its chemical parks based on certain minimum standards.

Comment MCC: These include a minimum size and a 100% rate for the collection, storage, utilization and disposal of hazardous waste. While these requirements seem sensible, it would probably be better to have a nationwide standard rather than one differing by province.

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Oct 10, 2020: In the Chinese Chloralkali industry, producers are getting bigger. The average capacity of caustic soda producers increased from 220 kt/a in 2013 to 275 kt/a in 2020 while that of PVC increased from 270 kt/a to 350 kt/a.

Comment MCC: However, the industry is still quite fragmented, with 161 caustic soda producers and 73 PVC producers operating at the end of June 2020.

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Oct 09, 2020: According to a paper by Ji Junhui of the National Engineering Research Centre of Engineering Plastics in the China Chemical Reporter, "Degradable plastics are on track for its best development period, driven by China's ban on free plastic bags. In recent two years, a large number of companies have entered the field of degradable plastics, and the capacities of degradable plastics are expanding rapidly. It is estimated that the next 10 years will be the golden development phase for China's degradable plastics industry"

Comment MCC: Indeed, this area is strongly supported by the government, presumably as another area in which China can become the world leader. Experience in other areas such as EV seems to indicate that this approach may work.

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Oct 08, 2020: Domestic fertilizer output was down 6.4% YoY to 28.04 million tons in the first half of 2020 (CCR)

Comment MCC: Different types of fertilizers were affected at very different rates. While output of nitrogen fertilizers fell only by 0.4% and that of potash fertilizers increased by 1.9% YOY, phosphate fertilizer output declined by 22.7%. As half of the domestic phosphate fertilizer production is located in Hubei province, many domestic producers were forced to reduce or stop production due to Covid-19.

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Oct 07, 2020: China's production of calcium carbide from January to June was 13.1 million tons, a year-on-year decrease of 2.3% (CCR)

Comment MCC: Given that this includes the months strongly affected by Covid-19, this actually seems like a relatively mild decrease.

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Oct 06, 2020: Producer prices for the chemical industry in China declined by 7.6% yoy in August 2020 and 0.2% mom (CCR)

Comment MCC: Price declines for the petroleum and petroleum processing industries are even higher, indicating that the oil price is probably a strong contributor to the decline in chemicals prices. Petroleum prices have of course been affected by the global downturn caused by Covid-19.

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Oct 06, 2020: SI Group will expand capacity levels for tackifier and reinforcing resin at its Nanjing facility by more than 50%

Comment MCC: The company press release describes China as a "key regional growth area"

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Oct 05, 2020: The Beijing Municipal Bureau of Economy and Information Technology issued a development plan for hydrogen fuel cell vehicles in Beijing for the period of 2020-2025, with specific sales targets for 2023 and 2025

Comment MCC: This indicates that China is not exclusively focusing on EV but keeps working on hydrogen as well, which should be relevant for chemical and industrial gases companies.

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Oct 04, 2020: Inner Mongolia Baofeng Coal-based New Materials started the design phase of the largest coal-to-olefin project with an investment of about 67 billion RMB and a capacity of 4 million tons.

Comment MCC: It is easy to understand China`s fascination with coal chemistry. The country is the technology leader in this area, and has vast coal resources in underpopulated areas that would otherwise be hard to use economically. However, given Xi Jinping`s recent pledge for China to become carbon-neutral by 2060, it is hard to align China`s coal chemical activities with its environmental policy.

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Oct 04, 2020: China's auto sales rose 11.6% in August from a year earlier, the fifth straight monthly rise after plunging during the lockdown.

Comment MCC: As a consequence, the China Association of Automobile Manufacturers now estimates that total 2020 car sales will only decline by about 2020 as some of the losses incurred due to Covid-19 can be recovered. Good new for a number of chemical suppliers.

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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.

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Oct 02, 2020: Among the top 20 agrochemical companies by 2019 sales, 9 are Chinese.

Comment MCC: While this sounds impressive at first, a closer look reveals that the biggest Chinese company is only at no. 10 on the list. Or to put it differently, the sales of the 9 Chinese chemical companies combined are smaller than those of any of the top 3 players. So, in a way they are still marginal players outside of China. Another observation is that their sales vary more from year to year than those of the biggest players, ranging from -22% for one Chinese company to +59% for another (yoy change from 2018).

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Oct 02, 2020: By the end of 2020, Shanghai shopping malls, supermarkets, pharmacies and bookstores and major events will not be allowed to provide single-use plastic bags to the public even if customers pay for them (Shanghai Daily)

Comment MCC: It is interesting to see how China gradually takes the lead in many areas of environmental protection. Of course, this will have implications on the plastics demand.

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Oct 01, 2020: Covestro will DSM's resins and functional materials business for about $1.8 billion. This will increase Covestro's sales in coatings, adhesives, and specialty materials by more than 40%

Comment MCC: What does this have to do with China? Covestro`s two main businesses in PU and PC are coming under pressure from fast-growing Chinese competition. In PU, while the business is profitable, Wanhua`s expansion has reduced Covestro`s market share and weakens the case for further capacity additions by Covestro. In PC, several Chinese producers have entered or will enter the market shortly, depressing margins.
In a simplified model, one might think of the chemical industry is having four level of complexity: the lowest is the mass production of chemicals and plastics based on easily available technology. This level is by now entirely owned by Chinese producers. The next is the mass production of chemicals and resins using a technology that is not widespread. This still applies to PU but no longer to PC. The third is chemicals and resins with lower volumes, higher variety, higher importance of problem solving etc. This is the level that Covestro has just bought into, and that the company was already partly pursuing in their CAS unit. The fourth level again increases the level of complexity by bringing in issues related to end consumer preferences, regulation, continuous innovation, etc. - this is the level DSM is aspiring to by expanding in the food segment.
So, Covestro - seeing that level 2 does not offer room for expansion and will become less profitable in the future - is moving to level 3. In the longer term, this will probably mean they will try to sell their PC business altogether.

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Oct 01, 2020: According to IHS Markit/BASF, 64% of global chemical industry growth between 2017 and 2030 will come from China. China`s share of global chemical production excluding pharma will rise from 43% to 49%, and China`s growth rate will be twice that of other regions.

Comment MCC: Of course, pretty much the whole point of this blog is to emphasize the importance of China for the global chemical industry. A 49% share indeed seems important enough.

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Oct 01, 2020: Mitsui will invest about 9 million USD on an equity interest in China-based ethanol producer Beijing Shougang LanzaTech New Energy Technology, the world's first commercial-scale producer of ethanol using waste gas from steelworks as a raw material. The company uses technology that converts waste gas into fuel and chemicals by microbial fermentation

Comment MCC: While this technology sounds interesting in principle, it is far from clear whether the ethanol thus produced is cost competitive.

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Sep 30, 2020: The MIIT is formulating standards for the production of APIs in China. Guiding principles include increasing the share of green and high-end APIs, improve the environmental impact of API production, promote innovation and development of new drugs, and to create centralized production bases.

Comment MCC: With China as the world's largest producer of chemical raw materials, with more than 1,500 raw material drug manufacturers and more than 1,600 product varieties, this is an important step to regulate the industry.

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Sep 30, 2020: According to new Chinese regulation, the agrochemical pesticide paraquat can only be used for export, and cannot be sold within the country.

Comment MCC: This is the right step given the high toxicity of paraquat, though of course it would be better to ban production completely and not just for domestic sales.

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Sep 29, 2020: Amon the top 30 chemical parks in China, 15 are located in the area of the Yangtze River Economic Belt, and 6 are in the top 10.

Comment MCC: This shows the importance and relatively high level of development of this part of China. It also indicates the potential for future issues, as the Yangtze river is the focus of intensified environmental protection, which could be a threat to the chemical parks located near it as the government aims to shift chemical industry away from the proximity of the river and towards coastal locations.

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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.

Comment MCC: Hengyi is one of the few private Chinese firms operating a refinery outside of China, and seems to be very successful at this.

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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: Given that the 2019 net import of PC into China was only about 1.33 million tons, this indicates that substantial overcapacities will exist if and when these projects start operating.

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Sep 27, 2020: According to the website of the Supreme People's Court, there are currently about 1,200 chemical companies that are regarded as dishonest . Nearly 600 of them were newly added this year

Comment MCC: This is an indication that while China`s economy overall is holding up, some chemical companies have been hit hard by the pandemic, presumably particularly some depending on exports.

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Sep 26, 2020: Thyssenkrupp Industrial Solutions won an order to build a bioplastics plant that will produce 30,000 tons/a of polylactide in South China.

Comment MCC: As for many other areas related to chemicals, China is now among the leaders in bioplastics. Thyssenkrupp had already built its first commercial plant based on the same technology for COFCO in 2018. In one of his recent posts, John Richardson of ICIS wonders whether "In 5-10 years, China may end up with a 70% or so global shares in chemicals and mechanical recycling technologies". Bioplastics could well take a similar pathway.

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Sep 26, 2020: Huizhou New Materials Industrial Park in Guangdong province will follow a "one platform, five areas and six plates" strategy: anew material sinnovation and pilot test platform divided into five major industrial areas: chemical new material area, synthetic material area, and fine Chemical zone, advanced organic raw material zone and functional new material zone ; and focused on the development of six major industries: advanced organic raw materials and synthetic materials, automotive lightweight materials and packaging materials, new energy materials, electronic chemicals, fine chemicals and daily chemicals and Cutting-edge new materials .

Comment MCC: Personally, I still find these "one, two, three ..." statements that Chinese companies seem to be so fond of slightly ridiculous. On a more serious note, the materials and applications covered are so broad that it is not clear whether such a platform will really lead to any meaningful concentration of resources and talent.

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Sep 25, 2020: Xi Jinping emphasized China's urgent need for technology and innovation at a symposium to prepare for the 14th Five-Year Plan

Comment MCC: Of course, this will be highly relevant for some chemical segments, particularly those required for the production of chips (electronic chemicals)

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Sep 25, 2020: Shandong Haike Holdings is planning to list publicly. The company produces electrolyte solvents, pharmaceutical grade/food grade propylene glycol, food grade isopropanol and other products used in electrolytes, automobiles, pharmaceuticals, In the food, cosmetics and other industries. Turnover in 2019 exceeded 1 billion RMB.

Comment MCC: Current stock market valuations for China`s chemical companies are high, making a listing highly attractive.

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Sep 24, 2020: Shanxi province is investing in 27 projects related to coal chemicals.

Comment MCC: This underlines China`s strong and continuing reliance on coal, particularly in those provinces with rich resources. Whether this is in line with global climate protection goals is another question.

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Sep 24, 2020: Sumitomo will establish a fifth polypropylene production base in China, located in Wuxi, Jiangsu, targeting the automotive and home appliance markets

Comment MCC: This again highlights the importance of China as the main growth market for chemicals. Or in the typical bombastic words of company press releases: "Setting up the Wuxi Plant as our fifth production facility in China, we aim to further increase our presence through a widespread supply chain for Chinese automobile manufacturers and home appliance makers in the region and by making the best of our timely response to customers." (Sumitomo)

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Sep 23, 2020: Clariant will build a new catalyst production site in China for the production of CATOFIN catalyst for propane dehydrogenation (PDH), which is used in the production of olefins such as propylene or isobutylene.

Comment MCC: PDH is indeed an important technology in China with good prospects and thus rising demand for the catalysts required for the process. And a few years ago, Clariant stated that the company expects 50% of global chemical growth to come from China. So, establishing a third Clariant plant in China seems reasonable.

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Sep 22, 2020: According to the Economist, today Chinese firms produce 72% of the world's solar modules, 69% of its lithium-ion batteries and 45% of its wind turbines.

Comment MCC: As pointed out in the respective Economist paper, this means "China could temporarily gain clout over the global power system because of its dominance in making key components and developing new technologies." Of course, this also mains China should be by far the most dominant chemical market for the materials needed for the technologies above.

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Sep 21, 2020: Sinopec has established a 2 billion RMB found to focus on emerging industry such as new materials, new energy, energy conservation and environmental protection, high-end intelligent manufacturing, artificial intelligence and big data through financial investment

Comment MCC: While this is in line with government strategy, I personally doubt that Sinopec is well equipped to support these new industries with regard to its company culture and mindset.

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Sep 20, 2020: According to John Richardson of ICIS, in 2000 the US accounted for 23% of global combined demand of 8 resins (ABS, EPS, HDPE, LDPE, LLDPE, PP, PS and PVC) while China accounted for 14%. In 2020, the percentages are expected to be 10% for the US and 39% for China

Comment MCC: This clearly indicates the shift in the center of gravity of the global chemical market. And it is specifically to China, not to Asia - India`s share only increased from 2% in 2000 to 6% in 2020.

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Sep 19, 2020: According to ICIS data, China`s PVC capacity accounted for 106% of local demand in 2000 but 135% in 2020 while for PTA, the figures are 47% (2000) and 144% (2020)

Comment MCC: Indeed, overcapacity for commodity chemicals is a serious problem for China. While it was addressed in the 13th Five-Year Plan, this seemingly has not resolved the issue so far. There is a tendency of Chinese producers of commodity chemicals to see capacity/economies of scale as the only way to be competitive, rather than following alternative routes such as differentiation. This in turn leads to what one might politely called "strategic crowding" - everybody expanding capacity despite limited market need.

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Sep 18, 2020: China`s self-sufficiency for HDPE has not changed much in the past few years, reaching 50.4% in 2013 and 49.4% in 2019.

Comment MCC: This is despite strong growth of domestic capacity - however, this was compensated for by rapid demand growth. For 2024, a total domestic capacity of about 12 million tons is forecast, still substantially below 2019 consumption of 15.5 million tons. So, China will remain a substantial importer.

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Sep 18, 2020: China exports of dyes have decreased by 1% in 2019.

Comment MCC: According to Wang Lina of the China Dyestuff Industry Association, the reasons for the slight decline include capacity expansions in Southeast Asia and India and stricter environmental restrictions within Chinas

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Sep 17, 2020: Prices of recycled plastics are close to a historic low in China despite the ban on imported scrap plastic that has been enacted since 2019.

Comment MCC: Obviously, this market is strongly driven by politics. These point to a longer-term recovery of the industry as the government is keen on plastics recycling.

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Sep 17, 2020: Shares of two Chinese poysilicone producers in China doubled after explosions at the plant of competitor GCL-Poly Energy in July, which took out about 8.8% of global polysilicon capacity.

Comment MCC: While this sounds impressive, polysilicon prices are still very low at around 10 USD/kg compared with its peak of 500 USD/kg in 2008. This has led most foreign competitors except Wacker leaving the market, with 5 of the 6 biggest producers now Chinese and the country accounting for 85% of global capacity. This is a familiar phenomenon - once several Chinese players enter a chemical market, prices crash to the point where the products become unattractive for all but the biggest Chinese players.

