Older Industry News (2020-2021)

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

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Dec 31, 2021: A total of 498 chemical parks have passed the certification.

Comment MCC: This is substantially down from the about 650 parks a few years ago, indicating tighter requirements.

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Dec 30, 2021: At the end of 2020, 7 companies in China had LCP resin production lines with a total production capacity of about 27 kt/a. In addition, 6 ongoing projects will likely increase total capacity to 67 kt/a by 2025 (CCR)

Comment MCC: This is another growth area in China's chemical industry, and one emphasized by government growth plans (increased self-sufficiency for high-end chemical materials).

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Dec 29, 2021: New-energy vehicle sales in China are expected to exceed 5 million units in 2022 and reach at least 7 million units in 2025, which would mean a market share above 30% in 2025 (China EV100).

Comment MCC: Not surprisingly, this makes the market for chemical materials needed for EV a major growth driver for the chemical industry, and investment and M&A activities are being pursued accordingly.

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Dec 28, 2021: Cummins Inc. and Sinopec Group have formed a 50:50 joint venture -- Cummins Enze (Guangdong) Hydrogen Technology Co., Ltd. The JV will produce proton exchange membrane electrolyzers for the production of hydrogen.

Comment MCC: Such an engagement of a US heavyweight - particularly in the form of a JV with an SOE - indicates the strong interest US companies have in the Chinese market, particularly in those in which China is likely to be a future leader.

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Dec 27, 2021: Chinese output of nitrogen fertilizers was down 14.5% from 2015 in 2020, that of synthetic ammonia down 11.9%, and that of urea down 20.3% (CCR)

Comment MCC: This seems to indicate that the objective of using less fertilizer may have been achieved during this period. For the period from 2020 to 2025, production capacities for all three products will only increase very slightly, though there will be a substantial exchange of outdated capacity for new capacity, hopefully improving economic and environmental aspects.

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Dec 26, 2021: China's ABS resin capacity and output in 2019 were respectively 4.2 million t/a and 4.05 million tons, and the industrial operating rate averaged at 96%. From 2010 to 2019, China's ABS capacity expanded by 5.5% annually, and the production grew by 7.8% yearly. The industrial operating rate averaged at 72% in 2015 and hit 96% in 2019 (CCR)

Comment MCC: This is one of the relatively rare examples of a common chemical turning from surplus to shortage in China. However, as China will build an additional 2 million t/a capacity by 2025, most likely there will be a surplus again soon.

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Dec 25, 2021: Hyosung Spandex (Ningxia) Co., Ltd. started a 360,000 tons of spandex and its raw material supporting project. It will produce 360,000 tons of spandex and 300,000 tons of polytetramethylene ether glycol, an investment of 12 billion RMB.

Comment MCC: Reportedly, this is the largest wholly foreign-owned project in Ningxia's history.

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Dec 24, 2021: By 2025 Clariant wants to boost its share of sales in China from 10% to 14%. It will direct more than a third of its growth in capital expenditure towards China

Comment MCC: According to the CEO, "In the next five years, half of all the growth in specialty chemicals will come from China alone", adding "It is a very important market, it is the biggest market for specialty chemicals."

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Dec 23, 2021: CAT will build a cathode material production line and related production facilities and supporting facilities in the Ganmei Industrial Park in Meishan, Sichuan, an investment of about 2.5 billion RMB. CATL has also invested in the construction of a cathode material project in Jintang, Chengdu, Sichuan.

Comment MCC: This highlights two trends in China's chemical industry - the growing importance of EV as a chemical market, and the Westward shift of the industry away from China's coastal Eastern areas.

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Dec 22, 2021: The website of the Ministry of Industry and Information Technology published the "Catalog of Industrial Water-saving Processes, Technologies and Equipment Encouraged by the State (2021)".

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

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Dec 21, 2021: From January to November 2021, the added value of chemical raw materials and chemical products manufacturing increased by 8.5% year-on-year while investment in the manufacturing of chemical raw materials and chemical products increased by 16.6 % year-on-year .

Comment MCC: This indicates an increasing rather than a declining importance of the chemical industry, though of course, some of the additional investment may be due to tightened environmental regulation rather than in extending production.

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Dec 20, 2021: Shaanxi Province will strive to achieve an average annual growth of about 3% in the total output value of the chemical industry (petroleum processing, chemical raw materials, and rubber products) to 2025

Comment MCC: This rather modest growth rate reflects the gradual shift away from a chemical industry driven primarily by increasing production volumes.

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Dec 19, 2021: Recent inspections at several locations including the Graphite Park in Luobei County, Hegang city and the Ningxia Pingluo Industrial Park in Pingluo County, Shizuishan City revealed widespread problems and prominent environmental pollution problems.

Comment MCC: While the details of the individual issues are probably not very relevant for the readers of this blog, it is telling that nowadays such news is published openly, presumably in order to create pressure on other chemical parks to improve their act.

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Dec 18, 2021: Wanhua Chemical's HCI green recycling technology was shortlisted for best recycling practice cases at the American Chemical Week 2021 Sustainability Award

Comment MCC: This is the first time a Chinese company has been shortlisted for this award.

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Dec 17, 2021: LyondellBasell signed a memorandum of understanding with Sinopec Corp. to expand the existing 50:50 joint venture by adding production of propylene glycol ether

Comment MCC: A statement by LB emphasizes both the cooperation with Sinopec and the importance of localized production, talking of "A partnership with Sinopec and local production of propylene glycol ethers to more effectively meet market demand."

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Dec 16, 2021: According to Central Economic Work Conference held in Beijing from December 8th to 10th, 2021, "new renewable energy and raw material energy is not included in the total energy consumption control".

Comment MCC: What this means is that only the part of coal turned into energy during the coal-to-chemicals conversion process will count as carbon dioxide emissions, not the part turned into chemical raw materials. This should give coal chemicals a boost, as indicated by increasing share prices of relevant companies after the announcement.

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Dec 15, 2021: In the Shangyu area of Zhejiang province, chemical production will be suspended at many companies as part of an effort to prevent the spread of Covid.

Comment MCC: Zhejiang province has been hit the hardest by the most recent Covid outbreak. As a preventive measure, there will be several measures enacted including traffic blocks and production stops. The economic damage of such measures will in the longer run lead to an abandoning of the zero-covid policy of the Chinese government, as such measures presumably cannot be taken for an unlimited period of time.

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Dec 14, 2021: By the end of the "14th Five-Year Plan" period, Shanghai Chemical Industry Park is expected to have an annual sales revenue of 170 billion yuan (from about 100 billion yuan during the "13th Five-Year Plan" period)

Comment MCC: This indicates that SCIP still expects substantial growth - a bit of a surprise as other signs seemed to indicate that Shanghai does not favor the chemical industry much any longer.

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Dec 13, 2021: In 2020, packaging and food boxes accounted for about 77% of China's consumption of biodegradable plastics followed by medical (16%) and agricultural films (6%).

Comment MCC: To justify the high growth forecasts for these materials, it will be necessary for them to spread to a broader range of applications

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Dec 12, 2021: In Ningxia, new or expanded projects for oil refining, coking, nitrogen fertilizer, iron and steel, coal-to-ethylene glycol, coal-to-methanol, soda ash, and ion-exchange membrane caustic soda (except comprehensive utilization of waste salt) will not be allowed

Comment MCC: Previously, there seems to have been a quiet understanding that some of the more remote provinces were allowed to have less strict environmental regulation - it seems that this is no longer the case. This particularly hits Ningxia province, where energy consumption is 4.1 times higher than the national average.

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Dec 11, 2021: Wanhua Chemical plans to build a 400 kt propylene oxide project

Comment MCC: This is another step in Wanhua's ambition in becoming China's BASF and establishing domestic technology that previously was restricted to MNCs.

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Dec 10, 2021: China sales growth figures of chemical MNCs have been relatively modest (e.g., CAGR of 4-7% over the last 10 years) compared to the growth of the China chemical market during this period (CAGR of 12.9% from 2009 to 2019).

Comment MCC: This indicates cumulative loss of market share for chemical MNCs in China during this period.

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Dec 09, 2021: Shandong province will mandate the replacement of manual operations in the production of hazardous chemicals with automated processes.

Comment MCC: This is a sensible reaction to the fact that chemical accidents are primarily caused by human error - and also an indication of how scared government officials are of any accidents happening in their area of responsibility.

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Dec 08, 2021: According to the Biodegradable Materials Research Institute, China's PBAT polymerization capacity utilization is about 31%, with several plants having shut down or running at low capacity.

Comment MCC: This is despite the strong government support for biodegradable plastics, and mainly the result of the high price for the upstream raw material BDO.

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Dec 07, 2021: China has set a target of 1 billion tons of oil refining capacity for 2025, which is 200 million tons below the capacity reached by adding up existing and approved projects.

Comment MCC: As the 1 billion tons are seen as a hard target, it will likely be met by the closure of smaller refineries. Shandong province is expected to be the most severely affected province by this measure.

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

Comment MCC: Sometimes I am still surprised how specific such targets are. It makes me wonder what the exact rationale is behind thinking that - for example - this province should have 80 billion yuan sales in the chlor-alkali segment in 2025, apparently independent of demand and price level in that year.

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Dec 05, 2021: By the end of 2020, 55% of China's PP capacity was oil-based, 24% coal-based, and 12% based on propane dehydrogenation.

Comment MCC: In contrast, the share of methanol-based PP is shrinking, accounting for only 6%, with no new methanol-based plants being put into production in 2021.

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Dec 04, 2021: Chemical distributor DKSH acquired a majority stake in a joint-venture with Chinese specialty chemicals distributor Right Base Chemicals (RBC).

Comment MCC: RBC is primarily active in supplying the coatings industry, an important market for chemical distribution. While still fragmented, China's distribution market is attractive due to its growth and consolidation trend. And of course, working with a local player accelerates growth for DKSH.

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Dec 03, 2021: POSCO Chemical, a Korean company active in coal chemistry and carbon materials, will acquire a 15% stake in the Chinese producer of synthetic graphite anode materials for electric vehicle batteries.

Comment MCC: According to the press release by the company, this is mainly to secure a production base to cope with growing demands for synthetic graphite in the global battery market.

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Dec 02, 2021: From January to October, the national fixed asset investment in the Chinese chemical industry grew by 17.8% YoY, according to the National Bureau of Statistics (CCR)

Comment MCC: While the comparison with the Covid-influenced 2020 may be misleading, this data still seems to indicate optimism regarding China's chemical industry.

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Dec 01, 2021: Several MNCs are seeking to divest their engineering polymer segments or parts of it, including DuPont, DSM, Trinseo (PS), and Lanxess.

Comment MCC: While the charitable view is that "The proposed separation and divestments reflect a dynamic merger and acquisition market and some companies' desire for more narrow portfolios focused on businesses with bright prospects" (C&EN), to me the prospect of more and more Chinese producers entering these segments - with the subsequent margin decay and commoditization - seems to be a more likely rationale.

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Nov 30, 2021: Cabot will acquire carbon black manufacturer Tokai Carbon (Tianjin) Co. from Tokai Carbon Group for $9 million.

Comment MCC: This is to support the growth of Cabot's battery materials offerings, which are used in the fast-growing market for lithium-ion batteries.

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

Comment MCC: If this standard is applied, it is expected that 2,300 petrochemical companies will be included in the national carbon market.

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Nov 28, 2021: Wacker will acquire 60% of Shandong Siike New Materials Co.

Comment MCC: According to the company, this is to localize production in China in order to ensure the stability of the company's domestic supply chain.

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Nov 27, 2021: Two recent articles in the China Chemical Reporter cover POM and Polysulfones. A few quotations from both:
"Although local POM capacities have been surplus, the self-sufficiency rate is declining, mainly because most domestic POM products are of general-purpose, leaving the market to be structurally surplus in copolymerized POM and structurally short in homopolymerized POM. The domestic POM market is dominated by medium and low-end copolymerized POM, which can only meet the needs of medium and low-end industries, while the POM products used in high-end fields largely rely on imports, leading to an increase of the import volume of POM year by year."
"Domestic polysulfone products are mainly used in low-end areas such as household electronic accessories. Most demand from high-end markets (e.g. medical treatment, automobiles and water treatment) is satisfied by imports."