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Sep 16, 2020: Sinopec is expanding its overseas refining capacity through international refining and chemical joint ventures.

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)

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Sep 16, 2020: The Chinese government is preparing broad support for so-called third-generation semiconductors for the five years through 2025, which will be part of the 14th Five-Year Plan.

Comment MCC: This is not surprising considering the trade conflict with the US and the importance of semiconductors for modern economies. Producers of electronic chemicals should also profit from this (and already do, given the multiples some Chinese electronic chemicals producers have on the stock market)

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Sep 15, 2020: Of the top 300 global chemical companies by sales, 26 are Chinese compared to 80 in the US, 40 in Japan and 27 in Germany.

Comment MCC: This small share of only about 9% contrasts with the approximately 36% global share of China`s chemical market. It is an indication of several factors including the relative weakness of Chinese chemical companies overseas, the relative strength of foreign chemical companies in China, and the fragmentation of the producer landscape of domestic chemicals producers.

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Sep 14, 2020: Hainan Huasheng will build 2×260,000 tons of non-phosgene polycarbonate project. The Dongfang City Water Affairs Bureau has basically agreed to the water and soil conservation plan report.

Comment MCC: This could be a long-term threat to those companies (such as Covestro) using the phosgene route to polycarbonate, which may face restrictions if the non-phosgene route is getting more established.

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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%).

Comment MCC: This is the consequence of new projects coming into operation, as well as the cost competitiveness of these companies compared to the SOEs Sinopec and Petrochina, which lost money.

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Sep 12, 2020: In the first half of 2020, China imported 34.2 million tons of organic chemicals, a year-on-year increase of 17.1%, and 17.3 million tons of synthetic resins, a year-on-year increase of 7.6% (including 8.7 million tons of polyethylene, an increase of 7.0% year-on-year, and 2.1 million tons of polypropylene an increase of 33.2%)

Comment MCC: It is important to keep in mind that China is still a net importer for chemicals, and for many materials, by far the most important overseas market for exporters. Trade restrictions thus may very well backfire.

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Sep 12, 2020: The Chemicals Working Group of the EU Chamber of Commerce launched its Annual Position Paper, focusing on the topics of Sustainability, Investment Costs and Chemicals Management.

Comment MCC: Most of these suggestions seem fairly uncontroversial, nudging the Chinese government towards transparency and creating a predictable economic environment similar to that which MNCs are used to in Europe.

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Sep 11, 2020: In September, Hebei province will carry out a special inspection of hazardous waste control.

Comment MCC: It will cover 190 development zones and 96 chemical parks including 17 which are being closed down, and will mostly affect producers of chemicals, pesticides and pharmaceuticals. Hebei will probably not be a good place for chemical production in the future, given its proximity to Beijing.

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Sep 11, 2020: Epichlorohydrin prices may increase after an accident at a production plant at Shandong Minji New Material Technology.

Comment MCC: While the company only accounts for about 3.1% of domestic capacity, supply was already tight before the accident. Some producers have stopped quoting prices, indicating that they may rise.

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Sep 10, 2020: New guidelines for the evaluation of chemical parks in China will become effective on Feb 01, 2021. These will set standards related to obligatory and anticipatory targets for these parks.

Comment MCC: It is recommended to study the anticipatory targets when choosing a chemical park, as it is likely these will become mandatory in the future.

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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).

Comment MCC: No big surprises here - it will be more interesting to see what these high-level objectives mean once translated into more specific targets.

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Sep 08, 2020: Sinopec has started its annual graduate recruitment, which will be the biggest ever as the company plans to recruit 11,000 people.

Comment MCC: Sinopec is participating in the "anti-epidemic stabilization and employment expansion" program of SOEs. MNCs competing with SOEs and complaining about their preferential treatment often forget that this comes with additional requirements that MNCs do not face. There is no reason to believe now is a particularly good time to hire large numbers of graduates from an economic perspective, but SOEs need to do so as they have objectives other than just maximizing profit.

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Sep 07, 2020: China`s output of Soda ash increased by 5.8% yoy in the period from January to May 2020 (CCR)

Comment MCC: While July operating rates were acceptable at 74% in July 2020, the startup of two new plants with a combined capacity of 400 kt in the second half of 2020 may put pressure on operating rates and prices

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Sep 06, 2020:China`s R&D spending reached a record high at 2.23 percent of its GDP in 2019, up by 0.09 percentage points from the previous year (Xinhua)

Comment MCC: What the article in the Shanghai Daily providing this figure does not mention is that this is still substantially below the 2.5% target given for 2020 in the 13th Five-Year Plan.

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Sep 05, 2020: Sinochem Group and ChemChina confirmed that they are discussing a merger of the two companies with a combined sales of $146 billion (Nikkei Review) Ning Gaoning, chairman of the two SOEs, stated "Both companies are going forward with the merger. It's highly necessary to collaborate on upstream and downstream technology and in markets at home and abroad."

Comment MCC: While this would create the global chemical company with by far the largest total sales (BASF has about 71 billion USD), it would far from solve any of the issues of the two companies. ChemChina has many underperforming commodity chemicals businesses while Sinochem lacks a clear focus, having activities not only in chemicals but also in finance, energy and real estate. So, the threat for other companies will remain limited unless the merger is combined with a real shake-up.

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Sep 04, 2020: According to statistics of enterprises under construction, Guangdong Province has become the province with the fastest growth in the chemical industry, including oil refining plants, large ethylene and important chemicals.

Comment MCC: Guangdong may in the long run overtake Shandong province as its location makes it more suitable for exports particularly to Southeast Asia - and Shandong province is somewhat dragged down by its legacy sites.

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Sep 03, 2020: While China`s effective Isoprene rubber (IR) capacity is about 180 kt (not including capacity that has long been idle), output reached only 38 kt in 2019, indicating a very low capacity utilization of only about 20%. At the same time, China imported about 30 kt of IR in 2019 (CCR)

Comment MCC: This points to a major mismatch between the offerings of the Chinese producers and the market demand. While 44% of domestic demand are satisfied by imports, local production could easily replace all imports without increasing capacity utilization above 40%.

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Sep 02, 2020: In 2018, sales of electrolyte for lithium ion batteries in China reached more than 170 kt, an increase of 50% from 2017. In 2025, the demand is expected to reach 1 million tons (CCR)

Comment MCC: This is a compound annual growth rate of 29% - an attractive prospect for producers, though if the past of China`s chemical industry is any indication, there will already be overcapacity in a few years.

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Sep 01, 2020: In 1H 2020, revenue of the chemical sector was down 10.5% yoy while profits decreased by 32.6%

Comment MCC: Of course, this is partly due to Covid-19. The much steeper drop in profits than in revenues reflects the relatively high fixed costs of the industry.

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Aug 31, 2020: The draft "Shandong Province Tire Chlor-Alkali Fertilizer Industry Capacity Replacement Implementation Measures" provide replacement ratios of 1.05:1 for radial tire casing, chlor-alkali and nitrogen fertilizer production capacity

Comment MCC: This is a reminder of the partly planned nature of China`s chemical industry. In addition, the relatively low growth rates implied in these replacement ratios indicate expected lower demand growth and/or higher capacity utilization for the future.

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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.

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Aug 29, 2020: Qilu Pharmaceutical had the opening ceremony for 1.5 kt of Spinosad production capacity, making the company the largest spinosad manufacturer in the world.

Comment MCC: Spinosad is an insecticide with good reputation as has high efficacy, low toxicity, a good environmental profile, is regarded as natural product-based and approved in organic agriculture by some certifications. The new production capacity thus should be fully aligned with China`s policy to make its pesticide industry more sustainable.

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Aug 28, 2020: According to Chen Youwei of CNCIC, China`s chemical industry is expected to grow at an annual rate of 3-5% in the next five years.

Comment MCC: While below the growth rates of the past, it is still decent compared to Western countries - and the rather wide range of 3-5% lends some credibility to the forecast.

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Aug 28, 2020: In 1H 2020, the number of newly registered pesticides in China increased by 378% compared to the same period in 2019, but decreased by 59% and 87% over 2017 and 2018 (Agropages)

Comment MCC: These massive variations in numbers - 3746 in 1H 2018 compared to 99 in 1H 2019 - indicate the uncertainties in pesticide registration.

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Aug 27, 2020: AkzoNobel`s Guangzhou plant will completely switch to water-based products, the last of the company`s four plants to do so.

Comment MCC: Apart from the environmental benefits, water-based coatings also have advantages for foreign companies in being higher-value, with higher entry barriers, and less competition from low-end domestic players.

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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)

Comment MCC: While China`s chemical industry so far probably has suffered less from Covid-19 that that in most other countries, some indirect negative consequences like this one are still to come. Saudi Aramco`s profit in 1H 2020 shrank by 50%, leading to the company`s decision to put the JV investment on hold.

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Aug 26, 2020: According to Lloyd'sList, congestion in Chinese ports continues to keep the number of oil tankers in floating tanks near record levels. In the week ending August 7, a total of 230 oil tankers were parked for 20 days or longer, involving a total of 299.1 million barrels of crude oil and refined oil.

Comment MCC: This is not due to limited unloading capacity but rather the lack of domestic oil storage facilities, as many Chinese companies used the low prices in April and May to buy oil

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Aug 26, 2020: Clariant's Business Line Biofuels and Derivatives has formed a partnership with Chemtex Global in China to market and sell the former's sunliquid technology licences, services and supplies to advanced biofuel plants in the country (Chemicals Technology)

Comment MCC: The market is driven by a government plan for all gasoline used for motor vehicles to contain bioethanol as an additive. Clariant's sunliquid technology converts agricultural residues into carbon-negative biofuel.

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Aug 25, 2020: China will start three new large-scale steam crackers in August, run by LyondellBasell/Liao Bora JV, Sinopec and Sinochem, respectively.

Comment MCC: This will increase the import demand for naphta, but decrease the import demand for downstream products such as PP and PE. It is an important step in China`s path towards reducing the need for imported chemicals, affecting many foreign companies that currently export chemicals to China.

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Aug 25, 2020: After the Beirut explosion of ammonium nitrate, China carried out an inspection of 80 enterprises dealing with the chemical and found 423 hidden dangers, 42 of which were classified as major hidden dangers.

Comment MCC: While these findings are of course not good, I am actually kind of impressed by the immediate reaction of the government to an explosion happening far away.

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Aug 24, 2020: Changzhou Sudu Chemical Auxiliary Factory, a producer of industrial detergents, water purifiers and polyaluminum chloride is looking to relocate to a chemical park, as they are no longer meeting the local requirements at their current production site.

Comment MCC: This is an example of the pressure many (particularly mid-size and small) chemical companies are currently facing, as companies are forced to relocate to chemical parks or close down. The company states: "The surrounding residents are dense and the cost of relocating residents is high, which is not conducive to long-term development. According to the new requirements, the safety and occupational health protection distance between our factory and the surrounding residential areas does not meet the requirements, and is facing the ever-increasing safety and environmental protection policy requirements."

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Aug 23, 2020: From now to the end of 2022, Liaoning Province will carry out safety and environmental protection hazards investigations of chemical parks and companies

Comment MCC: The province has 39 chemical parks, 610 hazardous chemical production companies and 4130 hazardous chemical storage companies, indicating that this will be a substantial task despite Liaoning not even being one of the most important provinces for the chemical industry in China.

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Aug 22, 2020: According to the Financial Times, explosions last month at a plant in China have pushed up the global price of polysilicon, the raw material for solar panels.

Comment MCC: The price rise highlights the global reliance on China as a provider of polysilicon, which accounted for about 67% of global production and 9 out of the 10 biggest players.

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Aug 21, 2020: US businesses are not leaving the Chinese market despite "an unprecedented downturn" in US-China relations during the COVID-19 pandemic, according to an annual member survey released by the US-China Business Council on Tuesday (Shanghai Daily)

Comment MCC: This also seems to be true for US chemical companies, some of which have recently announced substantial investments in China. China is still a net importer of chemicals, so any localization of global supply chains will likely increase the demand for locally produced chemicals. In addition, companies increasingly produce "in China for China", a strategy that benefits from China`s relatively high growth and is less affected by its international trade.

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Aug 20, 2020: While there were 79 producers of lithium-ion battery providers for EV in China in 2019, the market for lithium iron phosphate batteries is dominated by just three players accouting for a combined capacity of 83% of the total, with CATL alone accounting for more than 54%.

Comment MCC: While the initial number of 79 producers (already down by 13 from a year earlier) indicates a highly fragmented market, the market share of the top 3 players indicates that this is not the case. Many if not most of the other players are unlikely to survive. Chemical companies supplying to these players need to be careful.

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Aug 19, 2020: Starting from September 1, the revised "Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste" will be implemented. It is much stricter than the current law, with fines for multiple violations increasing tenfold.

Comment MCC: This is an important step in increasing sustainability of China`s chemical and other industries. In the past, due to the relatively small penalties, many companies paid fines in exchange for temporary stable production. This will no longer be cost efficient.

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Aug 18, 2020: Revenues of China XD, a plastics compounder with a focus on automotive applications, decreased by 39% in Q2 2020 compared to Q1 2020. Main contributors were a decline in sales volume by 47% and a price increase of 20%.

Comment MCC: The volume decline by 47% shows how serious the impact of Covid-19 has been on some industries, and is strikingly different from the 3.2% GDP growth officially reported for this period.

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Aug 17, 2020: On July 31, the National Development and Reform Commission and the Ministry of Commerce published a draft "Catalogue of Industries Encouraging Foreign Investment (2020 Edition) (Draft for Comment)" including 34 categories related to chemicals

Comment MCC: The categories are mostly unchanged from the 2019 version, except for two additions. As before, the focus is on promoting chemical areas that contribute to technological leadership, innovation and sustainability, thus putting China on a path towards a higher-value creating chemical industry.

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Aug 16, 2020: Weifang, a city in Shandong, recently announced the shutdown of 474 chemical companies.

Comment MCC: This large number indicates both the previous fragmentation of the chemical industry and the serious intent of the local government to better control the industry, primarily with regard to safety and environmental impact, despite possible negative economic consequences.

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Aug 15, 2020: BPA operating rates decreased by 12% in 1H 2020 compared to 1H 2019.

Comment MCC: This is a consequence of increased output (+8.8%) at a time of increased capacity (+20%). Covid-19 with its negative impact on operating rates of PC production was a contributor.

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Aug 15, 2020: An NDRC draft lists those chemical segments for which investments in China`s Western regions are encouraged.

Comment MCC: Many of the segments are specific to individual regions or provinces, leveraging the resources available locally, e.g., salt lake resources for Qinghai. Some others are more general, focusing, e.g., on bio-based and biodegradable materials. For companies open to investment in China`s Western regions despite the obvious difficulties (e.g., finding qualified staff), a closer examination of the catalog is worthwhile.