Comment MCC: For both segments, the basic situation of low-end domestic surplus capacity but import dependency for higher-end grades is similar and an obvious deficiency of China's chemical industry.

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Nov 26, 2021: Covestro plans to build a new plant for polyurethane elastomer systems in Shanghai amid rising global demand, especially in Asia Pacific

Comment MCC: China is already Covestro's biggest market, and many of the industries in which these materials are used - such as solar and wind energy - are strongly focused on China as well.

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

Comment MCC: This matters as the consumption focus of oil is likely to shift from fuel use to chemical use, which also has a higher value creation.

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Nov 24, 2021: According to a recent article in The Economist, "The rule of thumb for commodity traders is that China consumes half of everything"

Comment MCC: This gives credibility to CEFIC information that China accounts for more than 40% of the global chemical market.

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Nov 23, 2021: Among the wealthiest persons in China, 8.4% are involved in chemicals and new materials.

Comment MCC: I do not have comparative figures for other countries but suspect that this is a rather high share, indicating the relatively high importance of chemicals for China.

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Nov 22, 2021: Lanxess AG has started up a new production line for the manufacture of water-based compounds in Nantong, China.

Comment MCC: The main application is in China's huge automotive market, where the driver is the switch from solvent-based to water-based coatings.

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Nov 21, 2021: During the "14th Five-Year Plan" period, Inner Mongolia will no longer approve new capacity coke (blue charcoal), calcium carbide, polyvinyl chloride (PVC), synthetic ammonia (urea), methanol, ethylene glycol, and caustic soda projects.

Comment MCC: While the restrictions on China's chemical industry first particularly targeted the rich and populous Eastern provinces, they now seem to be expanded to those provinces which previously were seen as more open to the industry.

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Nov 20, 2021: In August, Sika announced the acquisition of Shenzhen Landun Holding Co., Ltd., a manufacturer of waterproofing systems.

Comment MCC: The acquisition hints at the importance of localizing production, as the press release particularly states that "With the two acquired manufacturing facilities, Sika will be able to strengthen its local supply chain and bring its products and services closer to the market."

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Nov 19, 2021: According to Lei Yalin, vice president of Beijing University of Chemical Technology, the chemical industry's carbon emissions per 10,000 yuan of added value are 1.29 tons, which is greater than the national industrial average of 1.14 tons.

Comment MCC: Having above-average carbon emissions per unit of added value will likely mean increased pressure on the chemical industry to reduce its emissions in order to reach the "dual carbon" target.

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Nov 18, 2021: Several chemical-related companies are listed on the newly created Beijing Stock Exchange, including Yingtai Bio, Qilu Huaxin, Jiaxian, Jilin Carbon, Litong Technology, Tongyi Aerospace, and Fangda.

Comment MCC: Most of these companies are smaller entities with activities in specialty chemicals (e.g., pesticides, catalysts, PVC additives, carbon fiber precursors, and adhesives). These segments are well suited for further growth, though of course, that does not guarantee the success of any of the individual players.

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Nov 17, 2021: Covestro plans to build a new plant for polyurethane elastomer systems in Shanghai amid rising global demand, especially in Asia Pacific

Comment MCC: China is already Covestro's biggest market, and many of the industries in which these materials are used - such as solar and wind energy - are strongly focused on China as well.

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Nov 16, 2021: A total of 193 listed chemical companies have released three quarterly reports. Among them, 186 companies were profitable in the first three quarters

Comment MCC: In particular, 67 companies have increased their net profits by more than 100% year-on-year, indicating the positive development of the industry. Reasons include the ongoing vaccination drive and the price rise of major chemical products.

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Nov 15, 2021: An inspection of 214 nitrification companies (companies producing TNT) found 9472 hidden hazards, including 279 major hidden hazards. The safety production licenses of 6 nitrification companies were revoked, 70 companies were ordered to suspend production and operations for rectification, and 138 companies were ordered to rectify hidden problems within a time limit.

Comment MCC: The inspections showed that smaller companies generally have a relatively higher incidence of hidden hazards, which is one reason for official government policy to promote industry consolidation. In addition, companies in Western and central china had higher numbers of hazards, indicating laxer supervision in these regions.

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Nov 14, 2021: The application for a retrial in the Tianci IP theft case was recently rejected, resulting in a full victory of Tianci.

Comment MCC: In November 2020, the Guangzhou IP court awarded it awarded compensation of U$4.6 million to Tianci, a Guangzhou company over the theft of technology used to make carbomer gel for cosmetics and personal care products. This is a victory for IP protection in China.

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Nov 13, 2021: Self-sufficiency rates of China's high-end chemical markets averaged 53% in 2020, with substantially lower rates for segments such as high-performance films (42%) and key monomers/fine chemicals (10%).

Comment MCC: These materials offer opportunities for MNCs, both for export from foreign production and for localization of production in China, as Chinese competitors still struggle to produce these products. 

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Nov 12, 2021: China's PLA capacity is expected to rise from 360 kta in 2020 to 3590 kta in 2025 will PBAT is expected to rise from 330 kta to 15330 kta.

Comment MCC: These forecasts made in a CCR paper are despite the current relatively low capacity utilizations for the existing capacities (56% for PLA, 45% for PBAT), indicating the assumption of strong political forces driving future demand.

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

Comment MCC: As long as domestic players keep pursuing their relentless capacity expansions more or less independent of market demand, MNCs better avoid these commoditizing segments.

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Nov 10, 2021: Clariant China sales grew by 16% in local currency in the first nine months of 2021.

Comment MCC: Surprisingly, this is actually lower than the sales growth in Europe, which was 19%.

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Nov 09, 2021: Average capacity of chlor-alkali producers increased to the current (2020) 280 kt/a from 220 kt/a in 2013, while that of PVC producers rose to 380 kt/a from 270 kt/a in 2013.

Comment MCC: At the same time, the average plant run rate of the domestic chlor-alkali and PVC industry was 85% and 82%, respectively in January-June 2021, both up by four percentage points year on year, showing the healthy status of the industry.

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Nov 08, 2021: China's BOPP industry from 2010 to 2020 shifted from tight balance to oversupply. Before 2021, the operating rate was above 80% but then decreased to 50-60% as capacity grew at an annual rate of 8.6% while consumption only grew by 5.5%.

Comment MCC: This pattern is similar for many commodity-type chemicals in China.

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Nov 07, 2021: Average capacity of chlor-alkali producers increased to the current (2020) 280 kt/a from 220 kt/a in 2013, while that of PVC producers rose to 380 kt/a from 270 kt/a in 2013.

Comment MCC: At the same time, the average plant run rate of the domestic chlor-alkali and PVC industry was 85% and 82%, respectively in January-June 2021, both up by four percentage points year on year, showing the healthy status of the industry.

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Nov 06, 2021: The employee share of multinational chemical companies in China is typically a few percentage points below their share of China sales.

Comment MCC: This is an indication of China still being seen as a somewhat secondary market, with specific activities such as R&D, central admin, and production of specialties still underrepresented in China.

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Nov 05, 2021: In 2020, China's synthetic rubber imports totaled 1.4291 million tons, a year-on-year increase of 7% while the total import value reached US$2 245.25 million, a year-on-year decrease of 13%

Comment MCC: This reflects both China's ongoing import dependency for synthetic rubber and the price decline in 2020.

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Nov 04, 2021: The China revenue share of multinational chemical companies typically ranges between 10-15%, though in some cases it can be well below 10% (e.g., Evonik) or above 20% (e.g., Wacker, Covestro).

Comment MCC: In any case, this is a low share given China's about 40% share of the total global chemical market.

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Nov 03, 2021: Albemarle will build a 50 kt/a lithium hydroxide production base in Meishan, an investment of about US$500 million.

Comment MCC: This will be the largest-capacity such project in the region, cementing Albemarle's leadership in China's important market for lithium materials.

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Nov 02, 2021: A recent ranking of Chinese universities lists 117 universities offering chemistry as a subject.

Comment MCC: This is a large number, indicating the number of chemists available to the industry in China. With regard to global rankings, however, Chinese universities still are in the lower ranks, with the top Chinese university reaching rank no. 15 in a global ranking of 600 universities offering chemistry.

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Nov 01, 2021: In principle, no new coal chemical projects will be approved during the "14th Five-Year Plan" period in Inner Mongolia.

Comment MCC: While there is the possibility of exceptions under certain circumstances, this seems to indicate that the area of coal chemicals is nearing the end even in those provinces most suitable for such projects.

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Oct 31, 2021: Danhua Technology stopped production of ethylene glycol at its Tongliao subsidiary starting Oct 20 due to shortages of the raw material coal.

Comment MCC: As ethylene glycol accounts for about 44% of the revenue of the company, the production stop clearly indicates the severity of the coal shortage.

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Oct 30, 2021: In 2020, China led the world in new installations for the third year in a row with more than 3 GW of offshore wind grid-connected in 2020, about half of the global total of 6.1 GW (Global Offshore Wind Report)

Comment MCC: This automatically makes China the biggest market for the chemical materials needed for these installations, e.g., advanced composite materials, adhesives, and coatings.

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Oct 29, 2021: Evonik Industrial Group and China Zhejiang Xin'an Chemical Group Co., Ltd. jointly established Ying Chuang An (Zhenjiang) Silicon Materials Co. for the production of Aerosil fumed silica.

Comment MCC: Evonik so far has been relatively slow in localizing production, but with this first silica production base in China seems intent on catching up.

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Oct 28, 2021: According to Nikkei, China's state-owned enterprises have overtaken the private sector in profits during the first part of this year. Large state-owned industrial companies had RMB 1.77 trillion in total profits for the first eight months of 2021, up 87% year-on-year, compared with a 34% rise to RMB 1.64 trillion for their private counterparts.

Comment MCC: Nikkei cites regulatory clampdowns, soaring costs, and liquidity crises as the main reasons for the inferior performance of private businesses - it is quite likely that this is also true for some segments of the chemical industry.

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Oct 27, 2021: Arkema will build a new polyamide 11 powder plant at its Changshu production base in China, which is scheduled to start production in the first quarter of 2023.

Comment MCC: This is a major bet on this biobased polyamide, which so far is only produced in France but which will be produced both in Singapore and China from 2023. Given the applications of PA11 and China's support of bio based materials, producing the material locally seems sensible.

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Oct 26, 2021: On October 5th, an explosion occurred in the ethyl chloride workshop of a company in Ningxia.

Comment MCC: What is specifically worrying about this is that apparently this company had a fire accident on April 12 and was ordered by the local emergency management bureau to suspend business for rectification on April 16. The safety production license was temporarily detained for 6 months. It seems the company may just have ignored this suspension, indicating a lack of supervision.

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Oct 25, 2021: Nouryon has started production of tert-Butyl hydroperoxide (TBHP) and tert-Butyl alcohol (TBA) at a new manufacturing facility located in Ningbo

Comment MCC: Given that local production increasingly becomes a supplier selection criterion for customers located in China, this seems a sensible step.

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Oct 24, 2021: Henan Energy Chemical Group Hebi Coal Chemical Company and Meirui New Materials Co., Ltd. will jointly construct a 100,000-ton degradable plastic (PBS) project.

Comment MCC: These projects seem to be extremely popular at the moment, somewhat surprising as the market for the materials so far is limited, but there seem to be expectations of massive demand growth, probably based on government support.

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Oct 23, 2021: Albemarle will buy Guangxi Tianyuan New Energy Materials Co., Ltd. (Tianyuan), a lithium converter located in Guangxi, China for approximately $200 million. Tianyuan has a designed annual conversion capacity of up to 25,000 metric tons LCE and is capable of producing battery-grade lithium carbonate and lithium hydroxide. It currently is in the commissioning stage and is expected to begin commercial production in the first half of 2022.

Comment MCC: This strengthens Albemarle's position in a key market for EV and thus for lithium.

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Oct 22, 2021: The current high electricity prices and shortages in China have led to substantial price increases for many chemicals.

Comment MCC: Particularly affected are chemicals for which electricity costs account for more than 50% of total costs, which includes chemical fertilizers, chlor-alkali, calcium carbide, coke and others.

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Oct 21, 2021: Hunan Province has completed the closure and exit of 31 riverside chemical companies and the relocation of 3 riverside chemical companies

Comment MCC: Judging from the number of employees affected (1909 employees), these were relatively small companies.

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Oct 20, 2021: The most recent "Market Access Negative List (2021 Edition)" puts restrictions on new chemical projects in the areas of ethylene, p-xylene, MDI as well as on coal-to-olefins and coal-to-para-xylene projects

Comment MCC: This reflects concerns about overinvestment and creation of overcapacities in these areas, and should reduce the number of new projects in these areas.

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Oct 19, 2021: Jiangsu province will shut down 200 low-end and low-efficiency chemical companies this year.

Comment MCC: This is part of an ongoing process. In recent years, Jiangsu has suppressed low-end and low-efficiency production capacity, and has closed 4626 chemical companies in total so far, reducing the number from 7,000 to 2,169 while the number of chemical parks has been reduced from 54 to 29.

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Oct 18, 2021: Shanghai BASF plans to expand its MDI capacity in the Shanghai Chemical Industry Park by 90 kta.

Comment MCC: This is an expansion of about 20% of the existing MDI capacity BASF has at the site. In contrast, Wanhua recently almost doubled its capacity at Yantai, adding 500 kta. These differences in investment size, risk appetite and growth expectations are a reason for the declining market share of MNCs in China's chemical market.

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Oct 17, 2021: The Chinese Ministry of Ecology and Environment the draft Action Plan for New Pollutants Treatment outlining the general requirements, goals and six major measures for new pollutants treatment.

Comment MCC: It covers 28 types of chemicals, each with specific measures. It is expected that coverage will be extended to, e.g., endocrine disruptors, antibiotic-like substances, chemicals listed under the Stockholm Convention on Persistent Organic Pollutants and pollutants included in the lists of toxic and hazardous air and water pollutants.

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Oct 16, 2021: Shandong Zhucheng Orderly Electricity Rotation Coordination and Promotion Office issued the "Notice on Implementing the "Four Stops and Three" Rotation Scheme", which mandates that affected companies (including chemical ones) can only produce 4 days a week and then have to stop production for 3 days.

Comment MCC: This is a relatively drastic local example of the effect of current electricity shortages on China's chemical industry. This will lead to higher prices for chemicals.

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Oct 15, 2021: China's penetration rate of new energy vehicles has increased to 17.8% in 2021 while the penetration rate for new energy passenger vehicles is even closer to 20%.

Comment MCC: Given this development, China is expected to achieve a 20% market share of new energy vehicles in 2025 ahead of schedule - with obvious consequences for chemical markets such as that for materials going into lithium-ion batteries.

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Oct 14, 2021: Among 170 accidents in China's chemical industry in the period from 2004 to 2018, human errors were the most important cause (72%) followed by mechanical failure.

Comment MCC: Of this 72%, the biggest two human errors were operating errors (32%) and maintenance errors (30%). At least the latter should offer substantial room for improvement via stricter controls.

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Oct 13, 2021: China is the third biggest market for U.S. chemicals after Canada and Mexico, consuming $10 billion in U.S. exports in 2019, or 7.4% of total U.S. chemicals exports. And China is the second-biggest supplier to the U.S. chemicals industry, accounting for 11% of total imports in 2019.

Comment MCC: Actually, given the global share of China's chemical market (more than 40%), these shares of the imports and exports from/to the US seem smallish.

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Oct 12, 2021: According to the US Chamber of Commerce, China has the world's highest chemicals R&D spending.

Comment MCC: On the other hand, China accounts for only about 4.4% of the overseas R&D spending of US chemical companies - only the seventh biggest country in this ranking. Combined with the fact that the Chinese chemicals market is by far the largest in the world, this seems like a huge mismatch.

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Oct 11, 2021: Among 170 accidents in China's chemical industry in the period from 2004 to 2018, explosion is the most common scenario (56.2%), followed by toxic release (33.7%) and fire (21.3%).

Comment MCC: Obviously, this makes explosion prevention a key to reducing the number of accidents.

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Oct 10, 2021: On October 5th, an explosion occurred in the ethyl chloride workshop of Jinrunsheng Biotechnology Co., Ltd. in Huinong District, Shizuishan City, Ningxia. There were no casualties.

Comment MCC: The business scope of the company covers the production and sales of ethyl chloride, hydrochloric acid, sulfur, benzyl chloride, and benzaldehyde. This makes me wonder about the company name - not exactly typical biotechnology products, right? But maybe biotechnology sounds better to the neighbors, or opens the chance to some government grants ...

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Oct 09, 2021: According to a US Chamber of Commerce study on decoupling, "For the U.S. chemicals industry, decoupling would mean a smaller U.S. share in China's growing market, diversification by China and others from U.S. suppliers, lost competitiveness, and lower R&D spending. This decrease would offset the newfound competitive advantages the U.S. enjoys from lower feedstock costs, thanks to improved extraction technologies. From the imposition of tariffs alone, the potential cost ranges from $10.2 billion in U.S. payroll and output reductions and 26,000 lost jobs to more than $38 billion in output losses and nearly 100,000 lost jobs."

Comment MCC: In my consulting work, I have done similar calculations of losses due to policy changes, and thus know that they have to be taken with a share of skepticism. Still, big figures.

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Oct 08, 2021: A recently published list of Chinese chemical parks has 532 locations on it.

Comment MCC: This is substantially down from the 676 parks listed at the end of 2018, indicating a further tightening of supervision of the chemical industry. Small chemical companies and those focusing on particularly hazardous or polluting chemicals will find it harder and harder to select a site, particularly on China's eastern coast.

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Oct 07, 2021: According to a 2020 paper by Chen and Reniers in "Safety Science", the number of accidents that occurred in large Chinese chemical companies is less than that in small companies and in medium-sized companies probably

Comment MCC: The authors conclude that large companies may pay more attention to safety and have larger financial means to devote to safety. Besides, the supervision and inspection of large companies are much easier than that of small companies. Part of the government measures to reduce the number of accidents therefore is to close many of the small companies.

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Oct 06, 2021: A recent survey by the American Chamber of Commerce included 19 chemical companies. 57.9% of the chemical industry indicated that dual circulation will be revenue positive. The authors of the study think that the upcoming infrastructure upgrades and the growth of the domestic electronics sector, particularly electronics for auto parts (two areas that require large amounts of chemicals) May explain the industry's optimism

Comment MCC: I am not sure this optimism is justified, though - for multinational companies, and policy that prefers specific production locations and markets for non-economic reasons should basically be a danger, not an opportunity.

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Oct 05, 2021: China is consistently the second largest chemical M&A market, accounting for about 13% of deals in 2020 compared to 34% in the US.

Comment MCC: While most deals are domestic, cross-border deals are increasing as Western companies are seeking growth and organic options are not always viable

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Oct 04, 2021: A recent survey by the American Chamber of Commerce included 19 chemical companies. The vast majority of chemical companies surveyed stated that government policy towards them has improved in the past few years (63% improvement, 26% no change, 11% worsening).

Comment MCC: This is encouraging - while the chemical industry as a whole (including domestic companies) has certainly been controlled more tightly by the Chinese government, the treatment specifically of foreign players is now regarded as fairer than before.

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Oct 03, 2021: A recent survey by the American Chamber of Commerce included 19 chemical companies. Major internal obstacles to business success in China reported in the survey include the slow speed of bringing products to market (compared to the local competition) and limited HQ understanding of the opportunities China offers.

Comment MCC: Indeed, even though China is the biggest or second-biggest market for many chemical MNCs, it is very rarely the place where top management is located, limiting its perceived importance. And indeed, processes in MNCs tend to be slower than those particularly in Chinese private companies.

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Oct 02, 2021: A recent survey by the American Chamber of Commerce included 19 chemical companies. A large share of the respondents from this industry stated that their margins improved substantially from 2020 to 2019, and 58% of them said they expected China growth of their sales to be much faster than that of their global operations.

Comment MCC: Not surprising but a confirmation of the general perception that China is the motor for growth in the global chemical industry.

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

Comment MCC: The project captures carbon dioxide in the industrial waste gas to produce photovoltaic-grade EVA resin.

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Sep 30, 2021: Wanhua Chemical plans to build a lithium battery cathode material project in Sichuan covering 50,000 tons/year iron phosphate, 50,000 tons/year lithium iron phosphate and supporting equipment.

Comment MCC: Wanhua always seems to have the aspiration to be the BASF of China, so it is interesting to see that like BASF, the company now tries to establish a strong position as a supplier to EVs.

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Sep 29, 2021: China's list of top 500 companies includes more than 50 chemical ones.

Comment MCC: The most comparable list on a global leve, the Fortune 500 list of biggest global companies, only as 8 chemical companies, less than 2% of the total compared to more than 10% for China. Despite the slightly different segmentations (e.g., chemical vs. petroleum refining), this indicates the high importance of the chemical industry in China compared to other countries.

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Sep.28,2021: A number of listed chemical companies have issued announcements of suspension of production in response to the regional "dual control of energy consumption" requirements. These companies include Hongbaoli, Yangzhou Chenhua, and ST Chengxing.

Comment MCC: Again, it now seems that achieving these energy consumption / environmental objectives sometimes is more important than production volume.

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Sep 27, 2021: The European Chamber of Commerce has issued its annual position paper including a section on the chemical industry. Focus topics are sustainability, investment costs, and chemicals management.

Comment MCC: This is a mixture of recommendations from the perspective of multinational chemical companies. To be honest, some of it to me sounds suspiciously like asking for special treatment, for example, the following passage: "The key differences between multinational corporations and domestic companies with respect to their maturity on EHS matters are not recognized by the Chinese authorities, who still insist on a 'one-size-fits-all approach to the chemical industry, such as bans affecting compliant and non-compliant companies alike." If I was a Chinese government official, would this make me want to study the recommendations in detail?

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Sep 26, 2021: Prices of some chemical raw materials have risen substantially, sometimes by almost 2000 RMB per ton in a single day. For example, Dimethylcyclosiloxane (DMC) in DMC is currently quoted at 42,000-43,300 RMB/ton for domestic production (though reaching up to 55,000 RMB/ton) while foreign brand functional silicone oil is offered as high as 55,000-65,000 yuan/ton. Several domestic producers have stopped giving external quotations. With the downstream peak season, industry insiders believe that organic silicon products are expected to exceed 80,000 yuan (Global Silicone Network)

Comment MCC: This is the consequence of recent production stops due to electricity shortages, which in themselves are a consequence of the dual-control policy to reduce environmental pollution and energy consumption.

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Sep 25, 2021: Major chemical companies in China have adopted different approaches to carbon reduction, with Sinopec and Petrochina mainly focusing on diversification into hydrogen and photovoltaic as well as exploring carbon storage. Wanhua has moved into wind energy, photovoltaic and biomass while Hengli focuses on biodegradable materials.

Comment MCC: At the moment, it is hard to say how transformative this will really be. Obviously, companies want to be seen as moving in the right direction even though they also have a strong incentive to continue their current business.

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Sep 24, 2021: China's sulfuric acid capacity was up 0.6% from 2015 to 124 million t/a at the end of 2019 while domestic output rose 0.7% from 2015 to 97.36 million tons (CCR)

Comment MCC: Hidden behind this largely static picture is the more interesting fact that during this period about 20% of sulfuric acid capacity was abandoned due to outdated or polluting technology, and replaced by more modern capacity.