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Aug 14, 2020: For styrene monomer, China`s share of global demand is about 35% in 2020, from 10% in 2000 and 25% in 2009, and ICIS expects the figure to rise to 38% by 2030. At the same time, China currently accounts for 64% of global net imports of styrene monomer

Comment MCC: On the one hand, this highlights the enormous importance of China for the global chemical market - in fact, the 35% share for China are very similar to the 35.6% given by CEFIC for China`s share of the total global chemical market. On the other hand, the ongoing capacity buildup for styrene in China is very threatening to those countries and companies relying on exports.

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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.

Comment MCC: This indicates growth in the Chinese and APAC market for surfactants, which are used in surface cleaners, dishwasher and laundry detergents, personal care products and industrial and institutional cleaning applications and as raw materials for producing plasticisers, crop protection additives, polyurethane foams for the rubber industry and emulsifiers for emulsion polymerisation. According to BASF, the existing alkoxylate line at the Jinshan plant is already running at full capacity.

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Aug 13, 2020: Global stock market returns of chemical companies were much more negative for diversified/commodity players (-24%) than for specialty players (-9%) between Nov 2019 and May 2020.

Comment MCC: Of course, specialty chemicals have long been favored by investors due to their perceived lower volatility. This data seems to indicate there is something to it, though the nature of the specialty segment also plays an important role.

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Aug 12, 2020: A paper in the newsletter of the CheManager, authored by MCC, talks about BASF`s interest in pig farming.

Comment MCC: See https://www.chemanager-online.com/en/news/will-basf-turn-pig-farming-not-quite

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Aug 12, 2020: H1 2020 data shows that China`s polyethylene apparent demand (net imports plus local production) grew by an average of 5% across the three grades (ICIS)

Comment MCC: This seems to indicate that China`s GDP growth figures for H1 2020 - which some sources have stated to be overstated - may well be real.

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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.

Comment MCC: This is an implementation of China`s "Lifelong responsibility" principle, according to which if dereliction of duty in a previous position results in accidents, the person will be held accountable despite no longer being in that position. This seems like a wise principle.

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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

Comment MCC: More such JVs between Chinese and Middle Eastern chemical companies are to be expected, as they offer a convincing combination of market access and raw materials access, particularly in those commodity areas for which Western know-how is no longer essential.

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Aug 10, 2020: The market penetration of degradable plastics in China is only 0.04%. According to estimates, after the implementation of relevant policies, the demand for degradable plastics in the three areas of food delivery, express delivery, and agricultural film will reach 1.5 million tons from the current 42 kt, an increase by a factor of 36

Comment MCC: Currently, the price of biodegradable plastics is 2-3 times that of traditional plastics, which limits its large number of applications. It will be interesting to see to what extent prices decline with larger production volumes, potentially opening up more applications

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Aug 10, 2020: In June, Sinochem became the actual controller of Luxi Chemical, a large state-owned producer of commodity chemicals which suffered from a substantial decline in sales in the recent past.

Comment MCC: It is hard to see a good strategic rationale for Sinochem taking over this business - most likely, there has been political pressure on Sinochem to rescue a failing chemical SOE. From an economic point of view, this does not look like a favorable deal for Sinochem.

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Aug 09, 2020: According to the World Bank, Shanghai is one of the top contributors to China's business reform and has a 55 percent weighting in the assessment for China, which saw a huge improvement in its business environment over the past few years

Comment MCC: Not surprisingly, Shanghai is the location of almost all Chinese headquarters of foreign chemical companies, and increasingly one for regional and global headquarters as well.

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Aug 09, 2020: Miracll Chemicals of Yantai, Shandong, a Chinese TPU maker, went public on the Shenzhen Stock Exchange on July 20, fundraising CNY470m for two projects.

Comment MCC: The company will expand its TPU (30 kt) and ETPU, expanded thermoplastic polyurethane (8 kt) capacity and is also considering expansion in polyols, demonstrating its focus on TPU. In fact, the company claims to aim for an eventual TPU capacity of 200 kt, which would indeed make it a huge player, though such announcements are often not followed through.

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Aug 08, 2020: On August 3, a flash explosion occurred in the butanone oxime workshop of Lanhua Organic Silicone Co. in Xiliuhe Town, Xiantao City, resulting in at least 6 deaths.

Comment MCC: The company is located in the High-Tech Industrial Park of Xiantao City and is regarded as one of the leading organic silicon producers with large scale, and advanced technology in China. This indicates that the current government policy of concentrating chemical production in chemical parks and eliminating small chemical companies alone may not be sufficient to prevent such accidents.

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Aug 08, 2020: A number of provinces including Shandong, Henan and Zhejiang will impose restrictions on non-degradable disposable plastics, with effective dates starting from 2020 but continuing to 2025.

Comment MCC: These are local implementation plans of the "Opinions on further reducing plastic pollution" issued by the NDRC and the Ministry of Ecology and Environment.

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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.

Comment MCC: Shandong is the province with the biggest chemical industry, and also the province relying the most on the chemical industry as a provider of tax revenues and jobs.

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Aug 07, 2020: According to Fu Xiangsheng, vice chairman of the China Petroleum and Chemical Industry Federation in 2019, the operating income of the petroleum and chemical industry exceeded 12 trillion yuan, accounting for about 12% of the national scale industrial operating income, and industry profits also accounted for about 12% of China's industrial profits. In the first half of 2020, the industry's operating income exceeded 5 trillion yuan, a decrease of more than 10% compared with the same period last year. The industry profit in the first half of the year was more than 140 billion yuan, a decrease of about 58% compared with the same period last year.

Comment MCC: This shows both the importance of the chemical industry for China and the hit it has taken from Covid-19.

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Aug 06, 2020: Linde has signed a Memorandum of Understanding with Beijing Green Hydrogen Technology Development Co., Ltd., a subsidiary of China Power International Development Ltd., to jointly promote the application and development of green hydrogen in China.

Comment MCC: China keeps its options open with regard to hydrogen technology, thus attracting companies such as Linde which have a substantial stake in it.

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Aug 06, 2020: Shandong Province has identified 85 chemical parks in four batches, including 10 specialized chemical parks. Now the province has released a draft of the "Administrative Measures for Shandong Chemical Industry Park (Trial)" for comments.

Comment MCC: There is a contradiction in the government policy here - on the one hand, there is a desire to standardize chemical parks, on the other hand, the relevant measures are now being taken on a provincial rather than on a central level. This is inefficient.

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Aug 05, 2020: Santander Bank lists the Chinese chemical industry as a high potential sector for investment.

Comment MCC: Indeed, recently there has been a substantial increase of foreign acquisitions and greenfield investment in China. Part of the reason may be that according to IMF forecasts, China will be the only larger economy with positive growth in 2020.

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Aug 05, 2020: After two extensions, pesticide producer Nanjing Red Sun finally disclosed the 2019 annual report on June 30. The net profit attributable to shareholders of listed companies was -340 million yuan , turning from profit to loss year-on-year.

Comment MCC: According to a source close to the supervisory authority, the main reason for the investigation of Red Sun by the China Securities Regulatory Commission was related to the illegal misappropriation of huge sums of money from listed companies by its major shareholders. This still happens, though not just in China.

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Aug 04, 2020: In 2019, Guangdong carried out a comprehensive safety risk assessment of 54 chemical parks, which resulted in withdrawing from 23 parks while 31 parks were retained.

Comment MCC: Another example of the individual provinces almost competing about which one can be the strictest with regard to chemical industry regulation, with the richest provinces probably winning this contest.

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Aug 04, 2020: On July 23, a 700 kt lithium battery new energy material integrated industrial base project had its groundbreaking ceremony in Yulin, Guangxi.

Comment MCC: This is claimed to be the world's largest integrated and park-based lithium battery material manufacturing base, emphasizing China`s crucial role in the shift towards electric vehicles.

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Aug 04, 2020: Container throughput of Shanghai port exceeded 3.9 million TEUs in July, a record high, according to Shanghai International Port (Group) Co.

Comment MCC: Another indication of China`s economic recovery. In fact, on Jul 30, the port had a container throughput total 149,565 TEUs, representing a record single-day high.

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Aug 03, 2020: Organic sales of DuPont in Q2 2020 increased 1% YOY in Asia Pacific while the US and Canada, EMEA, and Latin America each declined mid-to-high-teens percent

Comment MCC: This is another indication that China - which makes up a large share of APAC sales - and the overall APAC region have been less affected by Covid-19 than most other areas.

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Aug 02, 2020: Shanxi Tianze Coal Chemical Group plans to build a coal-to-gas/olefin project with a total investment of 16 billion yuan

Comment MCC: It is a bit surprising given the current low oil price that such projects are still deemed economically feasible

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Aug 01, 2020: A recent inspection of chemical companies in Shandong found that only 1,458 of the 4,580 chemical companies in the province have entered chemical parks (34%) while 3,122 have not yet entered a park.

Comment MCC: As a consequence, 1340 companies have already been closed, and another 1034 will be closed by the end of 2020. The mandatory relocation to chemical parks thus acts as a major force to push smaller companies out of business, something that is probably quietly appreciated by the authorities.

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Jul 31, 2020: Three major issues in the establishment of smart chemical parks in China are the lack of standards for the parks, the geographical imbalance (most are in Eastern China) and the unstandardized approach to automation taken by individual companies

Comment MCC: Nevertheless, China is making progress, with 36 existing demonstration units and the relevant ministry working on "Guidelines for the Construction of Smart Chemical Parks". In addition, Jiangsu province will award extra points for the establishment of smart management in its current evaluation of chemical parks

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Jul 30, 2020: According to data released by the National Bureau of Statistics, in the first half of the year,the total profit of the chemical raw materials and chemical products manufacturing industry was 136.46 billion yuan, a decrease of 32.2% compared to the same period in 2019

Comment MCC: This is a much bigger decline than that for the total manufacturing industry (12.8%), indicating that chemicals have suffered worse from Covid-19 than average

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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).

Comment MCC: Given mainland China`s huge share of the global chemical market of about 36%, the number of Chinese entries in the top 50 is still surprisingly low at 8%. This is particularly true as both Sinopec and PetroChina are mainly oil producers rather than chemical companies, with Sinopec only obtaining 15% from chemical sales while for PetroChina, the figure is 6% (the global ranking is based on chemical sales, not on total company sales).
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.

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Jul 28, 2020: In a paper on the past and future of China's pesticide industry, Han Yongqi of the Bureau of Industry and Information Technology of Penglai City lists 5 key trends for the industry for the period of the 14th Five-Year Plan, including green development, export promotion, structure optimization, digitizing, and independent innovation

Comment MCC: Many of these 5 trends will probably show up all over the 14th Five-Year Plan for the chemical industry, with the possible exception of export promotion. This is something that is particularly relevant to the pesticide industry due to the domestic "zero volume growth" target.

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Jul 27, 2020: China's chemical industry was the fifth largest industry in the country in 2018, accounting for 3.5% of the nation's output in 2018 at a value of around €1,300 billion, (Research & Markets)

Comment MCC: The country also dominates some chemical segments. For example, China accounts for about 70% of the global rubber chemical production and consumes about 33-35% of it

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Jul 26, 2020: More than 10% of key chemical parks at or above the provincial level in the country have started the construction of smart chemical parks

Comment MCC: At the moment, the idea of smart chemical parks is more a buzzword than a fully defined concept. This makes the statement above a bit meaningless.

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Jul 25, 2020: In July, the Jiangsu Provincial Emergency Management Department announced the cancellation of the production licenses of 102 hazardous chemical production companies including Nanjing Top Chemical Technology Co., Ltd.

Comment MCC: Jiangsu - probably due to a combination of past accidents and having a number of alternatives to the chemical industry - seems to be setting an example as being the toughest on the chemical industry recently.

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Jul 24, 2020: CPCIF will joint the Alliance End Plastic Waste

Comment MCC: Obviously, with China accounting for more than one third of the global chemical market and up to 50% of the market for individual plastics, the country`s participation in any such schemes is necessary to make them meaningful.

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Jul 23, 2020: China's production of chemical raw materials and products rose by 3.9% year-on-year in May 2020

Comment MCC: While this is below past growth rates, it is impressive given that Covid-19 has led to negative growth in most other economies.

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Jul 22, 2020: The Hebei Provincial Emergency Management Department canceled the safety production licenses of 145 hazardous chemical production companies including Shijiazhuang Coking Group

Comment MCC: Provincial governments have to worry both about their local economy and potential safety risks arising from chemical production. Currently, it seems their concern shifts more and more to the latter.

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Jul 21, 2020: The Jiangsu Provincial Security Committee Office and the Provincial Government Affairs Office will give a reward of up to 500,000 yuan to those who provide information on violations of production safety laws, hidden dangers of major accidents, and misreporting and concealing production safety accidents throughout the province.

Comment MCC: Interesting to see Chinese government authorities utilizing this whistleblower approach.

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Jul 20, 2020: For new chemical materials, China`s 2018 self-sufficiency rate was about 65%. For subsegments, engineering plastics had a self-sufficiency rate of 56%, high-performance fiber consumption of 50%, high-end membrane materials 67%, electronic chemicals 67%.

Comment MCC: The imported products tend to be those with higher technical requirements and higher performance

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Jul 19, 2020: 17 companies in the petroleum and chemical industry entered the list of China's Top 500 Listed Companies by Market Value.

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.

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Jul 18, 2020: The Ministry of Public Security Traffic Management Bureau will carry out a six-month traffic safety transport check of dangerous chemicals in the second half of 2020.

Comment MCC: While in principle a good thing, such checks run the risk of disrupting supply chains and occasionally reducing safety. For example, if some harbors are closed down for dangerous chemicals, more of them will be transported by road, which is hardly safer.

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Jul 17, 2020: According to Fu Xiangsheng, the overall view of China's petrochemical products is "low-end surplus, high-end shortage"

Comment MCC: This is a concise and accurate description of China`s chemical industry, highlighting the surplus of basic chemicals and the shortage of functional and specialty chemicals

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Jul 16, 2020: 48 of the 59 enterprises in Zhejiang province that have been included in the list of hazardous chemicals removal and transformation have been completed.

Comment MCC: That sounds like a decent ratio, though of course 59 enterprises are only a small fraction of the total number of chemical production sites in the province.

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Jul 15, 2020: 8 paint companies in China made the list of "Coatings World" magazine 2020 global ranking of paint and coating manufacturers

Comment MCC: While this is the same number as last year, in 2019 the first Chinese company, Sankeshu, entered the top 20 at no. 15 with sales of about 1.05 billion USD.

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Jul 14, 2020: The Emergency Management Department published a Catalogue of Safety Remediation and Elimination and Exit of Hazardous Chemical Enterprises containing three categories: shutdown and exit, production suspension and rectification, and deadline rectification.