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Sep 23, 2021: BASF and CATL have signed a framework agreement to cooperate on cathode active materials and battery recycling.

Comment MCC: Looks like a win-win, with CATL getting support in strengthening their activities in Europe and BASF getting a stronger participation in the battery market by association with a market leader.

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Sep. 22, 2021: While 85% of EVA film production capacity is concentrated in China, the domestic supply of photovoltaic-grade EVA pellets is in short supply, with 70% of photovoltaic-grade EVA imported.

Comment MCC: This is a typical example of the production situation for many chemical products in China - excess capacity in low-end grades and a lack of high-end grades. Currently, both government and individual companies, therefore, strive to enter into these higher-end markets.

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Sep 21, 2021: Kemira will expand its production capacity of alkenyl succinic anhydride sizing agent (ASA) in China. ASA is a sizing agent for improving water resistance in paper and packaging board.

Comment MCC: Presumably, the rise of online shopping increases the demand for such packaging material, driving the demand for ASA. It has been quite a while since the author of this comment last set foot into a Chinese supermarket, relying instead on courier delivery from online shops.

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Sep 20, 2021: Yulin City in Shaanxi requires local coal chemical companies to reduce their output by 50% in the fourth quarter.

Comment MCC: This is another example of Chinese government policy related to reducing pollution and energy consumption has a very direct impact on the chemical industry. The days of exclusive prioritization of economic growth are over.

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Sep 19, 2021: Evonik's Coating Additives business line will add local production capacity of several critical additives in Shanghai. The company states that this will mean "higher supply security for all our customers worldwide as well as reduced lead times for our Asian customers".

Comment MCC: With the center of demand for many chemicals shifting to China and customers getting more concerned about supply chain security, other companies may follow this example of adding local production capacity even for specialties.

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Sep 18, 2021: Luxi Chemical will be transferred to Sinochem ownership by the government (SASAC).

Comment MCC: I am not sure how happy the leaders of Sinochem are about this, but presumably they do not have much choice in the matter and may well think that bigger is better anyway. Luxi will get a chance to improve its financial situation and speed up the shift from its old chemical activities such as the coal and salt chemical industry to faster-growing ones such as silicone.

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Sep 17, 2021: A Chinese report highlights the possibility of a surplus of polypropylene in China from the second half of 2022. The main longer-term driver is the increase in domestic production capacity, which is expected to reach a CAGR of about 7% between 2020 and 2030 and thus substantially larger than the expected CAGR for the GDP. In 2020, the average
annual operating rate already reached a historical low of 84%.

Comment MCC: This is broadly aligned with the relatively bearish forecasts given by John Richardson in his ICIS blog.

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Sep 16, 2021: From April to August 2021, Shandong province carried out a safety risk assessment of 1850 hazardous chemical production and storage enterprises, and classified the enterprises as red (highest risk, 3% of companies), orange (second highest risk level, 32%), yellow (second-lowest risk level, 62%) and blue (lowest risk level, 4%).

Comment MCC: Apart from allowing direct action against the companies with the highest risk level, this qualification may also push the other companies to higher safety levels, as the "name and shame" approach will make it undesirable to stay in the elevated risk categories. It will be interesting to see whether the incidence of actual future safety issues will indeed correlate with the assigned risk level. In other words - is this a box-ticking exercise, or does it really help?

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Sep 15, 2021: BASF (51%) and Shanshan (49%) have formed a battery materials joint venture in China which plans to develop an annual cathode active materials capacity of 90 kilotons by 2022.

Comment MCC: BASF primarily contributes R&D capabilities, a global network, and access to raw materials while Shanshan contributes manufacturing expertise and its product portfolio. Obviously, for BASF as a leading global chemical company, it is important to quickly establish a strong position in this fast-growing market - both with regard to segment (EV batteries) and location (China), even at the cost of entering a JV.

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

Comment MCC: Shandong thus aims to remain the province with the largest chemical industry. The province also aims to obtain at least 80% of its chemical output value of enterprises in chemical parks.

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

Comment MCC: So far, China relies mainly on imports for these high-end polyolefins and thus has a strong incentive to replace them with domestic products. Incidentally, they were discovered in 1976 by two professors at Hamburg university, Hansjorg Sinn and Walter Kaminsky, who were among my teachers when I did my Ph.D. there.

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Sep 12, 2021: The list of top 100 global chemical companies published by Chemical Week has a total of 12 mainland Chinese companies including 6 in the top 50.

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

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Sep 11, 2021: Covestro plans to lay off up to 1,700 employees, equivalent to about 10% of its global workforce despite a strong performance in 2021 so far.

Comment MCC: Covestro strongly depends on polycarbonate, a polymer which after the market entry of several Chinese players including Wanhua is likely to commoditize, reducing margins.

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Sep 10, 2021: In 2021, more than 8 million tons of ethylene production capacity will be added in China on top of the existing approximately 32 million tons - the biggest addition in China's history.

Comment MCC: This reflects two broader trends - the aim for chemical self-sufficiency by adding refinery space, and the rise of private enterprises in this sector - private companies will account for the majority of the capacity additions.

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Sep 09, 2021: According to a report by Global Industry Analysts, the Internet of Things (IoT) market for China's chemical industry reaches about 1 bn USD in 2021, with an expected size of 1.5 billion USD in 2026, a CAGR of 7.7%.

Comment MCC: This compares to a current 1.7 bn USD size for the comparable US market, showing the lower maturity of the Chinese market - though probably all figures for something as vaguely defined as the IoT need to be treated with a good deal of caution.

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Sep 08, 2021: China, the world's biggest vehicle market, is predicted to sell 1.7 million new energy vehicles between January and August, almost triple the 600,000 units sold in the same period last year, according to Xin Guobin, vice minister at China's Ministry of Industry and Information Technology (Reuters)

Comment MCC: This rapid growth highlights the importance of China for chemical companies focusing on selling materials to this segment.

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Sep 07, 2021: In 2020, China was only the fourth biggest EU trading partner in chemicals both in exports and imports, with the USA, Switzerland and the UK all exceeding China.

Comment MCC: I was somewhat surprised to see this Eurostat data. On the other hand, the EU is still a net exporter of chemicals to China, despite the shift of substantial production capacity in selected segments.

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Sep 06, 2021: According to a report in the Economic Times (India), Reliance Industries is close to acquiring REC Group, the largest solar panel manufacturer in Europe, for $1-1.2 billion from China National Chemical Corp (ChemChina).

Comment MCC: This is a bit surprising as REC produces silicon material for photovoltaic applications and multi-crystalline wafers, as well as solar cells - materials that are certainly within the focus of China's 14th Five-Year Plan. However, China has its own local producers of these materials (for example, in 2019, about one-third of the polysilicon the industry used to make solar panels came from Xinjiang province), and Chinese ownership may be detrimental to the value of REC, as non-Chinese customers are aiming to reduce their dependency on supply chains felt to be controlled by China.

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Sep 05, 2021: Shanghai, Guangdong, Fujian, Chongqing, Tianjin, Shandong and other provinces have issued the "14th Five-Year Plan" for the high-quality development of manufacturing.

Comment MCC: In the chemical segment, the focus is on a broad range of new materials including polyurethane foams, polyurethane elastomers, waterborne polyurethane coatings, synthetic leather and other polyurethane products, nylon 66, nylon 6, long carbon chain nylon and other polyamide products, PET, PBT (polybutylene terephthalate) ) and other polyester products, PMMA and other polymethyl methacrylate products, VAE, PVB resin and other polyolefin products, polycarbonate products, polyoxymethylene products, and BDO products

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Sep 04, 2021: Jiangxi province cancelled the safety production licenses of 56 hazardous chemicals producers.

Comment MCC: As probably noted before, the interesting aspect is not so much the cancellation itself but rather that provinces these days see to use such announcements to promote themselves. It seems that the gain to be seen from being strict on the chemical industry outweighs any potential economic loss from deterring investment.

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Sep 03, 2021: Zhejiang Jiaotong will transfer its 100% equity interests in Ningbo Zhetie Jiangning Chemical Co., Ltd. and Ningbo Zhetie Dafeng Chemical Co., Ltd. to Zhenhai Refinery Chemical, a Sinopec company. After the transaction is completed, the company will focus on the main business of infrastructure construction and will no longer engage in the chemical business.

Comment MCC: Reasons given for exiting chemicals include the strong cyclicality of the business and the lack of an integrated chemical value chain. Solid reasons, but the net loss of the combined two entities of about 34 million RMB in 2020 will also have been a factor.

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Sep 02, 2021: Shanghai recently issued its Three-Year Action Plan to Strive for High-Quality Development of Advanced Materials Industry (2021-2023). The plan calls for making breakthroughs in key materials used in the areas like integrated circuit and aerospace and cementing advantages of advanced materials in the fields of biological medicine, high-end equipment, new energy, etc.

Comment MCC: One of the targets set is for key enterprises to spend more than 3% of their main business income on R&D of advanced materials - not a very high barrier given the typical R&D spending in the chemical industry.

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

Comment MCC: Such a cooperation makes a lot of sense, combining a reliable source of raw materials with market proximity. For basic chemicals such as these, for which the production technology is broadly available, the participation of Western chemical companies is no longer required.

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Aug 31, 2021: In the past few months, Shanxi province conducted the operation "Sharp Sword Decontamination", in which more than 6000 enterprises were investigated for environmental violations, and more than 600 such violations were detected.

Comment MCC: The name of the operation - reminiscent of military exercises - and the fact that even less-developed provinces such as Shanxi now focus on environmental protection indicate the seriousness of these efforts in China. The old saying among China experts - that economic considerations always triumph - may no longer be true.

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Aug 30, 2021:In the first half of 2021, there were 62 chemical accidents and 81 deaths across the country, a decrease of 22.5% and 12% compared with the same period last year

Comment MCC: As the Emergency Management Department itself points out, these accidents have exposed some outstanding issues such as weak safety development concepts, weak awareness of the rule of law, weak safety foundation, low intrinsic safety level, and lack of safety management in some places and enterprises.

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Aug 29, 2021: CNOOC is planning to develop onshore solar and wind farms as part of its diversification away from oil and gas

Comment MCC: The China 2030 and 2060 carbon reduction targets have given SOEs a strong incentive to pursue such projects.

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Aug 28, 2021: The Zhejiang Provincial Committee of Science and Technology Leading Group issued the "Zhejiang Carbon Peak Carbon Neutral Technology Innovation Action Plan", according to which Zhejiang will achieve carbon peak in 2025 and carbon neutrality in 2030.

Comment MCC: These are much tougher targets than those for the country as a whole (for which the target years are 2030 and 2060). This indicates that some of the more prosperous and highly developed provinces will strive to become the forerunners in achieving carbon neutrality, which may well mean further restrictions on chemical plants coming up much sooner than indicated by the countrywide targets. As a consequence, this may lead to a shift of chemical production to inland provinces.

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Aug 27, 2021: Luxi Chemical received a "Civil Ruling" from the Liaocheng Intermediate People's Court and will have to pay compensation of RMB 749 million to Dow and Davy related to the "Low-Voltage Carbonyl Synthesis Technology Non-Use and Confidentiality Agreement"

Comment MCC: Luxi has stated to accept the judgment. The company states that they have not infringed on other parties' property rights - however, this claim seems somewhat dubious given the large amount of compensation requested.

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

Comment MCC: In the chemical area, these include key technologies for green preparation of PX oxidation catalyst, high-purity hydrogen peroxide production process, clean technology for co-production of chromium oxide green and chromic anhydride, and new technology for industrialization of high-performance PTFE dispersion resin, indicating the objective of improving the environmental footprint of the domestic chemical industry.

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Aug 25, 2021: Ningxia Hantang Energy Technology did not get permission for a 500,000 tons/year methanol-to-ethanol and industrial chain integration project as the project missed the energy consumption dual control targets.