Comment MCC: Interestingly, the shutdown and exit category includes items such as "devices have not realized automatic controls, and the number of employees is less than 20". This highlights the fact that a useful and desired side effect of the tightened safety regulation is to put pressure on small companies to close down in order to consolidate the industry.

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Jul 13, 2020: Chinese EPS capacity declined by an annual 3.9% during 2015-2019 while demand increased by about 1% per year.

Comment MCC: Despite this positive development, utilization rates in 2019 are only about 50%, indicative of the problems of many commodity chemicals in China.

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Jul 12, 2020: In the first 5 months of 2020, the combined Chinese output of photovoltaic cells increased by 7.4% yoy.

Comment MCC: While this is still solid growth, it seems this market is gradually reaching maturation.

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Jul 11, 2020: Nouryon will start development of a world-class manufacturing facility at its current site in Ningbo, China to produce two key intermediates for its organic peroxides business: tert-Butyl hydroperoxide (TBHP) and tert-Butyl alcohol (TBA). Organic peroxides are essential ingredients in the production of polymers and composites.

Comment MCC: The rationale given is to localize the supply chain, according to Nouryon ("This is an important step in integrating our regional supply chain for TBHP, which is currently imported from overseas"). Given that China is a net importer of chemicals, the current trend towards localization may push foreign chemical investment in China, as the recent surge in foreign investments shows.

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Jul 10, 2020: The Chinese market demand for electronic wet chemicals is expected to grow by about 15-20% per year, driven by the three main applications display panels, ICs and PV cells (CCR).

Comment MCC: The higher-end segment of these electronic wet chemicals still is mainly met by imports, as local players have not mastered the technology yet. For example, the localization rate of 6-inch and below wafers is 82% while the localization rate of the more demanding 8-inch and above wafers is below 20%. The rapid speed of development in this area makes it much harder for Chinese players to catch up with global competitors than in other, more slow-moving chemical segments.

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Jul 09, 2020: In Meishan, Wanhua will invest in a 10 kt/a lithium battery ternary material project and a 60 kt/a biodegradable polyester project (CCR).

Comment MCC: Wanhua keeps expanding in fast-growing and innovative segments - hopefully the company does not spread itself too thin doing so.

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Jul 08, 2020: "New infrastructure", which includes 5G base stations, high-speed railways, urban transit, electric vehicles, AI and data centers, will increase demand for a number of chemicals including PTFE, LCP, modified polyimide, and sulfur hexafluoride (CCR).

Comment MCC: Chemical companies should benefit from this increased demand. On the other hand, for some materials such as PTFE, domestic players only produce low-end grades, while high-end grades still need to be imported.

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Jul 07, 2020: Xiangshui Ecological and Chemical Park agreed to pay a total of 54 million RMB to Jiangsu Annuoqi, an active dye producer located in the park.

Comment MCC: It is interesting to see that apparently the Xiangshui chemical park, which gained notoriety due to the explosion in March 2019, is held liable for losses incurred by one of its tenants.

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Jul 06, 2020: CATL has broken ground on a battery R&D center at a cost of more than $450 million. CATL plans to develop next-generation energy storage technologies at the site, including lithium metal, solid-state, and sodium-ion batteries (C&EN)

Comment MCC: Lithium batteries are one of the chemical areas for which the focus of R&D more and more shifts to China. Suppliers to such industries need to have a local presence in China in order to stay relevant.

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Jul 05, 2020: Hebei province will assess the safety risk level of its chemical parks. Parks with the lowest (A) rating at the end of 2021 will be shut down while parks with the second lowest rating (B) are restricted in taking on new projects. By the end of 2022, only those parks rated C and D will maintain their positioning as chemical parks.

Comment MCC: If you are producing chemicals in a chemical park in Hebei province, make sure to check the risk level assigned to your park.

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Jul 04, 2020: In the Chinese market for waterproof coatings, Oriental Yuhong is the leader with a share of about 10% while CKS and BNBM, the next biggest two, contribute another combined 7% and the top 10 producers account for 22%.

Comment MCC: With such a low share of the top 10 producers, there obviously is substantial potential for market consolidation.

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Jul 03, 2020: According to the Chairman of the Chinese Chemical Society, Yao Jiannian, "The overall refinement rate of China's chemical industry is around 45%, which is lower than the average level of 60% to 70% in developed countries.

Comment MCC: Indeed, while the early stages of chemical value chains are well-developed in China, the country still imports many small-volume, high-value chemicals at the end of the value chain. There is substantial room for additional such production in China, and it will happen. The question is who will do it.

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Jul 02, 2020: Jiangxi province has classified its 54 chemical parks. 48 of them will be upgraded, one will be completely relocated and 5 will be closed for chemical production.

Comment MCC: The rationale for the closure of the 5 is that these are chemical parks that have few chemical companies and thus no scale effect and poor infrastructure. As other provinces may enact similar rules, "chemical" parks by name but with limited chemical activities are best avoided by investors, as they not be open for chemical production for long.

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Jul 01, 2020: According to the 2019 Nature index list, among the top 100 chemical research institutions, there are 35 in China, 30 in the United States, 8 in Germany and Japan, and 5 in the United Kingdom.

Comment MCC: While this partly just reflects the population size, the fact that all top 10 fastest growing scientific research institutions are in China emphasizes the strength of the country regarding chemicals.

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Jun 30, 2020: From July 1, 2020, marine coatings and floor coatings have to meet the new national product hazardous substance limit standards

Comment MCC: This is another indicator that at least regarding official regulation, Covid-19 will not slow down the tightening of environmental regulation in China.

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Jun 29, 2020: Shandong Yuhuang Chemical applied for bankruptcy and reorganization, and is in a state of total suspension of production.

Comment MCC: This is an indicator of the financial strains of private chemical companies. Even large ones such as Shandong Yuhuang may not receive support by local governments.

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Jun 28, 2020: According to the CPCIF, China`s chemical sector had about $460 billion in revenue in the first 4 months of 2020, a 14% decline, while profits dropped by 82% (C&EN)

Comment MCC: Statistics from the NBS show a profit decline of 48%, indicating that while the profit decrease is very real, its exact extent depends strongly on the companies included in the specific sector definition.

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Jun 27, 2020: A list of 2020 China's top100 pesticide companies was released by China Crop Protection Industry Association (CCPIA). Total sales reached RMB 183.608 billion (USD 25.97 billion), an increase of 6.87% year-on-year while the top ten sales reached RMB 70.245 billion (USD 9.94 billion), an increase of 5.31% year-on-year.

Comment MCC: It is interesting to see that the growth of the top 10 players is lower than that of the top 100, indicating that industry consolidation - though likely to happen in the long run - is not always progressing smoothly.

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Jun 26, 2020: By the end of 2020, Shandong province will complete the relocation and transformation of 49 small and medium-sized hazardous chemical production enterprises.

Comment MCC: This actually sounds like a relatively small number, given that
there are 1,847 existing hazardous chemical production enterprises in Shandong.

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Jun 25, 2020: Celanese will develop and test a new route to acrylic acid in cooperation with two Chinese firms, the Southwest Institute of Chemical and Yankuang Lunan Chemical

Comment MCC: Similarly, BASF and Sichuan Lutianhua in 2019 agreed to codevelop a new process for the synthesis of DME. Given that a large share of new large-scale plants of commodity chemicals is located in China, it makes sense for global players to develop new technologies here. In the long run, this may mean that China`s plants will be more efficient than those elsewhere.

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Jun 24, 2020: In a recent court case, the mayor of Puyang claimed 5.51 million from an enterprise (Shandong Liaocheng Defeng Chemical) polluting a Yellow River tributary, acting as plaintiff for the Jindi

Comment MCC: This is a clear example for a judgement clarifying that environmental damages need to be remedied by the originator. If more local governments pursue a similar policy as Puyang, this should be a strong deterrent to polluters.

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Jun 23, 2020: Nantong (Jiangsu) will close 103 chemical companies this year after closing 99 companies last year.

Comment MCC: The additional closures are the consequence of Nantong's major pollutant discharge index not yet having reached the standard. Increasingly, local governments seem to value meeting such standards high enough to merit the closure of a substantial number of chemical plants, particularly in wealthier cities like Nantong.

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Jun 22, 2020: According to CPCIF president Li Shousheng, "For chemicals, the domestic market has been under-supplied for a long time, and some even rely heavily on imports. In 2019, the trade deficit of the whole industry was 268.3 billion US dollars, of which imports of synthetic resin increased by 12.4%, polyethylene increased by 18.8%, polypropylene increased by 6.4%, polystyrene increased by 13.6%, polycarbonate increased by 12.8%, and pesticide imports increased by 14% The import volume of high-end products such as new chemical materials and special chemicals has increased to varying degrees."

Comment MCC: It is important to keep in mind that China is indeed a net importer of chemicals - trade restrictions will therefore hurt foreign producers, not benefit them.

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Jun 21, 2020: Tianhe Chemicals Group's listing on the Hong Kong Stock Exchange was cancelled on June 11. Trading of the stock had been suspended since 2015.

Comment MCC: This was once a fairly strong player in lubricants and specialty fluorochemicals. However, the company was forced to relocate some fluorochemicals plants, and their lubricant additives business was hurt by the trade war with the US and the coronavirus.

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Jun 20, 2020: China`s PC capacity utilization rate in 2019 was 60%, a decrease of 5% from the previous year. At the same time, the self-sufficiency rate was nearly 50%.

Comment MCC: This may be a warning to Chinese companies thinking that local capacity will always have a competitive advantage compared to imports. In fact, the low capacity utilization despite substantial imports suggests that this is not always the case, though a mismatch in grades is also part of the explanation.

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Jun 19, 2020: LG Chem will sell its liquid crystal display polarizer business to Shanshan, a chemical material company in China, for $1.1 billion.

Comment MCC: This is one of the many examples of MNCs exiting chemical segments once they are dominated by Chinese competitors, which tends to bring down prices and margins. In terms of strategy, this means that companies like LG will always need to adapt their chemical portfolio, entering newly emerging segments and exiting those that are commoditizing. Another interesting aspect is that Chinese companies such as Shanshan now seem to take up the role that PE firms have in the Western world - buying cash-generating but mature businesses from the MNCs.

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Jun 18, 2020: According to a recent white paper, from 2020 to 2025, the output value of China's hydrogen energy industry will reach 1 trillion yuan, the number of hydrogen energy vehicles will reach 50,000, and the number of hydrogen refueling stations will be 200 while from 2026 to 2035, the annual output value will reach 5 trillion, the number of hydrogen refueling stations is 1,500, and 15 million fuel cell vehicles are realized.

Comment MCC: This is a timely reminder that while electric vehicles are in the lead right now, hydrogen may still be the winner in the long run, or will at least be a viable competitor.

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Jun 17, 2020: Shandong province withdrew policy support from 29 chemical-related provinces, citing changes in market environment, adjustments of industrial policy and the impact of Covid-19 as reasons.

Comment MCC: It would be very interesting to know which of these three reasons has the biggest contribution to the policy changes. Is Covid-19 really a reason, or is it just a pretext?

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Jun 16, 2020: Covestro opened its third online store in China in June. Customers will be able to use distributor Silan's Aperfect supply chain management app, a portal for services for the footwear industry, to order Covestro`s T80 grade of TDI. This is the third Covestro online store after its own Covestro Direct Store and one on Alibaba's e-commerce site 1688.com.

Comment MCC: To quote John Dou of Covestro, "China is the bellwether in the global digitalization area". Indeed.

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Jun 15, 2020: Baofeng Energy successfully started methanol production at its new plant with a final capacity of 1.2 million tons/year polyolefin, 4 million tons/year methanol, and 780,000 tons/year fine chemical products, becoming the largest coal-to-olefin monomer in China

Comment MCC: While the idea is to replace imports of polyolefins, this will be very difficult to achieve economically at the current low oil price level. Interestingly, the company is also investing in solar power at the same time. It has just announced that it has commenced construction of what it believes will be the world's largest solar-powered hydrogen plant.

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Jun 14, 2020: Ascend Performance Materials, the largest fully integrated producer of polyamide 66 resin, will purchase the assets of NCM (Changshu) Co., Ltd., and Tehe Engineering Plastic (Suzhou) Co., Ltd., in Changshu Yushan High-tech Industrial Park

Comment MCC: Covid-19 and trade frictions will make it more and more important for chemical companies to produce locally. As China is a net importer of chemicals, this means MNCs will need to increase their investment in China. The Ascend acquisition is one example of this.

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Jun 13, 2020: Hebei issued the "Three-year Action Plan for the Special Remediation of Dangerous Chemicals and the Special Remediation of Safety in Functional Areas such as Industrial Parks". According to this plan, there will be a safety risk assessment and certification of chemical parks.

Comment MCC: Due to the proximity to Beijing, Hebei province is probably not an ideal location for chemical production - both regulation and its implementation are likely going to be stricter than in most other places in China. So, if there is a suitable alternative, it is better to avoid chemical production in this province.

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Jun 12, 2020: According to ICIS, China`s monoethylene glycol plants ran at above 70% in March but only at about 60% in April and around 55% in late May while inventories also increased.

Comment MCC: While Covid-19 does no longer present a serious obstacle to production of chemicals, MEG shows that the bottleneck is demand, particularly export demand for finished goods, which substantially contributes to the demand for many chemicals.

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Jun 11, 2020: China is estimated to add about 5.9 million tons of PP capacity in 2020, an increase of 22%.

Comment MCC: If utilized, this additional capacity will obviously substantially reduce the need for imports, hurting the prospects of those countries focusing on PP exports to China.

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Jun 10, 2020: Hubei province has confirmed 40 chemical parks as compliant with new regulations. The province also claims to that the relocation and transformation of hazardous chemical enterprises in the province and the relocation and customs clearance of enterprises along the Yangtze River in 2019 are among the highest in the country.

Comment MCC: The pressure by the central government to improve the safety and environmental record of the chemical industry is not decreasing, as the emphasis of provinces such as Hubei on their tough approach indicates.

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Jun 09, 2020: LyondellBasell has stated that demand in China is improving very well, with oil consumption at almost 90% of pre-pandemic levels and increasing demand for LBs products

Comment MCC: It is a bit surprising to hear that a return to 90% of pre-pandemic levels is already seen as a very positive sign - but I guess compared to markets outside of China, it is.

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Jun 08, 2020: Lithium producer Tianqi is struggling with a high debt burden and may have to sell some assets including its 51% stake in Greenbushes, the world`s largest lithium mine.

Comment MCC: Potential buyers for the whole company could be Chinese players involved in EV, such as BYD or CATL, while Albemarle, the co-owner of Greenbushes, may be interested in acquiring full ownership of the mine. Overall, Tianqi`s problems are a consequence of the decline in lithium prices, which has also led other lithium producers to reduce their investments.