Comment MCC: Another sign of the increased importance of environmental issues now that Xi Jinping has set his focus on them. Of course, it is always possible that some of such cancellations are driven by other reasons as well.

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Aug 24, 2021: Several non-chemical companies have invested in chemical products and businesses, including COFCO in PHA, Huawei in photoresists, Sunvim in bleaching chemicals, Lenovo in several areas including plastics used in photovoltaics, Tencent in biodegradable plastics.

Comment MCC: Companies in China have always been attracted to the idea of vertical integration, even if this covers areas that are far outside the core business area of the company concerned. The threat of supply chain disruptions due to trade wars and the desire to enter business areas promoted by the central government seem to further enhance this trend.

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Aug 23, 2021: Nine provinces (Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi, and Jiangsu) increased their energy intensity in the first half of the year and received a warning by the central government.

Comment MCC: This may lead to high-energy projects (including chemical ones) being suspended. 

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Aug 22, 2021: The Department of Energy Conservation and Comprehensive Utilization of the Ministry of Industry and Information Technology published a draft list of outdated production process equipment, suggesting eliminating 9 types of outdated production process equipment

Comment MCC: The list includes a number of environmentally harmful processes for which more environmentally friendly alternatives are available, e.g., the acetylene process PVC production using high-mercury content catalyst.

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Aug 21, 2021: Li Shousheng, President of CPCIF, recently listed five key tasks for chemical firms during the period of 2021-2025: Energy transformation (basically, gradually moving away from oil), restructuring (increased self-sufficiency), low-carbon/green development, strengthening of leading firms and double circulation (domestic and international market).

Comment MCC: There are no major surprises here, though it is notable that there clearly has been a shift from a focus on unspecific growth to improvements in quality and environmental impact.

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Aug 20, 2021: In the period from 2015 to 2020, the added value of the domestic petroleum and chemical industry was up 4.51% annually, operating revenue up 4.33%, total profits up 8.11%, and foreign trade value up 3.66% (CCR)

Comment MCC: It is interesting to see that profits have increased more than revenues, possibly indicating that the environmental clampdown actually helps the surviving companies rather than reducing their profits.

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Aug 19, 2021: 90% of the global production capacity of PVC gloves comes from China, and 90% of the PVC gloves produced in China are for export

Comment MCC: This figure nicely illustrates the global dependency on China for some products, including many medical ones related to the fight against Covid-19.

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Aug 18, 2021: China's PP capacity has increased by 40% from 2016 to 2020 while output has increased even faster at 44%. However, despite this increase in operating rate (from about 88% in 2016 to 91% in 2020), the self-sufficiency rate has been stable at around 86% as the PP consumption (+45%) rose roughly in line with output, not capacity development.

Comment MCC: With a CAGR of 9.8% during the period and continued reliance on imports, this still is a highly interesting segment of China's chemical market.

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Aug 17, 2021: According to the 2021 edition of "bp World Energy Statistics Yearbook", China's energy consumption increased by 2.1% in 2021

Comment MCC: This makes China one of the few countries where energy consumption increased in 2020 despite Covid-19. While a positive reflection on the Chinese economy, it will also make it more difficult to achieve China's longer-term emission reduction targets.

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Aug 16, 2021: Demand for adhesives in China grew by a CAGR of 5.8% during the 2016-2020 period.

Comment MCC: While not on a level of previous periods, it is of course starting from a much higher base and thus probably still globally the most interesting growth market for adhesives.

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Aug 15, 2021: From 2016 to 2020, China's PX production has increased at a CAGR of 20.2% while consumption increased by a CAGR of 10.4% and the import CAGR increased by only 2.9%.

Comment MCC: In the typical blooming Chinese style, CCR describes the 2020 PX market situation as showing "the characteristics of ‘three highs and five lows'. The ‘three highs' are high capacity, high output, and high social inventories; the ‘five lows' are record low prices, record low profits, low loads, low imports, and low import dependence. Given the huge amount of announced capacities to be added (roughly on a level with existing production capacities), self-sufficiency for PX seems only a matter of time for China.

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Aug 14, 2021: According to Li Shousheng, chairman of the CPCIF, China's output of new chemical materials was around 27 000 kt in 2020, while consumption was as high as 38 000 kt, indicating a self-sufficiency rate at only 71%.

Comment MCC: Of course, this is therefore one of the major focus areas for the 14th Five-Year Plan given China's aim for increased self-sufficiency.

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Aug 13, 2021: According to Livemint, the Indian speciality chemicals industry is likely to grow at a CAGR of 12.4% over the next five years

Comment MCC: Among the reasons given for this optimistic forecast is that Indian manufacturers have benefited from a rise in demand from global customers who aim to reduce dependence on China.

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Aug 12, 2021: China has prohibited the use of HBCCD, with surveillance activities starting from December 26, 2021. HBCDD is a flame retardant with a number of uses, including EPS and XPS foams for insulation and construction, as well as back-coatings for upholstery and other interior textiles, including automotive applications (SGS)

Comment MCC: This is a consequence of China's ratification of the Stockholm Convention on Persistent Organic Pollutant chemicals (POP chemicals)

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Aug 11, 2021: The value of chemicals exported from China to the United States amounted to 13.9 billion U.S. dollars in 2019. The chemicals exports value from China to the U.S. peaked in 2018, at some 16.8 billion U.S. dollars (Statista)

Comment MCC: Given that the average annual oil price was USD 50.8 in 2017, USD 65.2 in 2018 and 57.0 in 2019, the decline from 2018 to 2019 is at least partly due to the lower oil price.

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Aug 10, 2021: According to China's special envoy for climate change, Xie Zhenhua, China may need to invest 136 trillion yuan to achieve the goal of carbon neutrality.

Comment MCC: This means approximately 100,000 RMB per person - not a little amount of money, but not one that sounds impossible either.

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Aug 09, 2021: Except for modern coal chemical projects that extend and supplement the chain, in principle, no new modern coal chemical projects will be approved during the "14th Five-Year Plan" period.

Comment MCC: The shift from enthusiastically promoting coal chemical projects to limiting them substantially has been relatively recent and quick, though once China committed to reducing carbon dioxide emissions in the long run, it was inevitable.

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Aug 08, 2021: Shaanxi province has reported a total of 30 chemical parks.

Comment MCC: This is a rather large number that hints at the issues of these parks. They were mostly formed around established enterprises rather than deliberately planned, and as a consequence, in the words of an expert, "generally have problems such as large numbers, small volumes, inconspicuous industrial characteristics, imperfect utilities and infrastructure, insignificant cluster effects, and irregular park management". This could mean that not all of them will survive in the long run.

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Aug 07, 2021: Transportation company Hupac is setting up a new cross-border liquid cargo service between Europe and China. The rail freight line is specifically designed for the chemical industry in Europe and will run via Belarus-Russia-Kazakhstan to the Chinese city of Lanzhou.

Comment MCC: Encouraging to see trade being expanded rather than being restricted.

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Aug 06, 2021: According to Bloomberg, metals demand from lithium-ion batteries will increase by a factor of 5.5 for copper, 5.3 for lithium, 9.3 for manganese and 5.2 for nickel

Comment MCC: China has the largest global market share for all major battery metals, indicating China's leading position in EVs.

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Aug 05, 2021: Kingfa plans to acquire 51% of Bora New Materials, a company currently constructing a 600 kt ABS plant.

Comment MCC: ABS is a product for which China still strongly relies on imports - import substitution should therefore guarantee demand for the new plant. And as many Chinese chemical companies, Kingfa favors upstream integration into production rather than just compounding and marketing of plastics such as ABS.

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Aug 04, 2021: For several chemical products produced in China, exports account for more than 30% of production, including rubber additives, titanium dioxide, polyurethane, dyes, phosphorous chemicals, fertilizers, etc. For some chemicals including accelerators, antioxidants, ammonium sulfate, diammonium phosphate, and polymeric MDI, the share of exports is above 50%.

Comment MCC: While China is still an overall net importer of chemicals, for some products, it has the economies of scale as well as the technology to dominate the world market.

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Aug 03, 2021: The number of domestic dye firms decreased from more than 500 in 2010 to around 300 in the late years of the 13th Five-Year Plan period

Comment MCC: The tightening of environmental regulations has had the - by government criteria, certainly desirable - side effect of reducing the number of players and consolidating the industry, making it both easier to supervise and potentially more profitable.

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Aug 02, 2021: As container shipping freight has increased significantly, the increase in freight in the import market has led to an increase in the import cost of imported plastic raw material particles and solid chemicals that use containers as logistics carriers. In addition, the increase in the export cost of China's plastic products is hindering product exports.

Comment MCC: This partial blockage of exports is responsible for a major share of the current volatility in the market for polyolefins.

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

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

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Jul 31, 2021: Haldor Topsoe and Shaanxi Yanchang Petroleum have established a joint venture which aims at producing methanol synthesis catalysts for the Chinese market.

Comment MCC: Unfortunately, the press release announcing this provides few details. It would be interesting to know more about the rationale for the establishment of a JV in a time when JVs have largely fallen out of favor with MNCs. The rationale given in the announcement is not convincing - "With this joint venture, we combine Topsoe's world-leading methanol catalyst technology and Yanchang's outstanding production capabilities", as Yanchang's capabilities are in the area of producing methanol and oil products rather than producing catalysts. Potential reasons for the JV from Topsoe's side include the contribution of investment capital by Yanchang and/or securing a major customer. In any case, while the announcement does not give details about the ownership of the JV, the fact that the GM is from Topsoe indicates that the MNC controls the JV.

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Jul 30, 2021: The NDRC recently issued a Development Plan for Circular Economy in the 14th Five-Year Plan Period (2021-2025), according to which 2025 output rates of major resources in 2025 will be 20% higher than in 2020, while energy consumption and water use per unit of GDP will be 13.5% and 16% lower.

Comment MCC: While ambitious, these targets - with output increasing faster than the reduction in resource utilization per unit - still mean that China will use up more rather than fewer resources in 2025 than in 2020.

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Jul 29, 2021: In the area of new materials, Shanghais 14th Five-Year Plan focuses on high-performance polyolefins, high-end engineering plastics, synthetic rubber, adhesives and other advanced polymer materials, high-end surfactants, electronic chemicals, high-purity solvents, catalysts, pharmaceutical intermediates and other specialty chemicals

Comment MCC: No surprises here. Of course, Shanghai can afford to be somewhat choosy and focus on R&D/high tech areas rather than on the production of basic chemicals.

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Jul 28, 2021: The Ministry of Environment published a list of 885 products as highly polluting and/or having a high environmental risk. Many of these products are pharmaceutical or pesticide intermediates.

Comment MCC: New projects for these products will face restrictions under the "two highs and one capital" banner, which stands for projects with high energy consumption, high environmental pollution and high resource consumption.

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Jul 27, 2021: Tongkun Holdings suspended a 1.2 million tons of coal-to-glycol project, apparently as a consequence of new national "dual control of energy consumption" policies.

Comment MCC: This comes after two similar announcements by Shaanxi Coal Group Yulin and Sinopec (CTO project in Guizhou), indicating that the era of big coal-chemical projects may end rather quickly.

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Jul 26, 2021: On the first day of the newly established National Carbon Emissions Trading Market market, the carbon market turnover was 210 million yuan, and the closing price was 51.2 yuan/ton, a 6.7% increase in a single day.

Comment MCC: Interestingly, 4 companies belonging to the Sinopec group accounted for more than 6% of the transactions, emphasizing the active role Sinopec wants to assume in achieving China's carbon emission goals.

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Jul 25, 2021: From Jul 01 to Jul 22, prices of 62 chemicals out of a list of about 100 chemicals rose while the price of 27 products fell. The biggest price increases were for yellow phosphorus (48.15%), bisphenol A (29.85%), and butadiene (29.71%).

Comment MCC: Among the reasons for the increases are shutdowns, outages, power rationing, and floods, leading to these increases despite July being usually an off-season for chemicals demand.