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Jun 07, 2020: Chinese coal-based capacities for PVC and MEG are losing competitiveness relative to ethylene-based alternatives in a lower priced ethylene environment (ICIS)

Comment MCC: According to ICIS analyst Ciaran Healy, Chinese derivative producers utilising coal-based processes may face pressures to rationalise, as these plants are now less cost-competitive compared with ethylene-based alternatives. "The production costs of these coal-based plants remain essentially unchanged and local ethylene-based alternatives have gained a cost advantage as the cost of these processes has fallen"

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Jun 06, 2020: South Korea's chip makers have switched to domestically produced chemicals after Japan tightened restrictions on South Korea-bound exports of etching gas, photoresist and fluorinated polyimide.

Comment MCC: In a similar way, US restrictions could boost the prospects of Chinese producers of electronic chemicals

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June 05, 2020: China produced 81.8 million tons of plastics in 2019, an increase of 3.9% over 2018.

Comment MCC: For some plastics such as PVC, China is now fully self-sufficient. For others such as PE, self-sufficiency is still a way off, providing opportunities for imports.

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Jun 04, 2020: China's vehicle sales are estimated to rise 11.7 percent on year in May

Comment MCC: This confirms that at the moment, China is again the most likely global driver of the economy in many industries that are key customers of chemicals.

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June 03, 2020: Coatings producer Hempel is investing $100m in a new factory in Yantai with a capacity of 102 kt/a. Products will include solvent-borne, water-based and powder coatings.

Comment MCC: It is reassuring to see that international chemical companies are continuing to invest in China. Under the current circumstances, even a bland statement such as the one given by Hempel, "The Chinese market is a very important part of Hempel's business and our ongoing investment demonstrates our confidence in the region" is nice to hear.

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Jun 02, 2020: China XD, a plastics compounder with a focus on automotive applications, reported that in 2018, premium plastics such as PA66,PA6 and PPO accounted for a substantially larger share of revenue than in 2018

Comment MCC: The company provides a number of potential explanations, all of which probably contributed to this shift: shift towards luxury cars, shift towards EVs and shift towards cars produced by partly foreign-owned JVs with higher quality standards.

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Jun 01, 2020: Shandong Hongda will invest 13.6 Billion RMB in a number of chemical products including acetic acid, food additives, pharma intermediates, polyglycolic acid and polylactic acid.

Comment MCC: While the project is named the Fuyu Fine Chemical New Materials project, the majority of investment actually goes into basic chemicals such as acetic acid - somewhat surprising given that China already has substantial capacity there.

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May 31, 2020: In 2019, 84 Chinese new materials projects qualified for premium subsidies, as announced by the MIIT (CCR)

Comment MCC: Among the projects are silicon nitride ceramic materials, high-performance carbon fiber, auto-exhaust catalysts, and titanium alloy powder, indicating areas that the government considers strategic for China`s development.

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May 30, 2020: From June 1 to 30, a nationwide safety production inspection of chemical companies will be carried out as a integral part of the "safe production month" activities.

Comment MCC: While declaring a "safe production month" to me is a bit too close in spirit to McDonald`s showcasing an employee of the month, there is obviously nothing wrong wit a focus on safety.

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May 29, 2020: MCC/Kai Pflug get quoted in a C&EN article on tightened environmental regulation in Jiangsu province.

Comment MCC: See the article here.

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May 28, 2020: A paper on the strategic implications of the coronavirus for chemical supply chains and global demand scenarios has been published on the ChemAdvice website.

Comment MCC: I work with ChemAdvice as their Senior Expert China, contributing my knowledge of the Chinese chemical industry. Thus the paper.

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May 27, 2020: In 2019, Sinopec had an 80% capacity utilization rate for SBR followed by PetroChina with 70% while the private producers only reached an average of 40% (CCR).

Comment MCC: In this case, the SOEs profited from their stable supply of integrated raw materials compared to the non-integrated private companies were struggling to get enough butadiene.

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May 26, 2020: Every large Japanese chemical maker reported a decline in sales for the year, and all but one, Shin-Etsu Chemical, posted a drop in profits (C&EN)

Comment MCC: Part of the decline is related to China. In particular, car demand declined in the country, and China`s manufacturing suffered from the US-China trade conflict.

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May 25, 2020: Chinese EPS operating rates are well below 50% as the surge in capacity around 2010 to 2012 was not matched with demand growth, which only reached an annual 2.2% in the last 5 years.

Comment MCC: It is somewhat surprising that market growth has been so slow, indicating that insulation is still not a main priority in new construction in China.

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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).

Comment MCC: The fact that this is the third expansion of ethylene capacity (from the current 2.2 million shows that this is a successful venture.

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May 23, 2020: Xingfa will raise funds to build a 60 kt-a ultra-high-purity electronic grade chemical project.

Comment MCC: Electronic chemicals are a segment for which China still strongly relies on imports, something the government clearly is uncomfortable with. So, if the quality of the electronic chemicals produced reaches the necessary level, this should be a solid investment.

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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.

Comment MCC: In terms of sales, Wanhua is substantially smaller than Hengli, illustrating the value of more technically advanced products with higher entry barriers, such as MDI, compared to Hengli`s more commodity type of products. At the same time, this makes the current move of Wanhua into some commodities such as PVC all the more puzzling.

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May 21, 2020: China`s capacity of maleic anhydride decreased by 3% in 2019 while the operating rate decreased by 2.5% (to 44.3%).

Comment MCC: China is seeing a shift from the China-specific benzene oxidation route to the globally more common route via n-butane.

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May 20, 2020: In 2019, the operating income of the Chinese petroleum and chemical industry was 12.27 trillion yuan, accounting for 11.6% of the national industrial revenue.

Comment MCC: In comparison, according to CEFIC, in the EU the chemical industry comprises approximately 7.6% of the manufacturing economic sector. This demonstrates the relatively high relative importance of the chemical industry for China.

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May 19, 2020: The Chinese government has released a second list of goods which will be exempt from the recently imposed tariffs for one year. The list includes chemical products such as medical disinfectants

Comment MCC: This is a relatively easy and inexpensive way of China`s government to support both local and US industry without appearing weak.

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May 18, 2020: While in the first quarter of this year, Chinese chemical prices generally fell, they have actually increased in May so far. Among 64 important monitored products, 48 showed price rises and only 7 showed price declines. Biggest increases were for MMA, nylon chips and cyclohexanone.

Comment MCC: These are encouraging signs which hopefully are not just short-term blips.

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May 17, 2020: The General Office of the Jiangsu Provincial People's Government released the "Restriction, Elimination and Prohibition Catalogue of the Structural Adjustment of the Chemical Industry of Jiangsu Province" (2020 version) to promote the structural adjustment and optimization of the chemical industry. The list contains 13 major categories of restricted projets as well as 18 categories of projects to be eliminated.

Comment MCC: Among the items prohibited is the establishment of new chemical parks, but also the establishment of chemical production outside of chemical parks. In addition, several specific products are prohibited or restricted. In short, the tightening of regulation for the chemical industry is continuing.

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May 16, 2020: High-density polyethylene (HDPE) pipe prices in China have gained ground, finding support from peak consumption season as downstream construction activities resume during warmer weather, and tight supply (ICIS)

Comment MCC: Good to hear some positive news - apparently PetroChina has had four rounds of price increases in the last few weeks, indicating indeed strong demand. In a similar vein, Korean Lotte also sees the beginning of a recovery in olefins demand in China and the rest of northeast Asia

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May 15, 2020: The Jiangsu Provincial Government Investment Fund will set up a special sub-fund: Jiangsu Province Chemical Industry Structure Adjustment Investment Fund. It focuses on supporting the transformation and upgrading of the chemical industry, the optimization and transformation of chemical parks, land restoration and management of chemical parks. The first phase of the Jiangsu Chemical Industry Structure Adjustment Investment Fund has achieved a scale of 10 billion yuan and a target total scale of 20 billion yuan

Comment MCC: Jiangsu province is China`s second largest producer of chemicals, and the industry has been hit quite hard by environmental tightening and the mandatory relocation to chemical parks. The government support shows that the province still has an interest in maintaining a strong chemical industry.

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May 14, 2020: Celanese signed a long-term agreement to supply Anhui Wanwei with VAM to support approximately 50% of the company`s needs.

Comment MCC: This is one of the relatively few commodity chemicals in which multinationals still seem to be competitive with local players.

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May 13, 2020: Local PE production in China was up 8% in Q1 2020 while imports fell by 12%. Apparent demand growth was 3% (ICIS, Richardson).

Comment MCC: As with many chemicals in the past, China`s importance as a net importer declines despite local demand growth.

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May 12, 2020: DIC has acquired liquid inks for the packaging business from Liaoning Tianqi Technology, a manufacturer of liquid inks for packaging for the food and beverage industry based in China. The acquired company name will be DIC Graphics (Shenyang) Ltd. (kemicalinfo)

Comment MCC: According to DIC, this will increase their production capacity of liquid inks in China by about 20%, with the more specific aim of strengthening the presence in the north and northeast. So, it is a smaller add-on to an existing business in order to expand the regional presence from the two main centers of demand (DIC is already present in the greater Shanghai area and in Guangdong province) to a somewhat more secondary market.

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May 11, 2020: The American Chemistry Council is asking the Trump administration to relax tariffs on chemical products related to the fight against COVID-19. Tariffs, some as high as 25%, affect $918 million in imports of chemicals from China needed during the pandemic, including disinfectants like isopropyl alcohol and polycarbonate sheet for personal protective equipment, as well as medical chemicals such as guaifenesin, an expectorant (C&EN)

Comment MCC: If it was not for Trump being president, this should be an easy sell. With a president suggesting drinking disinfectant as a remedy for the virus, nobody knows.

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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.

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May 09, 2020: Demand growth of key polymers in China is expected to be around 2% in 2020, in comparison with an average growth of around 7% in the past 3 years (Globaldata)

Comment MCC: As before, this is still likely to be substantially higher than the global average.

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May 08, 2020: Hengli Petrochemical forecast a profit increase of more than 300% for Q1 2020 compared to the same period in 2019.

Comment MCC: The main source of profits is the upstream integration into PX, which is locally produced at a much lower cost than that of imported material. As a consequence, the gross profit
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.

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May 07, 2020: John Richardson of ICIS points out two interesting facts about the Chinese PE market. China`s global demand share increased from 12% in 2020 to about 33% now. At the same time, average per capita income by province varies from 232% for Beijing to 47% for Gansu.

Comment MCC: The latter means that while some richer provinces have reached a high level of demand saturation, the poorer provinces should still have substantial potential for growth.

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May 06, 2020: Wanhua has a five-generation product range. The first generation is MDI, for which Wanhua has become the global market leader. The second is water-based paint, which is being produced but at a relatively low volume. The third is nylon 12, which will require another 2-3 year before industrialization. The fourth is the ethylene chain. The fifth, which is a long-term prospect only, is degradable plastics and monocrystalline silicon.

Comment MCC: Wanhua has been spectacularly successful in MDI, reaching global market leadership by utilizing a very focused approach. Hopefully, the extension of the portfolio to areas which do not require particular technological expertise (e.g., PVC) will not be detrimental to the company`s success.

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May 05, 2020: China`s demand for semiconductor materials accounts for more than 50% of global demand, exceeding US $ 20 billion. China relies on imports for about 70% of these materials.

Comment MCC: The reliance on imports along with the trade conflict with the US and the high importance of semiconductors for the overall economy provide a strong incentive for China to build up its own local companies.

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May 04, 2020: An insulation company representative has been sentenced to 10 years in prison for illegal use of a banned ozone-depleting substance, chlorofluorocarbon

Comment MCC: China sends a strong signal that this will not be tolerated, in an aim to counteract the negative publicity that reports on continued use of such substances in China generated.

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May 03, 2020: Axalta broke ground on a new waterborne coatings production at its Jiading, Shanghai plant.

Comment MCC: This will be an expansion of an existing plant at the same site. In the long term, both the Chinese automotive market and waterborne coatings are supported by long-term trends as the Chinese automotive market still has room for growth, and environmental regulation is promoting waterborne materials.

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May 02, 2020: From January to March 2020, the Chinese chemical raw materials and chemical products manufacturing industry achieved a profit of 38.34 billion yuan, a year-on-year decrease of 56.5%

Comment MCC: Not an unexpected drop, though it is somewhat worrying that the drop in profits is substantially larger than the average drop over all industries (37%)

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May 01, 2020: Shandong province has publicized a list of more than 190 companies targeted to close and withdraw from chemical production enterprises.

Comment MCC: Shandong is China`s leading producer of chemicals, and the publication of the list indicates the continuing effort of the government to improve the safety and environmental record of the chemical industry.

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Apr 30, 2020: While according to C&EN, Covid-19 did not seriously impede the production and shipment of pharmaceuticals in the first quarter of 2020, the magazine nevertheless concludes that "What the pandemic has done is wake up regulators and world leaders to the extent to which China dominates the world's supply of active pharmaceutical ingredients and their chemical raw materials. An ongoing industry effort in the US and Europe to rebalance the pharmaceutical chemical supply chain is likely to be energized by government initiatives to ensure domestic production of drugs."

Comment MCC: This is somewhat ironic as currently supply of APIs from China may be the most stable in the world, as the country currently is much less affected by Covid-19 than most other API-producing countries.

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Apr 29, 2020: In a response to the growing reliance of the country on API imports from China, the Indian government approved an investment package worth 1.3 billion USD to increase the local production of APIs.

Comment MCC: It will be interesting to see how much will result from these efforts. Chinese API producers have substantial advantages with regard to local infrastructure, size and knowledge, all of which will not easily be replicated in India.

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Apr 28, 2020: Wanhua results for Q1 of 2020 showed a y-o-y decrease of operating income of 3.8% while net profit decreased by 50.7%

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.

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Apr 27, 2020: China`s calcium carbide capacity and output both fell in 2019, while capacity utilization was about 70% (CCR)

Comment MCC: The industry is still highly fragmented, with the 66 largest firms accounting for 78% of total production. This fragmentation is probably a reason for the low profitability - only 32 of the 66 largest producers were profitable in 2019.

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Apr 26, 2020: China will cut subsidies on new-energy vehicles by 10 percent this year, by 20 percent in 2021 and 30 percent in 2022

Comment MCC: These subsidies were scheduled to end earlier, so the reduction of subsidies is actually an improvement, indicating that China aims to further support NEVs. This should be beneficial to suppliers of chemicals required for these cars.

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Apr 25, 2020: The Chinaplas 2020 has been canceled after initially being postponed to August from its original April data. The cancelation is based on State Council regulations effectively stopping exhibitions for the time being.

Comment MCC: It is clear that with the current travel and visa restrictions, this could not have been a regular event. The postponement illustrates that the coronavirus will certainly affect the whole of 2020, not just the first half.

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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.

Comment MCC: Along with the similar-sized BASF investment also in Guangdong province, these two projects show that multinational chemical companies still see China as an important source for growth.