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Jul 24, 2021: ChemChina has filed for an IPO of Syngenta, the world's largest producer of agricultural chemicals, which it bought for $43 billion in 2017 (Fortune).

Comment MCC: According to Syngenta, the proceeds from its expected $10 billion IPO will be used to fund internal growth and external acquisitions in the areas of seeds and sprays.

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Jul 23, 2021: In early July, the groundbreaking ceremony of the first phase of the Sinopec Guizhou 500,000-ton/year PGA (polyglycolic acid) project was held in Zhijin County, Bijie City, an investment of 23 billion RMB.

Comment MCC: Supported by the 14th Five-Year Plan, Chinese chemical companies including the SOEs invest more and more in a variety of environmentally friendly alternatives to traditional plastics.

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Jul 22, 2021: On June 12, 2021, a methyl formate leak occurred at Guizhou Sanqiang Xingxing Chemical Trading of Guiyang City, causing 8 deaths. On Jul 3, a hydrogen sulfide poisoning suffocation accident occurred at Zhejiang Maike New Materials Co., Ltd. in Haining City, Jiaxing City, causing three deaths. On Jul 4, a reactor explosion at Guangdong Yike Chemical in Donghua Town, Yingde killed one person. On July 19, 2019, a major explosion occurred at the Yima Gasification Plant of Henan Gas, resulting in 15 deaths

Comment MCC: Despite the tightening of safety controls, these accidents continue to happen. The positive aspect is that these incidents are now thoroughly analyzed. The negative aspect is that the ultimate reasons still seem to be the same ones as before - limited safety measures, limited staff training, limited overall supervision.

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Jul 21, 2021: Gross profit of China's n-butanol production mostly fluctuated between 7% and 10% in the last decade, and occasionally exceeded 20%, however, it has exceeded 50% since January 2021.

Comment MCC: Most likely reasons are the restarting economy in the US and maintenance shutdowns in China, rather than any longer-term lack of production capacity.

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Jul 20, 2021: Jiangsu canceled the qualifications of 220 high-tech enterprises in one go, and recovered their tax incentives.

Comment MCC: This qualification as high-tech enterprise was somewhat prone to abuse, though to be fair, the majority of those companies delisted closed down rather than changing their business activities. For the companies affected, the income tax rate is adjusted from 15% to 25%.

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Jul 19, 2021: The transportation of hazardous chemicals was suspended from June 20 to July 02 in many places including Shanghai and Beijing.

Comment MCC: No doubt, many local officials will be relieved that no major chemical accident happened close to the July 1st 100th anniversary of the communist party.

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Jul 18, 2021: According to the National Bureau of Statistics, from January to June 2021, the investment in the manufacturing of chemical raw materials and chemical products increased by 30.1% year-on-year , and the added value of the manufacturing of chemical raw materials and chemical products increased by 9.8% year-on-year.

Comment MCC: When I started living in China 17 years ago, I was sure that the high annual growth rates of the domestic chemical industry could not continue for long. Clearly, I was wrong.

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Jul 17, 2021: China's carbon dioxide emissions accounted for 27% of the world's total, of which 6% were accounted for by the chemical sector (or about 1.5% of global carbon dioxide emissions).

Comment MCC: These 6% are a much higher share than the global share of the chemical industry (about 2.2% according to Our World in Data), reflecting both the higher importance of the chemical sector for China compared to global average and the focus on commodity-type, more emission intensive chemical sectors, partly using older technologies as well. In any case, this makes the Chinese chemical sector a focus area of government efforts to achieve China's 2030 (peak) and 2060 (zero) carbon emission targets.

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Jul 16, 2021: Jan-May profits of chemical industry enterprises above designated size were up 211% year-on-year.

Comment MCC: While nice to hear, this mainly reflects the difficult situation of the industry in the months most affected by Covid-19.

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Jul 15, 2021: On July 1, the signing ceremony of the 3 million tons coal coking 300,000 tons methanol project in Yumen Dong Town, Yumen City, Gansu Province was held.

Comment MCC: The overall picture of coal chemicals is confusing - major projects are being halted, while others are still being started. Overall, I do not see a long-term future for this segment assuming China is serious about its emission reduction targets.

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Jul 14, 2021: Starting in the second half of 2021, the "Plastic Pollution Directive Implementation Plan" is implemented in major provinces and cities.

Comment MCC: For example, in Shanghai, the use of non-degradable disposable plastic straws will be prohibited. This has already led to fast food restaurants such as McDonald's to eliminate these straws altogether.

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Jul 13, 2021: WuXi STA, the small-molecule drug arm of WuXi AppTec, one of the world's largest pharmaceutical services firms, plans to build a plant in Middletown, Delaware.

Comment MCC: This is another step in the internationalization of WuXi - the company already has a small plant in San Diego and will also buy a plant from BMS in Switzerland. Eventually, presumably, the aim of WuXi is to become the Foxconn of the pharma industry, taking over production and other tasks from the pharma majors and leaving only R&D and marketing to them.

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Jul 12, 2021: Shandong announced a list of 85 provincial-level green factories, of which 20 are in the petrochemical industry.

Comment MCC: The main requirement to be on the list is to have an energy consumption meeting or exceeding the tightest national standard given for that industry. Other requirements are a large size and a clean safety and quality record.

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Jul 11, 2021: The 1H 2021 profits of Wanhua Chemical, Hualu Hengsheng, Shenghong, and several other chemical companies all increased by more than 300% year on year.

Comment MCC: This shows the good health of China's economy, though of course, the high relative increases are largely due to the low base set in 1H 2020, which was affected by Covid-19.

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Jul 10, 2021: Hubei Province has completed the relocation of all chemical companies (118 in total) within 1 km of the Yangtze River

Comment MCC: The provinces these days seem to compete on their success in achieving this and other environmental protection measures, highlighting the shift in national objectives from pure economic development to a more balanced view which pays attention to the environment.

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

Comment MCC: Sinopec is aiming to maintain its relevance in a zero carbon dioxide emission world, both by pursuing alternatives to oil (e.g., hydrogen) and by other approaches to zero emission such as carbon capture (which for Sinopec have the benefit of still allowing the company to produce oil).

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July 08, 2021: Shaanxi Coal Group Yulin Chemical announced a temporary shutdown of the world's largest coal chemical project currently under construction.

Comment MCC: While it is unclear whether the project will eventually continue, it seems likely that both in terms of economics (relatively low oil price) and environment (high carbon dioxide emissions of coal chemical projects) more and more coal chemical projects will be affected and eventually stopped.

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Jul 07, 2021: More than 85% of polysilicon materials used in photovoltaic modules in the world come from China, and more than 50% of solar polysilicon materials in the world come from Xinjiang.

Comment MCC: This will make it very difficult for American companies to avoid using material from this region should the US government prohibit all imports from there.

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

Comment MCC: The interest of major players such as Hengli in biodegradable plastics marks a sort of coming-of-age of the segment, promoted by strong government support

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Jul 05, 2021: Guizhou province has announced the first batch of recognized chemical parks, a list of 7 parks.

Comment MCC: It is interesting to see how the different provinces work at different speed and give different importance to the chemical industry. Guizhou is a bit of a laggard in terms of timescale, and of course, with so far only 7 recognized chemical parks also is a province for which the chemical industry seems to be of lower importance.

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Jul 04, 2021: 98 hazardous chemical production enterprises in Jiangsu province including Nanjing Jiahe Daily Chemical Co., Ltd. have terminated the production of hazardous chemicals as their production licenses were canceled.

Comment MCC: It seems to be almost a matter of pride these days for provinces to announce the closure of chemical companies.

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Jul 03, 2021: Several major energy and chemical provinces such as Shandong, Shaanxi, and Inner Mongolia have tightened the gates for approval of chemical projects

Comment MCC: Basically, the energy consumption and emission of new projects cannot exceed those of the projects that they replaced - a potentially serious restriction that will even apply to new technology.

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Jul 02, 2021: Metallocene PE with a China self-sufficiency rate of 20% and metallocene PP with a self-sufficiency rate below 10% are areas in which China relies particularly on imports.

Comment MCC: These materials are important as compared to other polyolefin types, they go into relatively advanced applications such as microwave appliances, medical appliances, high-end non-woven fabrics, making China’s low self-sufficiency more of a concern.

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Jul 01, 2021: The Jiangxi Provincial Security Committee issued the "Emergency Notice on Seriously Implementing the Important Instructions of General Secretary Jinping and Carrying out the Large-scale Inspection of Hazardous Hazards in Key Industries such as Hazardous Chemicals", starting a one-month safety inspection and hidden danger investigation in key industries across the province

Comment MCC: Given that any major accident close to the 100th anniversary of the party founding would be embarrassing for provincial leaders, they intensify inspections.

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Jun 30, 2021: An analysis of the top 300 global chemical companies by Daydream finds 80 of them to be in the US, 40 in Japan, 27 in Germany and 26 in China, with other countries such as India (14), France (11), and Switzerland, the Netherlands and South Korea (10 each) trailing behind.

Comment MCC: Indeed, China's share of about 8% among the top 300 companies is quite small given the roughly 40% of China's share of the global chemical market. This is an indicator both of the substantial presence of foreign chemical companies in China and the fragmentation among the Chinese domestic players.

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Jun 29, 2021: Huaan Securities analyst Liu Wanpeng states in a report that he believes that coal-to-olefins, coal-to-methanol, coal-to-ammonia, and oil refining will be restricted by indicators related to carbon emissions

Comment MCC: While I share this belief, I am puzzled by the continued investment in coal-to-olefins, which I believe will be hardest hit by carbon emission restrictions.

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Jun 28, 2021: China is the biggest global producer of PVC with a capacity of about 26 million tons. It is both a major importer and exporter of PVC.

Comment MCC: China's PVC products tend to be at the lower end of the spectrum, thus imports of higher-end products are still required. This is also reflected in the locations which are the biggest PVC exporters to China (United States, Taiwan, Japan) and those which are China's major export destinations (e.g., Bangladesh, India).

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Jun 27, 2021: PetroChina Dalian Petrochemical is pushing forward the relocation of a refinery, with a startup planned for 2024.

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

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Jun 26, 2021: Among the Top 30 chemical parks in China, half are in the greater Shanghai area - in Jiangsu (9 parks), Zhejiang (5 parks), and Shanghai (1 park) while a traditional province for China's chemical industry, Shandong, is represented by 5 parks

Comment MCC: Generally, the parks on the East Coast of China tend to be more professional and better organized than most of the chemical parks elsewhere in the country.

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Jun 25, 2021: China's integrated circuit industry has grown by an annual average of almost 20% over the past four years.

Comment MCC: As the government is keen to continue this growth path, chemicals used in electronics should benefit.

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Jun 24, 2021: The first national carbon trading market will begin operating in Shanghai at the end of June

Comment MCC: This follows the previous establishment of regional carbon trading markets, which seem to have been successful. For example, in Shanghai carbon emissions are reported to be down by 7%, though this may also be due to a shift of the Shanghai economy towards services.

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Jun 23, 2021: China's new energy vehicle ownership reached 5.8 million units by late May, accounting for about half of the global total. Sales reached 220% of the same period last year in the first five months of 2021, and the market penetration is 8.7%.

Comment MCC: This along with the fact that the growth rate is expected to stay above an annual 40% make China the clear target for R&D and investment in chemical materials related to EVs

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Jun 22, 2021: New materials account for 6.6% of the total revenue of chemical products in China, with a self-sufficiency rate of 61%

Comment MCC: This is regarded as too low by the government. As a consequence, the 14th Five-Year-Plan aims for reaching a 10% share and a self-sufficiency rate of 75%, which still does not seem a very ambitious goal.

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Jun 21, 2021: Eight people died and three others were injured when a toxic chemical leaked Saturday at a plant in the southwestern Chinese city of Guiyang (ABC News/AP)

Comment MCC: This happened during unloading of a shipment of methyl formate from a vehicle at a chemical handling facility. At first glance, it sounds like a typical accident involving untrained workers dealing with dangerous chemicals - an investigation will show whether this indeed was the case.

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Jun 20, 2021: According to Qiao Yitao, Director of Strategic Planning of Wanhua Chemical's Strategic Development Department, China's chemical research and development investment accounts for 27% of the global total compared to 23% for the EU and 20% for North America

Comment MCC: Compared to the far more China-centric share of capital investment of 45%, this highlights the fact that China generally speaking is still more focused on capital-intensive basic chemicals rather than on innovative, R&D-intensive materials.

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Jun 19, 2021: In 2020, China's EVA demand was 1.88 million tons, domestic production was about 950,000 tons, output was more than 700,000 tons, and imports were more than 1 million tons.

Comment MCC: This is particularly relevant as China's share of the entire global photovoltaic industry accounts for 70%-80% of the world's output - and more than 500,000 tons of EVA products are used in the domestic photovoltaic film

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Jun 18, 2021: According to Qiao Yitao, Director of Strategic Planning of Wanhua Chemical's Strategic Development Department, in the past ten years, global chemical investment totaled 193.1 billion euros, with China accounting for 45.1%, while North America and the European Union added a combined 28%.

Comment MCC: This underlines the importance of China for the global chemical industry - admittedly, probably not the first time this blog has made this point.

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Jun 17, 2021: Akzo is installing a total of 8000 solar panels at two Chinese decorative paints plants, which will become the primary source of power at each location

Comment MCC: Akzo's total share of renewable electricity is already relatively high at 40%, with the new solar panels moving Akzo towards its overall goal of moving to 100% renewable electricity by 2030

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Jun 16, 2021: China's exports of organic silicon products are mainly low-end intermediate products and basic polymers, while high-end organic silicon products rely heavily on imports. In 2020, the average unit price of imports was 5392 yuan/ton while the unit price of exports was 2975 yuan/ton.

Comment MCC: This situation is similar to that in many other chemical sectors - China has now some strength in basic products, for which the production knowledge is somewhat more widespread and for which economies of scale are important, but lacks capabilities in high-end products, which rely less on scale and more on innovation.

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Jun 15, 2021: Four major overseas gas companies control 88% of China's electronic special gas market, leaving only 12% for domestic players.

Comment MCC: Chinese companies are trying to grab a larger share and substitute foreign players in areas such as semiconductor etching gas, semiconductor chemical deposition, and expanding their portfolio. This is strongly supported by the government but difficult to achieve due to the high entry barriers posed by high quality (and quality consistency) requirements.

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Jun 14, 2021: In 2020, BASF achieved about 14% of its sales in Greater China. Sales in this market increased from 7.4 billion Euro in 2019 to 8.5 billion in 2020, an increase of about 15%.

Comment MCC: True to its statement that China is the growth engine for the global chemical industry, BASF keeps investing in the country. Recent activities include the establishment of a biodegradable laboratory in Shanghai, the work with Tongcheng to produce PBAT, a cooperation with Meituan, and of course the construction start of the new base in Guangdong.

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

Comment MCC: The main attraction for Wanhua may be Hengyi's experience and operations outside of China - in this respect, Wanhua so far is mostly limited to its acquired production site in Hungary.

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Jun 12, 2021: China has several universities ranking high in the annual global ranking of universities teaching chemistry, including the University of Science and Technology of China (8th in the world), Tsinghua University (14), Peking University (16), Nankai University (20), Nanjing University (23), Zhejiang University (25), Soochow University (26), Fudan University (27), Tianjin University (31), South China University of Technology (33).

Comment MCC: The very top ones are still in the US, though, lead by UC Berkeley, where I am proud to say I did a postdoc.

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Jun 11, 2021: Domestic companies such as Fengyuan, Hisun, Kingfa, Jindan, Wanhua Chemical, and other companies are increasing the production capacity of PLA, with the planned PLA production capacity exceeding 3.3 million tons during the 14th Five-Year Plan period

Comment MCC: In particular, Anhui Fengyuan aims for the gradual buildup of 2 million tons of PLA until 2023, which - if coming to fruition, which is never certain for such ambitious projects - would make the company the clear leader in capacity.

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Jun 10, 2021: At the end of 2020, there were 616 key chemical parks or industrial parks with petroleum and chemical industries as the leading industries in the country.17 are super-large parks with an output value of more than 100 billion in the petroleum and chemical industries; 35 large-scale parks with an output value of 50-100 billion, 219 medium-sized parks with an output value of 10-50 billion, and 345 small-scale parks with an output value of less than 10 billion.

Comment MCC: The trend is towards a further reduction of the number of parks, primarily closing down some of the smaller ones. At the end of 2019, the number was still 676 parks, indicating a reduction by about 9% in 2020.

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Jun 09, 2021: The Ministry of Ecology and Environment announced that it plans to launch a national carbon market online trading before the end of June this year

Comment MCC: This took a while and a number of pilot projects but will be a reality on a national level soon. A carbon market is seen by many experts as the best solution to tackle global warming.

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Jun 08, 2021: The Zhejiang government has put restrictions on three types of chemical projects: Non-integrated production of basic chemicals, projects with high VOC emissions, and projects that require the large-scale transportation of hazardous chemicals.

Comment MCC: While overall sensible, these restrictions exceed those just focusing on environmental considerations and thus are also an expression of a specific industry policy, e.g., the support of complete value chains in one location.

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Jun 07, 2021: According to an index prepared by Nature, China has the highest scientific contribution in the chemical area while coming second after the US in life sciences, physical sciences, and environmental sciences.

Comment MCC: This reflects both the extreme importance of the chemical industry for China and the relative strength of the US in life sciences. In the chemical area, China passed the contribution of the US in 2018, and the gap is now quite wide.

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Jun 06, 2021: SASAC issued the "Recommended Catalogue of Scientific and Technological Innovation Achievements of Central Enterprises (2020 Edition)". Among the recommended chemical areas are para-aramid, ultra-high molecular weight polyethylene fiber, large-scale methanol synthesis catalyst, and high-performance carbon fibers

Comment MCC: Overall, the catalog includes 178 products in 8 fields. The field "Key materials" (the one most relevant for chemicals) includes nano-aerogel composite materials, ultra-fine high-purity germanium powder, tantalum target materials, 5G, and aerospace-level electronic devices with organic silicon materials, etc.

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

Comment MCC: For example, Zibo city has ozone control measures from May 01 to Sep 30 which mandate suspending VOC emission processes such as paint mixing and spraying from 9 am to 4 pm each day. Interestingly, there are exceptions if the weather is overcast or rainy, which may make these requirements hard to control and enforce. Other cities also mandate the use of low-VOC raw and auxiliary materials with a usage ratio of more than 80% or use efficient treatment processes.

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Jun 04, 2021: BASF and Shanshan, a leading lithium-ion battery materials supplier serving both the e-mobility and the consumer electronics market, have agreed to form a BASF majority-owned joint venture (BASF: 51%; Shanshan: 49%) to produce cathode active materials (CAM) and precursors (PCAM) in China.

Comment MCC: It is interesting to see that JVs are not dead - in areas that are deemed strategic by the Chinese government, the participation of a Chinese partner may still be helpful to improve market access.

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Jun 03, 2021: In 2020, China added 7.2 million tons of PTA production capacity followed by 4.9 million tons in Q1 of 2021 and another 6.6 million tons in the second half of 2021.

Comment MCC: This massive increase in capacity caused China's PTA profit margin to fall into a negative region - not very surprising and somewhat typical for commodity chemicals in China.

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Jun 02, 2021: SK Chemicals has purchased a 10% stake in Shuye Environmental Technology, a Chinese firm with technology to depolymerize polyethylene terephthalate (PET) into the raw material bis(hydroxyethyl) terephthalate

Comment MCC: There is huge customer demand for PET with recycled content, and apparently SK hopes to incorporate recycled material into half of its specialty polyester output by 2025. The stake should help achieve that goal.

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Jun 01, 2021: The Anhui Provincial Fire and Rescue Corps of the Emergency Management Department of Anhui Province issued a notice on the issuance of the "First Special Inspection and Supervision Work Plan for Enterprises with Major Hazardous Sources of Hazardous Chemicals in Anhui Province in 2021."

Comment MCC: It is interesting (and maybe a bit funny) to see that Xi Jinping is quoted as the driving force behind these safety measures. The note starts as follows: "In order to conscientiously implement the spirit of General Secretary Jin Ping's important instructions on safe production, ..."

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May 31, 2021: 14 Chinese chemical companies are listed on the Forbes list of the top 2000 most influential chemical companies

Comment MCC: A back-of-the-envelope calculation suggests that this means such companies are underrepresented given their contribution to global GDP - this should mean about 36 companies should be on the list. Basis of the calculation is a China share of global GDP of 18% and a 10% share of GDP of the chemical industry in China.

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May 30, 2021: China's apparent consumption of styrene was 12.6 million tons in 2020, adding up to a CAGR of 7% during 2016-2020, which is far lower than the output growth of about 13% per year

Comment MCC: As a result, the self-sufficiency rate increased to77% in 2020 from 63% in 2016

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May 29, 2021: From January to December 2020, the average domestic urea operating rate was 73%, an increase of 6% over the same period in 2019 (CCR)

Comment MCC: Reasons include the falling coal prices from the second half of 2019 to the first half of 2020 and the fact that export prices of urea in 2020 were higher than domestic market prices, partly due to demand from India.

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May 28, 2021: GWI (Global Water Intelligence) published a ranking of major global water companies based on the estimated water revenue of major global water companies. Chinese companies listed include Beijing Enterprises Water (9th), Alliance Group, Beijing Capital Group (26th), Guangdong Investment (31st), Bishuiyuan (36th).

Comment MCC: Most Chinese players all substantially improved their position in the ranking, e.g., Beijing Enterprises Water moved up 19 places. This reflects the growing importance of water treatment in China, and the increasing capabilities of local players.

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May 27, 2021: A senior R&D chemist working at Coca-Cola and Eastman Chemical in the USA was convicted of stealing trade secrets related to bisphenol A-free beverage can liners. Prosecutors say the chemist took intellectual property valued at $120 million from Coca-Cola and seven chemical companies, intending to give it to a Chinese polymer firm in exchange for an ownership stake and cash payments (C&EN)

Comment MCC: While this is about IP theft linked to China, it is notably not about IP theft due to IP having been brought to China.

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May 26, 2021: A paper in the China Chemical Reporter lists three main issues with China's domestic supply of electronic chemicals: 1. Low-end products dominate electronic chemical materials market while high-end products show little competitive edge 2. Limited portfolio of products 3. Severe shortage of core intellectual property rights

Comment MCC: Among the recommendations given in the paper, an interesting one is for the government to set up a special "green channel" for the project approval, capacity control and schedule management of electronic chemical materials. The given rationale is that currently the industry is still administrated in compliance with the chemical industry, which according to the author seriously restricts the industrial development

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May 25, 2021: Wanhua celebrated the contract signing ceremony for an 800 kt PVC project in Fujian province

Comment MCC: The rationale behind this project may less be the demand for PVC and more the need to find an outlet for the chlorine which is produced as a byproduct of MDI production.

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May 24, 2021: The Anhui Provincial Government website announced the first batch of 38 approved chemical parks.

Comment MCC: This makes Anhui one of the future centers of China's chemical industry, with several companies investing there instead of the more traditional chemical provinces of Jiangsu and Shandong.

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May 23, 2021: China's output of technical chemical pesticides dropped to 2 148 kt in 2020 from 3 740 kt in 2016 with a CAGR of -6% during the "13th Five-Year Plan" period (CCR)

Comment MCC: This is mainly due to tightened regulation related to environmental protection and safety. Another trend is the shifting of production capacities from Eastern China to Northern China, where these restrictions in reality seem to be less tight.