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Apr 23, 2020: Current (2019) Chinese butadiene capacity is about 4.1 million t/a, with a capacity utilization of about 75%. Capacity is forecast to reach 6.1 million t/a by the end of 2024 based on expansion plans already announced.

Comment MCC: This means that to keep capacity utilization at the current level, an annual demand growth of about 8.5% will be needed - not a very likely rate, indicating the danger of overcapacity.

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Apr 22, 2020: The Office of the Shandong Provincial Government 's Security Committee conducted law enforcement inspections on more than 6,380 enterprises dealing with hazardous chemicals and found more than 34,700 problems and hidden dangers

Comment MCC: Shandong is the province with the largest production of chemicals in China - still, the number of chemical enterprises shows the magnitude of the work to improve chemical safety. In addition, currently the coronavirus has slowed down the progress of inspections.

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Apr 21, 2020: The State Council issued a"Notice on Matters Related to Comprehensive Administrative Law Enforcement of Ecological Environmental Protection". The Notice limits taking indiscriminate and simple actions in response to environmental inspections, particularly perfunctory practices such as complete shutdowns and shutdowns before getting a full understanding of the situation.

Comment MCC: While common sense, this is a shift from what has been practiced so far. It seems that in the trade-off between economics and environment, the balance is shifting somewhat more to economics right now, possibly as a consequence of the economic damage caused by Covid-19.

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Apr 20, 2020: In 2019, the average annual operating rate of high-cis butadiene rubber in China was 63.2% (CCR)

Comment MCC: The CCR paper also states that "In 2019, China's butadiene rubber output
and capacity utilization rate were both good". In most Western countries, a capacity utilization of 63% would not be regarded as good.

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Apr 19, 2020: China's production of chemical raw materials and products increased by 0.7% year-on-year in March 2020 (Trading Economics)

Comment MCC: This is better than the industry average, a decline of 1.1%, indicating that the chemical industry is not quite as badly affected by the coronavirus as some other industry segments. Possibly this is due to the fact that some of the products produced by the chemical industry are important in the fight against the virus.

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Apr 18, 2020: The demand for para-aramid in China will increase from 13 kt in 2020 to 25 kt in 2025 (PaCP)

Comment MCC: Currently, 80% of the material is imported. However, the strong market growth and the fact that para-Aramid is regarded as a key strategic material by the Chinese government provide strong incentives for local players to expand their market share.

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Apr 17, 2020: Azelis will acquire 100% shares of CosBond, a Chinese specialty chemicals distributor headquartered in Hong Kong. CosBond has over 30 global principals, predominantly in the personal care industry, followed by flavor and fragrance, food and nutrition, and fine chemistry

Comment MCC: Personal care chemicals are indeed a growth market in China, with a CAGR of about 9% in the last 5 years. At the same time, chemical distribution is still relatively weak in China, so this could be a good move by Azelis.

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Apr 16, 2020: According to Surya Patra, analyst, PhillipCapital India, "the powering trend of de-risking of input procurement from China by global chemical leaders offers great export as well as domestic sales opportunity for the Indian specialty chemicals industry"

Comment MCC: Indeed, the US-China trade conflict was a motivation for chemical companies to diversify their sourcing, as is the coronavirus, though it now looks that China might get past the virus quicker than many other countries.

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Apr 15, 2020: According to IHS, China is increasingly self-sufficient in polypropylene and has the potential to become a net exporter of the resin.

Comment MCC: This is one more in a long list of basic chemicals for which China over time has turned from a massive importer to a net exporter.

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Apr 14, 2020: About 600 kt/a of new silicone monomer is expected to be brought onstream in 2020/21 and at least another 1.5 million t/a after 2022 (CCR)

Comment MCC: As a consequence, it will take several years until this capacity is absorbed by the market. Silicone monomer thus follows the usual trajectory of chemicals in China - a boom (in this case partly caused by the inclusion of organic silicones in the "Made in China 2025" initiative) followed by a bust as too much capacity is created.

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Apr 13, 2020: According to ICIS, Asia may end up as a dumping ground for many chemicals from the world over, as US and European markets slump and economies slide into recession

Comment MCC: This is somewhat ironic as for many chemicals, China has usually been the least attractive buyer globally.

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Apr 12, 2020: According to ICIS, China's textile supply chain is facing rougher times ahead as export orders get cancelled

Comment MCC: The negative consequences of the coronavirus for China now mainly shift to economic ones, and export-oriented industries such as textiles will suffer most. Obviously, materials suppliers for these industries will be hit hard.

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Apr 11, 2020: For POM, CCR reports that consumption and imports are growing while domestic output is falling.

Comment MCC: As in many other areas, Chinese producers are so far unable to enter the higher end of the market. They would be well advised to either invest more in R&D, collaborate with foreign companies or buy a foreign player in order to advance their product lines.

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Apr 10, 2020: Chinese operating rates for silicone production decreased from 86.5% to 82.9% in 2019 compared to 2018 (CCR)

Comment MCC: This is mainly a consequence of the stricter environmental protection - demand for silicones is still increasing.

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Apr 09, 2020: Southeast Asia's isopropanol prices reached a six-year high on 3 April 2020, with demand driven by the use of the alcohol in hand sanitizers and similar products (ICIS)

Comment MCC: There are indeed a few products including isopropanol and some grades of PP which benefit from the coronavirus, though of course this impact is far lower than the negative impact on overall chemical demand.

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Apr 08, 2020: Xinjiang Wangjinglong New Materials held the signing ceremony for a 1.3 million PBAT project at Korla. PBAT (polybutylene adipate terephthalate) is a biodegradable copolymer of adipic acid, 1,4-butanediol and terephthalic acid (CCR)

Comment MCC: While the PBAT has some advantages in its application, particularly its biodegradability in agricultural uses, the project is for petrobased polymer. Thus it does not solve the issue of overall sustainability.

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Apr 07, 2020: China's plastics export value dropped by 16pc year on year for January-February to $8.2 trillion (Argusmedia)

Comment MCC: This indicates that effectively, exports of plastics in February were about 30% lower than in 2019 as a result of the coronavirus.

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Apr 06, 2020: Henan province will carry out work inspections for all enterprises that have obtained licenses for production of hazardous chemicals. April is the self-inspection stage, May/June is the review stage and June/July is the spot check stage.

Comment MCC: This announcement indicates a certain "going back to normal", and shows that the government interest in improving the safety of the chemical industry is still strong.

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Apr 05, 2020: The plants of plastics compounder China XD in Heilongjiang and Sichuan were running at 20% capacity utilization at the end of this March and are expected to reach 70% capacity utilization by the end of this April and normal utilization rate by the end of this May

Comment MCC: While the facilities were only completely closed from Jan 24 to Feb 09, the numbers above show that the effect on total production will be much larger. Drivers are both the reduced number of workers at plants and the lower demand.

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Apr 04, 2020: China will extend subsidies and tax breaks for new-energy vehicle purchases by two years (Caixin)

Comment MCC: This is in effect a stimulus measure aimed at supporting the car market, which has been affected by low demand and the coronavirus. Of course, chemical companies supplying automotive producers will benefit.

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Apr 03, 2020: Sinopec will reduce its 2020 capex by 2.5% as a consequence of low oil prices and low demand for fuel due to the coronavirus (Reuters).

Comment MCC: The cuts are in the refining and the sales unit, so they should not substantially affect chemical production.

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Apr 02, 2020: BASF`s investment focus will shift from Europe to Asia. While in the planning period of 2019 to 2023, the Asia-Pacific region accounted for 27% of investment and Europe for 43%, in the next five years 41% will be allocated to Asia and only 34% to Europe.

Comment MCC: BASF still maintains its belief that chemical industry growth will mainly come from Asia

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Apr 01, 2020: According to the National Bureau of Statistics of China, the output of China's industrial enterprises dropped by 21% in the first two months of 2020, compared to the year-ago period, and profits by 66% (C&EN)

Comment MCC: On the positive side, 86% of all chemical plants have reopened, though frequently not at full capacity.

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Mar 31, 2020: Dow will increase its investment in production of silicone intermediates in Zhangjiagang by 300 million USD in the next 5 years.

Comment MCC: Targeted growth markets include automotive, construction, consumer goods, electronics, and personal care.

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Mar 30, 2020: According to CEN, China`s contract research firms may actually benefit from the coronavirus as for example at WuXi App Tech, 96% of employees are back at work and its CEO stated that he expects COVID-19 to delay projects at the company by only 2 to 3 weeks

Comment MCC: At the same time, the lockdown in Europe and North America obviously slows down the progress of R&D in these regions.

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Mar 29, 2020: Celgard, a North Carolina-based maker of battery separator films, has filed a lawsuit accusing a former employee of stealing trade secrets related to separators and bringing it to a Chinese company. The suit alleges that the employee changed his name in the process to cover his tracks (C&EN)

Comment MCC: This example illustrates that the biggest IP risk does not originate from shifting production to China but rather from individual employees anywhere stealing IP - whether they are Chinese or not.

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Mar 28, 2020: PP and PE prices in China have steadily declined since the coronavirus outbreak worsened in January. For LLDPE film, spot prices fell close to a 12-year low last week, while PP raffia prices reached a four-year low (ICIS)

Comment MCC: The big SOEs with continuous production were somewhat less affected by the virus outbreak, and now that the virus is gradually coming under control in China, they are producing at 80-90% of capacity. At the same time, local demand is still low, explaining why there is an increase in inventory and a decline in prices.

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Mar 27, 2020: In 2018, 15 private environmental protection companies transferred or signed equity transfer agreements with other parties, of which 12 (80%) were authorized by state-owned enterprises, accounting for 80%.

Comment MCC: While overall, the field of environmental protection is promising, it requires substantial investments, and good returns may only be expected in the longer-term future. As a result, private enterprises which tend to pay an interest rate about 25% higher than the benchmark rate struggle to keep up with the SOEs which have stronger financials.

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Mar 26, 2020: Operating rates for PTA dropped from a high of 92% at the end of January to 71% in February and was 75% on Mar 12.

Comment MCC: This points to the main issue affecting commodity chemicals producers, lack of demand rather than inability to produce. Given the worsening global situation, this may not improve for some time.

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Mar 25, 2020: Gansu province has issued measures for assessment of chemical parks with scoring standards, including the aspects of planning and layout, public infrastructure, work safety, environmental protection, and economic development.

Comment MCC: It is a bit worrying to see these standards being established on provincial rather than on national level, as this may both offer opportunities for individual provinces to have weaker standards and makes compliance more difficult for companies active in several provinces.

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Mar 24, 2020: Medical authorities in China have said Favipiravir, a drug used in Japan to treat new strains of influenza appeared to be effective in coronavirus patients, at least in patients with less severe syndromes (The Guardian) Japanese media said on Wednesday.

Comment MCC: It is good to get the occasional reminder that chemistry can be very useful indeed.

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Mar 23, 2020: Deloitte expects inbound chemical acquisitions by foreign buyers in China to benefit from the ongoing consolidation process in the industry driven by liquidity issues of smaller players, and from stabilization of IPO pricing levels.

Comment MCC: Interestingly, Deloitte expects the typical deal size of inbound transactions to be in the range of 50 - 150 million USD rather than in bigger deals.

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Mar 22, 2020: China's data for January-February showed a 13.5% year on year drop in industrial production due to the outbreak that started in Wuhan in December (ICIS). Production of rubber and plastic products was down 25% in the two-month period, year on year, while automobile production fell 46%, and mobile phone output was down 34% (ICIS)

Comment MCC: Given that the virus primarily affected the month of February (production stops in January were due to the spring holidays), this indicates a decline of about 30% for February.

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Mar 21, 2020: Jiangsu-based Suzhou Bianjing will establish a neonicotinoid pesticide production in Inner Mongolia

Comment MCC: It is likely that - given the tightened environmental regulation and the lack of space in chemical parks in Jiangsu province - more and more companies from this province will move to less populated provinces such as Inner Mongolia.

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Mar 20, 2020: A report by management consultancy McKinsey gives some export data for specialty chemicals comparing India and China. For several major specialty chemicals segments, the China share of global exports is between 3 and 6 times higher than that of India.

Comment MCC: From this, McKinsey derives the key insight that "India can aim for deeper market penetration in these segments" and "These segments provide new opportunities for India to explore".

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Mar 19, 2020: According to Reuters, China will increase export tax rebates on many products (including a 13% export tax rebate on ethylene, propylene and ethylene glycol) from March 20 to ease the pressure on companies hit by the coronavirus outbreak

Comment MCC: This sounds more like a goodwill gesture than something that will have a strong real-life effect, as global trade flows and global demand are currently too disrupted to substantially benefit from such a rebate.

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Mar 18, 2020: German Domo Chemicals will build a 50 kt nylon compounding plant in Zhejiang

Comment MCC: The company will focus on modified nylon for automotive and electronic uses, reflecting the substantial and growing market China offers. The company claims to already sell 6 kt of imported material in China per year.

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Mar 17, 2020: A number of chemical companies presenting at the J.P. Morgan Industrials Conference gave their most up-to-date assessments of the pandemic. Finances are being hit but conditions are improving in China (C&EN, see there for detailed comments by companies including LyondellBasell, Dow, Solvay and Lanxess)

Comment MCC: Of course, this matters little if the global economy takes a substantial hit as the coronavirus affects Europe and the US.

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Mar 16, 2020: In 2019, China's chemical enterprises above designed size realized operating revenue of 105.78 trillion yuan, up by 3.8% over the previous year. Operating costs incurred were 88.94 trillion yuan, up by 4.1%. The profit margin of operating revenue was 5.86%, down by 0.43 percentage points against the previous year. (Linking Chemical Parks)

Comment MCC: According to an expert from the Bureau of Statistics, an important reason for the decline in profits is the lower profitability of key customer industries including automotive

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Mar 15, 2020: The number of Chinese inorganic salts producers decreased by 69 to 882 in 2019 from the previous year, a reduction of 7%.

Comment MCC: The low capacity utilization rate of the industry (about 62%) suggests that further industry consolidation is likely, as in many Chinese chemical segments.

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Mar 14, 2020: According to Indian media, prices of some APIs such as paracetamol, vitamins, and penicillin have rapidly increased as a consequence of the coronavirus.

Comment MCC: India is particularly affected as the country gets more than 70% of its active ingredients from China, and Indian companies tend to hold lower levels of stock than Western pharmaceutical companies.

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Mar 13, 2020: LyondellBasell has signed a definitive agreement with Liaoning Bora to set up a 50:50 joint venture in China, an investment of about 2.6 bn USD.

Comment MCC: This JV should allow local player Bora to move into higher-end polyolefins (utilizing LyondellBasell technology). These materials are so far underrepresented in the Chinese market.

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Mar 12, 2020: China will modify the environmental supervision of companies to help the resumption of production disrupted by the coronavirus epidemic, giving firms more time to rectify environmental problems, but stressed it was not relaxing standards (Reuters/China Economic Review)

Comment MCC: This was to be expected and makes sense, but will indeed not meant that the pressure on the chemical industry to improve its environmental record will decrease in the longer run.

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Mar 11, 2020: The China Synthetic Resin Supply and Sale Association expects China to become a net exporter of PC in 2021 or 2022

Comment MCC: This forecast is based on the rapidly expanding domestic PC production, particularly by expanding domestic players. This is bad news for multinationals involved in PC production, as it will likely lead to further decreases in price.

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Mar 10, 2020: Banks are suspending the credit lines for some Chinese independent oil refineries amid rising concerns about overall industrial defaults and as the coronavirus outbreak has eaten into the processors' fuel sales (Reuters). At least three independent refiners have had $600 million in credit lines suspended by international banks

Comment MCC: Many chemical companies in China will suffer from similar issues in the near future, and government support is more likely to help the biggest, most well-connected companies rather than those with the most serious issues.

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Mar 09, 2020: The average capacity of caustic soda producers increased from 220 000 t/a in 2013 to 270 000 t/a in 2019, and the average capacity of PVC producers increased from 270 000 t/a in 2013 to 340 000 t/a.

Comment MCC: This hints at the ongoing consolidation process. The still large remaining number of producers (e.g., 161 for caustic soda) suggests that this process will continue.

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Mar 08, 2020: The impact of the coronavirus outbreak cut Arkema's earnings by €20m to the end of February this year

Comment MCC: The company states that production has resumed to some extent at most but not all of Arkema's China-based plants, but that impacts such as access to raw materials or customer demand remain disrupted.

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Mar 07, 2020: In the chemical industry, there were 23,335 companies above the designated size. Overall profits decreased by 13.9%, but this was not evenly distributed. Profits of specialty chemicals, coatings and rubber products increased while profits from fertilizer production and coal chemicals declined substantially.

Comment MCC: Clearly, the lower-volume, more technically challenging chemical segments such as specialty chemicals are much more attractive in China - similar to the situation globally.

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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: Essentially this is Wanhua coming to the rescue of a loss-making SOE that never mastered the technology for MDI production. At the same time, this JV will further strengthen Wanhua as the leading global MDI producer. For the other players, it is probably good that no second Chinese MDI producer is developing - judging from the situation with polycarbonates, that would quickly lead to price wars.

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Mar 05, 2020: Last year, the proportion of US imports of medicines that came from China included 95 per cent of ibuprofen, 91 per cent of hydrocortisone, 70 per cent of paracetamol, 40 to 45 per cent of penicillin and 40 per cent of heparin, according to data from the US Commerce Department (SCMP)

Comment MCC: This is the reason why pharma companies and health ministries worldwide are worried about supply chain disruptions as a consequence of the corona virus.

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Mar 04, 2020: Sang Jianxin of the CPCIF paints a rather positive picture of China`s existing CTO and MTO projects, stating sound profitability and high operating rates of 85-90%.

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.

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Mar 03, 2020: BASF SE warned the outbreak could help lead to the lowest growth in production since the financial crisis more than a decade ago. According to the company, the epidemic will have a significant impact worldwide, particularly in the first and second quarters, which won't be fully offset during the remainder of the year.

Comment MCC: Viewing the situation from China, it is strange to see how the vulnerability to the virus now shifts from China to countries outside of China - many of which presumably are less prepared than China to take drastic measures.

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Mar 02, 2020: According to Zack`s, Coronavirus adds to the pains of the chemical industry. Disruptions associated with the outbreak are expected to hurt chemical demand in China, a major consumer, over the short haul. Slowdown due to coronavirus is expected to lead to lower consumption of chemicals, including ethylene, polyethylene and polyvinyl chloride in China, at least in the first quarter of 2020. As such, chemical makers are expected to face short-term demand weakness in China as industrial activities in the country take a blow due to the shutdowns. Demand remains soft in certain key chemical end-use markets such as automotive, electronics and agriculture. Fallouts from the supply disruption in China could affect the availability of raw material for the chemical industry during the first half of the year. Notably, U.S. chemical makers procure several chemicals critical to their production processes from China. Shutdowns due to the outbreak are likely affect the delivery of key raw materials. The supply disruption will also lead to a spike in costs of these inputs and eat into margins of chemical makers, with most of the impact expected to be felt in the March quarter.

Comment MCC: Individual chemical companies including Celanese, Eastman, Westlake, Huntsman and Albemarle have already indicated that they expect a weak first half of 2020 due to the virus.

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Mar 01, 2020: According to Emkay, peak summer sales of some Indian companies could be at risk if the virus-induced delay in supplies from China persists beyond February. Chemicals and agro-chemical companies like Dhanuka Agritech Ltd., Rallis India Ltd., Vinati Organics Ltd. and Camlin Fine Sciences Ltd. appear vulnerable

Comment MCC: A large share of India`s APIs and pesticide active ingredients come from China and are thus in danger of suffering from delays in production or logistics in China.

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Feb 29, 2020: The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Comprehensively Strengthening the Work on the Safe Production of Dangerous Chemicals" and requested that all localities carefully implement them (Xinhua)

Comment MCC: Part of the idea of releasing these opinions right now seems to be to show the public that life - and more importantly, the economy - goes on. So, while there might be a slight slowdown in implementation of tightened chemical regulation, it will certainly not be reversed.

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Feb 28, 2020: Chemical value chains are still being disrupted with factories crippled by lack of raw materials, manpower, high inventories, and poor downstream demand (ICIS). In the week ended 21 February, MMA plant operating rates in China averaged at 38.6%, down from 42% in the previous week, as producers attempt to prevent inventory from building up. PS operating rates currently are only about 50%. A bright spot is isopropanol, which is in high demand due to its use in disinfectants.

Comment MCC: Given the international spread of the virus, is is now quite possible that lower export demand will act as a further restraint on markets.

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Feb 27, 2020: While China`s self-sufficiency rate for synthetic rubber reached 79% in 2019, it is still much lower for higher-end products, reaching only 44% for butyl rubber (CCR)

Comment MCC: The headline of this report in the CCR is "Synthetic Rubber: Surplus of Mainstream Products and Short of High-end Ones". If the first two words are modified, this headline still applies to vast parts of China`s chemical industry.

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Feb 26, 2020: Chinese caustic soda producers are beginning to turn to external markets, in addition to making production cutbacks, to help manage the drop in downstream demand caused by the coronavirus outbreak (Argusmedia)

Comment MCC: However, only a few - mostly coastal - Chinese producers have the option to export. Many others have reduced operating rates to reduce inventory buildup due to low demand and/or difficulties in outbound logistics.

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Feb 25, 2020: Sinochem Energy, which operates Sinochem's oil and petroleum products trading, refining, storage and logistics, as well as distribution and retail businesses, will sell a 20% stake to five state-owned firms for 11.56 billion RMB (kemicalinfo/Xinhua)

Comment MCC: Both Sinochem and ChemChina try to reduce their debts before their potential merger. However, the fact that this is done via sales to state-backed entities may limit the effect of such a sale, as it does not really expose both companies to market forces.

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Feb 24, 2020: Electricity consumption at major industrial parks such as Shanghai Chemical Industry Park, Zizhu Hi-tech Park and Waigaoqiao bonded area had hit 80 percent of normal use, indicating recovery at these parks is positive. (Shanghai Daily)

Comment MCC: Of course, that does not mean that all the chemicals produced now can find ready buyers, both for reasons of lacking demand and logistics issues.

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Feb 23, 2020: Hebei province has published a positive list of more than 30 companies in the petroleum and chemical industries, involving chemical fertilizers, titanium dioxide, coatings and other fields. Companies on the positive list can achieve "non-stop production, unlimited production, no inspection, and no interruption" during the emergency emission reduction period.

Comment MCC: This should be very positive for the companies on the list, as the area around Beijing is in general getting more and more restrictive with regard to chemical production.

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Feb 22, 2020: An assessment published by the British "Nature" magazine on December 12th showed that for the first time in 2019, China became leader in the production of high-quality chemical scientific papers, putting the United States in second place.

Comment MCC: It is hardly surprising that a country that accounts for about 40% of the global chemical market will also become the leader in chemical research.

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Feb 21, 2020: Out of 32 big chemical parks surveyed, half had employee return rates of at least 80% on Feb 19, 10 had return rates of between 50-80% while 6 had return rates below 50%. The production load rate hovers around 60% for most parks but can go as low as 40% or as high as 100%. The average load rate of 60% is an improvement of the load rate of below 50% in the previous week.

Comment MCC: The data shows both that the coronavirus has and continues to strongly affect chemical production, and that things are improving.

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Feb 20, 2020: Plastics fair ChinaPlas has been shifted from its original date in April to August 2020, still in Shanghai.

Comment MCC: This seems to indicate the official Chinese objective to get most of the economy back to normal as quickly as possible. However, only about 1/3 of migrant workers had returned to work by mid-February, and 1/3 is still expected to be missing at the beginning of March. Coal consumption is down 40%, and passenger numbers on local public transport are at only around 10% of their normal levels. So, the normalization process will be spread out even in those provinces with very limited impact of the virus so far.

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Feb 19, 2020: According to EU Chamber of Commerce President Joerg Wuttke, the world could face a shortage of antibiotics if the pharmaceutical industry's supply problems posed by the coronavirus outbreak in China cannot soon be resolved. He also mentioned the problem of surging inventories in the car industry (China Economic Review)

Comment MCC: Indeed, large parts of the pharma industry depend on APIs and intermediates sourced in China. The impact of the virus on China`s logistics thus can affect the rest of the world

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Feb 18, 2020: Several Chinese producers of chemicals such as ethylene oxide, ethylene glycol and polyethylene have reduced production as a consequence of the coronavirus. Prices have declined (ICIS)

Comment MCC: Among the reasons are the lack of production and transportation workers as many of them have to stay in self-imposed quarantine for two weeks after returning from the holidays, as well as restrictions on inter-provincial transportation. Companies react by reducing production as they run out of storage space for their products.

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Feb 17, 2020: 101 production and operation units including Tianjin Bohai Pharmaceutical Co., Ltd. and their related personnel were included in a third "blacklist" related to work safety issues, published by the Emergency Management Department

Comment MCC: Interesting to see how the "name and shame" approach that so far was more prominently used against major Western brands now is applied to domestic companies as well.

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Feb 16, 2020: Drug producers face the threat of serious disruption to production if China's coronavirus lockdown persists and cuts off supplies of Chinese-made essential ingredients, the head of Indian pharmaceuticals group Cipla has warned (Financial Times)

Comment MCC: Indian producers of generic drugs rely on China for about 70% of their API supplies, though for drug producers, the reliance on supply from China is much lower. So, a disruption in supply from China may indeed strongly affect the production of generic drugs.

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Feb 15, 2020: Celanese is starting a debottlenecking project at its Nanjing VAE production facility of 20 kt/a by 2022. Celanese will further expand VAE production capacity at its Nanjing facility by 65 kt/a by adding a third VAE reactor by late 2022, taking the total Nanjing VAE capacity from 130 to 215 kt/a.

Comment MCC: This reflects the growing demand for VAE-based adhesives in China, and Celanese`s ambition to increase its market share.

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Feb 14, 2020: Initial reports from a variety of places suggest that economic activity in China is slow to pick up again after the Spring festival break that got extended due to the coronavirus. For example, it is estimated that less than 20% of economic activity in Shanghai has resumed, even though this city does not have a high number of virus cases.

Comment MCC: As a best case scenario, most economic activity will be resumed after Feb 17 in most places in China - an unplanned stoppage of 2 weeks. This makes predictions that GDP growth in Q1 will still reach 4% rather optimistic.

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Feb 13, 2020: In agrochemicals, the coronavirus and its associated restrictions on transportation start to have an effect. Problems include factories not being able to deliver goods to warehouses at ports; delays in trans-provincial transportation due to epidemic prevention measures; truck drivers not being able to come to work. In addition, in places such as Shanghai about half of the packing workers and forklift drivers have not returned to their posts yet (Agropages)

Comment MCC: Depending on the duration of the epidemic prevention measures, this may cause major economic damage. On the other hand, the government is now trying hard to improve the situation and to emphasize the importance of economic activity in this period. For example, strict measures have been enacted to prevent random road blocks.

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Feb 12, 2020: Iberchem Group, a Spanish private-equity owned flavor producer, will buy Chinese flavor producer Nanchang Duomei Bio-Tech.

Comment MCC: This reflects a number of trends - the "Buy and build" strategy of private-equity backed chemical companies, the need for global reach in specialty chemicals, and the increasing availability of suitable acquisition targets in China`s specialty chemicals segment.

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Feb 11, 2020: IHS Markit expects GDP growth in mainland China to be 4.2%, down 1.6% from the original forecast of 5.8%. This would result in 4 million tons of lost base chemicals demand.

Comment MCC: This forecast is based on the assumption that the economy remains locked down through the end of February. At the moment, this seems like a relatively negative scenario as most places outside of Hubei province gradually seem to start working again.

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Feb 10, 2020: The NDRC published a list of 23 Green Petrochemical Technologies in order to promote green development of the petrochemical industry.

Comment MCC: Hopefully, this will direct new investment to adopting more sustainable options. For at least some of processes listed, such as titanium dioxide production (via chloride rather than via sulfonation process), the recommendations seem straightforward and obvious. I still think it is fascinating that issues such as different production processes are an NDRC matter.

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Feb 09, 2020: At present, Shandong Province has a total of 85 certified chemical parks (out of a total of 199 chemical parks in total) and 9,609 chemical production companies, of which 2,978 have entered the park, with a rate of 32.8%. Shandong proposes to further reduce the number of chemical companies, strive to close more than 20% on the existing basis, and control the province's chemical production enterprises to less than 5,000 (Xingyuan Chemical Park Research Institute)

Comment MCC: Shandong has already closed down several thousands of chemical companies, and it indeed seems very likely that thousands as well as about 100 chemical parks will be closed down in the next few years

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Feb 08, 2020: A comment on the impact of the coronavirus on the chemical industry was published on the CheManager webpage.

Comment MCC: I am not going to comment on my own comment - that would be weird, right?

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Feb 07, 2020: 49 chemical companies were closed in several counties of Yancheng, Jiangsu in 2019

Comment MCC: It is interesting to see that such announcements are now apparently used to promote regions - closing down some chemical production is seen as a responsible thing to do, rather than as an obstacle to investors.

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Feb 06, 2020: The Chinaplas 2020 trade fair has been postponed indefinitely due to the coronavirus.

Comment MCC: The fallout is spreading.

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Feb 06, 2020: Major drug companies have issued statements in recent days assuring the public that their inventories are adequate in the face of supply chain threats stemming from China's coronavirus outbreak. Suppliers of active pharmaceutical ingredients (APIs) are also assuring customers that they are prepared for temporary interruption in the supply of key ingredients from Chinese firms (C&EN)

Comment MCC: A large share of chemical companies has already extended the Spring holiday vacation by one week, lasting until Feb 09. If restrictions are largely lifted thereafter, the effect on API supply chains should be limited. However, longer restrictions either affecting production or transportation could be a bigger issue.

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Feb 05, 2020: A paper by Liu Chang in the China Chemical Reporter lists a number of chemical materials that will be vital for the development of 5G technology, including ceramic filters, semiconductors, 3D glass, ceramic covers, electromagnetic shielding and heat dissipation materials.

Comment MCC: Chemical companies with relevant materials are well advised to analyze the opportunities of their products in this fast-growing market in detail.

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Feb 04, 2020: Agrochemical producers in Jiangsu and Zhejiang have extended their Spring Holidays by an additional week as a consequence of the coronavirus outbreak. Many other companies in other provinces have not stopped production of agrochemicals at all during the holidays. However, a fair to be scheduled for February (CAC 2020) has been canceled (Agropages)

Comment MCC: While there is some concern about getting raw materials supply, so far the overall effect of the virus on agrochemical production seems to be low.

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Feb 03, 2020: The Food Ingredients China (FIC), an annual fair for food ingredients and food additives, has been postponed due to the coronavirus. It was originally scheduled for Mar 17-19, 2020.

Comment MCC: This is unlikely to be the only one of such events to be canceled in the next few months. The virus will cause major disruptions at least of all activities that include face-to-face meetings.

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Feb 02, 2020: Chinese consumption of Bisphenol A increased by 22% in the first 10 months of 2019 (CCR)

Comment MCC: This is mainly due to the increased number of PC producers in China. PC production is classified among China`s new materials projects in the context of high-tech industrialization, causing a number of domestic companies to focus on its production.

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Feb 01, 2020: A government official has pointed out two major difficulties in relocating chemical firms in the Yangtze River delta, namely the lack of funds for relocation and the limited acceptance rate by chemical parks (CCR)

Comment MCC: Indeed, these are major obstacles - on the other hand, given that industry consolidation is presumably a major objective of the relocation program, these hurdles are probably deliberate rather than just a byproduct of better environmental protection.

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Jan 31, 2020: China`s polyester production is still relatively fragmented, with the top 10 players only accounting for 55% of total production (CCR)

Comment MCC: On the other hand, on a positive note, capacity growth in 2019 (6.3%) was lower than output growth at about 10%.

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Jan 30, 2020: According to Simon Robinson of Utech-polyurethane, the signed Phase 1 US China trade agreement significantly lowers the bar for US companies to pursue intellectual property claims in China, as it shifts the burden of proof in trade secret disputes to the accused party.

Comment MCC: If properly implemented, this should indeed make it easier for foreign companies - including chemical ones - to protect their IP in China.

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Jan 29, 2020: The chemical price index released by ChemSino declined by 11.2% in 2019, with the vast majority (74%) of the 160 tracked products showing a price decline.

Comment MCC: This is despite the ongoing tightening of environmental regulation. For some chemicals, the boom-bust cycle typical for China could be observed in 2019. For example, Lithium carbonate prices dropped by 36% as the government reduced subsidies for EVs.

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Jan 28, 2020: Heilongjiang Xinda has started construction of a 300 kt/a biobased and biodegradable composite materials project

Comment MCC: It will be interesting to see whether there is already a domestic market for these products, or whether it will have to be created via governmental regulation. In the past, the majority of bioplastics made in China was exported.

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Jan 27, 2020: Sichuan province will implement measures to standardize chemical parks, and to promote green chemical parks.

Comment MCC: From my own visits to chemical parks, there used to be very limited understanding of the needs and requirements of chemical tenants. For example, one park proudly pointed out that a bicycle manufacturer was already present at the park. If the provincial government wants to have a chance to achieve its objective of locating more than 80% of chemical companies in chemical parks, they need to improve substantially in this regard.

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Jan 26, 2020: China will halve its subsidy budget for new solar power projects this year to 1.5 billion yuan as the government steers its renewable energy sector away from reliance on financial support (Caixin). National subsidies for onshore and offshore wind farms will also end in 2021 (onshore) and 2022 (offshore).

Comment MCC: This will have an effect on the suppliers of materials to these segments. As the example of EVs shows, it can potentially lead to strong reductions in sales. This hits the solar industry at a time when some of the participants are already in a difficult position. For example, Yingkou Jinneng, a company backed by thin-film solar energy firm Hanergy, just failed to pay a part of its debt.

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Jan 25, 2020: In the first eleven months of 2019 the US imported 6.5 m refrigerators, a decrease of 60% compared to the same period in 2018.

Comment MCC: Presumably this is the result of the trade conflict. Interestingly, about 90% of the imports of refrigerators to the US still come from China, with other countries such as Mexico (4%), Canada (1%) and Turkey (1%) lagging substantially behind. This indicates that it will not be easy for other countries to profit from the trade conflict in the short term, as China`s established supply chains make it a competitive producer even with the current restrictions. Of course, this is relevant for the producers of chemical raw materials for refrigerators, such as PU.

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Jan 24, 2020: China will restrict and eventually mostly ban single-use plastics within the next 5 years

Comment MCC: It will be difficult to find suitable replacements for plastics in some applications. On the other hand, plastic waste is a problem, particularly in China where you can still routinely see motorists just tossing their trash out of the window. In any case, with China producing about 30% of the world`s plastics, this surely will have an impact on the market for some of the lower-end plastics such as PE.

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Jan 23, 2020: In an interview, Yang Ting of CPCIF lists three major events related to Chinese chemical parks in China: The impact of the Xiangshui explosion, the rise of green chemical parks and the expansion in the number of smart chemical parks.

Comment MCC: All three work in the same direction, towards more regulated, safer and more sustainable chemical parks.

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Jan 22, 2020: The link between air pollution exposure and risk of premature death has been confirmed by two Chinese studies. One showed that at the national level, an average increase of 10 μg/m3 in daily concentration of PM2.5 was associated with a 0.26% increase in hospital admissions on the same day for cardiovascular diseases. including heart failure, stroke, and restricted blood flow to the heart. The second study found that each increase of 10 μg/m3 in PM2.5 concentration led to a 13% higher risk of stroke (C&EN)

Comment MCC: If you wonder what the link between these studies and the chemical industry is: at least C&EN thinks there is one, otherwise presumably they would not publish these studies.

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Jan 21, 2020: Shanghai Chemical Industrial Zone started the construction of the Shanghai International Chemical New Materials Innovation Center, aiming to build an industrial agglomeration area and source of innovation strategies for new chemical materials. (Xinmin Evening News)

Comment MCC: Shanghai certainly does not see its future as a major production location for chemicals despite having a very well established chemical park. However, it is an attractive site for R&D. The opening of the Innovation Center indicates the gradual shift that Shanghai wants to make from chemical production to chemical R&D.

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Jan 20, 2020: China likely surpassed the US in research funding for the first time in 2019, according to projections presented for new report on the state of science in the US and worldwide (C&EN)

Comment MCC: Similar trends can be observed for related indicators such as the global share of patents (49% China share in 2018) and the share of scientific publications (21% in 2018 from 5% in 2000).

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Jan 19, 2020: Zhongzhi Kebo of Peking University gives some high-level guidelines for the development of chemical parks during the period of the next (14th) Five-Year Plan including perfecting urban facilities, allowing efficient industrial exchange and promoting talent development.

Comment MCC: Admittedly, these points are rather high-level, if not to say vague. However, they are to be seen as just the start of a process of further refinement that will continue throughout the next few years, as the 14th Five-Year Plan takes shape.

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Jan 18, 2020: Chinese phosphorus chemical producer Chengxing received a warning from the Shanghai Stock Exchange for violations of regulation including non-published related-party transactions, which may lead to a delisting.

Comment MCC: Financial irregularities are still a bigger issue for Chinese chemical companies than for Western ones. In particular, related-party transactions that are not made public are fairly common. This means any acquisition of such a company will require a careful due diligence.

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Jan 17, 2020: Ineos will build a 600 kt ABS unit in Ningbo, with a scheduled starting date in 2023.

Comment MCC: This is just one of several major investments by chemical MCCs in China, suggesting that China is still seen as a major growth engine.

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Jan 16, 2020: PEEK producer Victrex will form a 75:25 JV with Yingkou Xingfu Chemical Company to build a polymer factory in Liaoning, China with a capacity of 1500 tons per year.

Comment MCC: For smaller companies such as Victrex, JVs may still be a suitable entry option in order to speed up the entry and reduce risk.

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Jan 15, 2020: According to Beijing News, in the "Jiangsu Chemical Industry Rectification Improvement Plan (Consultation Draft)", it is mentioned that in the next few years, the province intends to reduce the number of chemical companies to 1000, and the number of chemical parks from 50 to 20 by 2022.

Comment MCC: I am a bit doubtful this is doable - Jiangsu has reduced the number of chemical parks by a few every year recently, but a reduction from 50 to 20 within 2-3 years seems almost impossible without massively damaging the industry.

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Jan 14, 2020: Clariant has signed a licence agreement with Anhui Guozhen Group, a Chinese green energy company, and Chemtex Chemical Engineering, for Clariant's sunliquid® cellulosic ethanol technology.

Comment MCC: Unfortunately, the timing is a bit off. Just a few days ago, Reuters reported that "China has suspended its plan to implement a nationwide gasoline blend containing 10% ethanol this year, following a sharp decline in the country's corn stocks and limited production capacity of the biofuel."

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Jan 13, 2020: Elkem will acquire Polysil, a leading Chinese silicone elastomer & resins material manufacturer (kemicalinfo)

Comment MCC: Elkem in turn is part of Bluestar, so in effect a Chinese company strengthens its position in the Chinese market.

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Jan 12, 2020: Of 196 chemical enterprises along the Yangtze River in Hubei Province, 54 were closed down, 100 met the standards for transformation, 17 were relocated to other places, and 25 undertook changes in the line of production. Hubei has established a fund with a total budget of 600 million RMB for 2018 to 2020 to assist the changes.

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.

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Jan 11, 2020: Several Chinese ministries released a "List of Strictly Restricted Toxic Chemicals in China" (2020), which will be implemented from January 1, 2020. The list includes eight categories of products: PFOS and its salts and PFOS / F, hexabromocyclododecane, mercury, tetramethyl lead, tetraethyl lead, Polychlorinated terphenyls (PCT), tributyltin compounds, short-chain chlorinated paraffins.

Comment MCC: No big surprises on the list. These chemicals are generally prohibited from use but may be authorized for use in special circumstances.

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Jan 10, 2020: Inner Mongolia will ban the construction of new chemical parks, and the construction of new chemical projects in existing parks without successful risk assessment

Comment MCC: Inner Mongolia is generally considered to be one of the less restrictive provinces as it is not densely populated and does have a need to create employment. Still, it seems that the central government has decided to prioritize environmental protection even in such provinces, and the provincial government is reacting accordingly.

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Jan 09, 2020: Cabot Corporation will acquire Shenzhen Shansun Nano New Materials Co. (SUSN; Shenzhen, China), a maker of carbon nanotubes in China, for $115 million

Comment MCC: As the Chinese chemical industry matures and moves into specialty-type areas, the number of attractive acquisition targets for foreign companies increases. This is one example of the consequences.

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Jan 08, 2020: Taixing Economic Development Zone has implemented closed management in its 18-square-kilometer core chemical area. After all the residents, small hotels and small restaurants in the core chemical area were moved out, the area of 18 square kilometers was enclosed by means of walls, and checkpoints and emergency passages were set up.

Comment MCC: As I have seen myself at a visit of the site, substantial effort is put into not only safety but also environmental protection at the site. Possibly as a consequence, the Taixing chemical park now ranks at No. 10 in the national list of chemical parks.

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Jan 07, 2020: ChemChina and Sinochem will consolidate their agricultural businesses into a new holding company, Syngenta Group, within ChemChina

Comment MCC: As the overall merger between ChemChina and Sinochem seems to progress very slowly or not at all, this seems to be a sensible alternative: at least merge complementing businesses within both companies. Kind of like the Dow/DuPont approach, but (at least so far) without the intermediate step.

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Jan 06, 2019: Dalian Hengli Petrochemical Company received its 720 kta styrene facility, which is claimed to be the world`s largest.

Comment MCC: As a consequence of China`s market size and relatively late market entry, the country will be the location for many of the world`s largest and most modern chemical production sites.

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Jan 05, 2020: Several major Chinese tyre makers have set up or shifted their production facilities to countries in Southeast Asia, including Vietnam, Thailand and Indonesia due to the growing tensions in the US-China trade war. As a consequence, Chinese producers of high-cis polybutadiene rubber (PBR) including Sinopec, PetroChina and Transfar have increased their exports to the Chinese tyre makers in southeast Asia.

Comment MCC: China`s automotive production declined in 2019, forcing Chinese PBR producers to look for export markets. And Chinese tyre producers producing in Southeast Asia aim to avoid the fallout from the trade conflict with the US, as a substantial volume of tyres is exported to the US.

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Jan 04, 2020: The American Chemistry Council (ACC) predicts an output growth of 5.4% for chemicals in China in 2020 after 4.9% in 2019 (CW)

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.

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Jan 03, 2020: Watma Battery, the third largest lithium battery company in China, is on the verge of bankruptcy. The company currently has an external debt of about 19.7 billion yuan and owes about 5.4 billion yuan in debt to 559 suppliers (CPCIF)

Comment MCC: Several domestic chemical companies are struggling with high debt - both a counterparty risk for other players and an opportunity to benefit from industry consolidation and/or available acquisition targets.

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Jan 02, 2020: A plant producing an annual 100 kt of PVC, 75 kt of caustic soda and 300 kt of methanol was opened in Uzbekistan, built by Chinese companies CAMC Engineering and HQC Shanghai (Xinhua)

Comment MCC: The importance of this plant for Uzbekistan is indicated by the president attending the opening ceremony. Given the number of chemical plants opened in China in the last decade, it is quite likely that Chinese companies now have the highest level of expertise in building these plants, at least for some of the most common chemicals such as PVC.

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Jan 01, 2020: Qinghai Salt Lake Potash, China`s largest potash producer, has been trying to auction assets and shares officially valued at more than 2.5 billion USD on Taobao in order to avoid delisting from the Shenzhen stock exchange, but so far has failed to attract bids despite price cuts of more than 75%.

Comment MCC: The company has lost money in 2017 and 2018, and a third year of losses would result in the company's delisting from the Shenzhen stock exchange in 2020. This shows that state-owned entities (the company is 27 per cent owned by the Qinghai government and 20 per cent held by state chemicals conglomerate Sinochem) are not immune to serious debt issues.