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May 22, 2021: Up to now, a total of 8,731 chemical companies along the Yangtze River have been relocated as part of the development of the Yangtze River Economic Belt

Comment MCC: Given this huge number, it is almost surprising that disruptions to chemical supply chains have not been bigger.

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May 21, 2021: Huafeng Chemical intends to invest 2.755 million yuan to build a 1.15 million tons/year adipic acid expansion project

Comment MCC: The rationale given by the company is "After the project is put into production, the overall scale of the company's products will be further expanded, the cost advantage will be further reflected, the market share and influence will be further increased, and the company will bring a relatively large profit return." While this may be possible, it is also a rationale that will lead to overcapacity if utilized by several companies in parallel - something that has not been rare in China's commodity chemicals in the past.

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May 20, 2021: 399 listed companies in the chemical industry in Shanghai and Shenzhen have announced their 2020 financial reports

Comment MCC: While of course there are huge differences in revenue, it is interesting to see that even the company ranked the 100th biggest still has revenues of about 4.4 billion RMB. So, there is a long tail of sizeable chemical companies.

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May 19, 2021: Hengli Petrochemical invested in two major PBS biodegradable plastic projects with an annual output of 600 kt and 300 kt

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

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May 18, 2021: The first mobile photovoltaic power station independently developed by Sinopec Northwest Oilfield was successfully commissioned on April 23, reducing annual carbon emission by an estimated 91 tons

Comment MCC: As mentioned before, it is interesting to see how Sinopec - quite different from the somewhat more passive Petrochina - seems to position itself as a company embracing China's carbon emission targets.

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May 17, 2021: The State Council’s Office of the Safety Commission recently dispatched multiple unannounced inspections to industrial sites including chemical ones

Comment MCC: A seemingly typical quotation from security personnel was "I am a security officer, and I am usually responsible for patrolling and collecting safety information in the tank farm, public works and other areas outside the installation. I don't understand the production process and equipment of the installation." This sounds like there still is a lot of work to do

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May 16, 2021: The Hubei Provincial Development and Reform Commission released a confirmed list of 51 chemical parks in the province on its official website

Comment MCC: This is a relatively large number which could account for almost 10% of all chemical parks in China (depending on how many of the original approximately 670 parks will be closed down), thus indicating that this province - unlike some coastal provinces - still promotes the industry.

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May 15, 2021: Mandatory energy consumption standards for the production of a large number of basic chemicals will be combined and tightened. Chemicals affected include calcium carbide, fertilizers, sulphuric acid, rubber, methanol, MDI, PVC, caustic soda, titanium dioxide, PP and PE.

Comment MCC: The idea is to accelerate the reduction of carbon emission and eventually reach carbon neutrality, as for both specific target dates have been set.

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May 14, 2021: The Emergency Management Department of Shaanxi Province issued an announcement prohibiting adding capacity of the hazardous chemicals phosgene, chlorine, ammonia, hydrogen sulfide and other toxic gases , sodium cyanide, potassium cyanide, hydrogen cyanide, ammonium nitrate, nitroguanidine, and ammonium chlorate as well as others.

Comment MCC: A ban on expanding production of these chemicals, which are important intermediates, will severely limit production expansion of a large number of downstream materials, including MDI, polyurethane, PVC and others.

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

Comment MCC: This is one of the later stages of the gradual implementation of the Five-Year Plan - starting from high-level objectives on a central level, then moving to individual industries (the chemical one in this case) and then on to individual provinces such as Zhejiang.

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May 12, 2021: Wacker's 2020 China sales fell by 0.3% while global sales fell by 5%.

Comment MCC: Another indicator of the lower impact of covid-19 on China than on most of the world.

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May 11, 2021: In a recent speech, CPCIF president Li Shousheng highlighted the challenges facing modern coal chemistry, including the challenge of carbon dioxide emissions, of water scarcity, of identical end products and environmental governance.

Comment MCC: Personally, I feel that these challenges mean that coal chemistry does not have a longer-term future, though of course, China is very proud of being the technology leader in this field.

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May 10, 2021: By the end of 2022, Shandong will close 6 local refineries, 4 coking companies, 18 tire companies, and 154 chemical companies will withdraw while Jiangsu plans to close another 200 companies this year, including one kilometer away from the park along the river.

Comment MCC: These two provinces are the most important ones for the chemical industry in China, so these changes mark an important shift in the provincial attitude towards the industry and may lead to relocations of chemical plants to inland provinces.

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May 09, 2021: The Shandong Chemical Special Action Office announced that the refining units of 13 enterprises with a refining capacity of less than 2 million tons that were found after inspection have been dismantled and officially withdrawn from the market. The 13 companies have a total oil refining capacity of 3.96 million tons

Comment MCC: One of the not-too-minor aspects of the whole environmental campaign is to consolidate the Chinese chemical industry, as this announcement illustrates.

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

Comment MCC: That is slightly below 5% of the number of companies, thus probably understating the real importance of China's chemical companies for the overall economy. Of course, Sinopec and Petrochina are number one and two, but this is more an indication of the importance of oil refining than of the chemical industry in a more narrow sense.

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May 07, 2021: A 600 kt coal-to-olefin project of Qinghai Mining Group passed the safety evaluation.

Comment MCC: On the other hand, the newest edition of the Green Bond Catalog no longer includes coal projects, and the Ministry of Ecology and Environment issued a statement according to which The coal chemical industry is allowed to build new production capacity. A somewhat confusing situation.

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May 06, 2021: Plastics compounder China XD received a notice from NASDAQ for failure to file Form 10-K for the fiscal year ended December 31, 2020 and therefore is not in compliance with the listing rule.

Comment MCC: According to the company, the delay of filing was primarily due to lockdown ordered by the local government in response to the resurgence of COVID-19 outbreak early this year. Given the limited impact of the virus in the later part of the year, this does not sound entirely convincing to me.

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May 05, 2021: The 2020 operating income in the Chinese petroleum and chemical industry was 11.08 trillion yuan, a year-on-year decrease of 8.7% while total profits were 515.55 billion yuan, a year-on-year decrease of 13.5%.

Comment MCC: A decline that can easily be blamed on covid-19, and which should not worry the industry too much as long as the economy keeps recovering.

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May 04, 2021: Sales in Greater China in 2020 accounted for 14 percent of Lanxess' total global sales

Comment MCC: This is still relatively low compared to the about 40% that Greater China contributes to the global chemical market.

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May 03, 2021: Under a new draft plan, China plans to rapidly expand its energy storage sector over the next five years, aiming to use emerging technologies to add 35 gigawatts to China's energy storage capacity by 2025 (Caixin)

Comment MCC: This information should be highly relevant for producers of battery materials.

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May 02, 2021: Prices for many basic chemicals have increased massively year-on-year, e.g., BDO by 225%, MDI by 102%, acetone by 81%.

Comment MCC: This is probably partly due to the depressed prices in the corona-affected comparison period, but also due to higher oil prices and improved expectations for China's GDP growth.

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May 01, 2021: Sinopec's first PTA project with an annual output of 3 million tons held a groundbreaking ceremony at Yizheng Chemical Fiber Company in April.

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

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Apr 30, 2021: On August 3, 2020, an explosion occurred in Lanhua Organic Silicone in Xiliuhe Town, Xiantao City, causing 6 deaths and 4 injuries. The direct cause of the accident was: excessive methyl ethyl ketoxime hydrochloride released heat rapidly in a relatively confined space, and energy could not be effectively released, leading to an explosion.

Comment MCC: The root reasons include illegal production, failure to implement responsibilities for safe production, low-quality risk management, inadequate training etc., indicating that the tightened supervision by the government still fails to prevent such behavior.

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Apr 29, 2021: In 2020, the overall operating rate of polyesters in China was about 84%.

Comment MCC: This includes some very different periods, with operating rates dropping below 60% in early March as a consequence of Covid-19 but recovering to high rates of 87-90% from June to December, indicating a strong recovery.

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Apr 28, 2021: China has 555 battery-swapping stations, offering a quicker alternative to charging the batteries of individual EVs.

Comment MCC: However, currently the different EV makers use different battery models and provide only swaps to owners of their own brands. To make this approach work, probably some standardization will be necessary eventually. This could also change the material requirements for batteries, both with regard to standardization and with regard to longer lifetime and higher robustness. This would directly affect the suppliers in the chemical industry.

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Apr 27, 2021: In 2020, Hengli Petrochemical's performance reached a new high, increasing by 51% while profits increased by 34%.

Comment MCC: Overall, 2020 has not been a particularly bad year for China's chemical industry, with most of the pain occurring in Q1 2020 only.

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

Comment MCC: This may lead to reductions in market inventory and thus spikes in prices.

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Apr 25, 2021: According to its chairman Zhang Yuzhuo, Sinopec will ensure that carbon dioxide peaks before the national carbon peak target, and strive to achieve carbon neutrality 10 years ahead of the national target.

Comment MCC: Sinopec is taking a lead in defining its role in a potential post-oil world by building hydrogen supply centers, though its current 10 hydrogen refueling stations are still a very small number compared to its 30,000 gas stations.

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Apr 24, 2021: Chinese production capacities for many basic organic chemicals will increase substantially in 2021 compared to 2020, e.g., ethylene by 28%, PX by 34% and EVA by 103%.

Comment MCC: This huge increase is partly as some projects were delayed in 2020 due to Covid-19, but also because China's economic outlook is generally still regarded as positive.

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Apr 23, 2021: Forbes officially announced the latest issue of the global billionaire list. Fang Honwei and her husband Chen Jianhua are the highest listed persons involved in the Chinese chemical industry, coming in at no. 102 (wealth 18.2 billion USD) and no. 210 (wealth 10.6 billion USD), both of Hengli Group.

Comment MCC: It will be a comfort to us other people involved in China's chemical industry that this indeed involves a pathway to real riches.

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

Comment MCC: This is still low compared to the relative share of China as a part of the global chemical market, at about 40%.

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Apr 21, 2021: Clariant Catalysts has opened a new R&D center at its "One Clariant Campus" (OCC) in Shanghai. Focus areas will be more sustainable solutions for the coal value chain, hydrogenation for high value-adding chemicals, environmental protection, and custom catalysts

Comment MCC: According to Clariant, China is now the largest chemical market in the world and the country alone accounts for 46% of world chemical sales, making it a natural location for R&D.

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Apr 20, 2020: In China, nearly 30 projects related to PBAT, a biodegradable plastic, are under construction or being planned.

Comment MCC: 2020 production global capacity was about 560 kt, which is expected to rise to 2300 kt in 2025. The consumption in 2020 was about 350 kt, of which about 90 kt were domestic. China's current capacity is about 330 kt, but the operating rate is quite low. With the large number of Chinese projects, this could worsen unless the market keeps growing at a very high rate. In some way, this is typical for the market in China - any potential for growth is immediately being turned into the potential for overcapacity.

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Apr 19, 2021: A CNOOC and Shell SMPO/POD project with a total investment of nearly 7.1 billion yuan was put into operation. Among the products are 750 kta ethylbenzene, 630 kta styrene, and 300 kta PO.

Comment MCC: China's capacity for basic organic chemicals keeps expanding at a rapid pace, partly driven by foreign investment, indicating that MNCs still see China as a major growth driver.

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Apr 18, 2021: Canadian performance additives maker SI Group is opening a new plant to make antioxidants in Danyang, China by May 2021.

Comment MCC: The reasons given for the plant opening are increasing supply security and enabling quicker expansion through compressed lead time and simplified logistics - in other words, China is becoming too important a market to be served by imports alone.

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Apr 17, 2021: The IMF raised its 2021 growth forecast for China to 8.4 percent yesterday

Comment MCC: This is 0.3% higher than forecast in January, and obviously much higher than the modest government target of more than 6%.

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Apr 17, 2021: Jiangxi province announced a first list of 26 approved chemical parks.

Comment MCC: Gradually, all provinces seem to issue such lists of approved parks. Companies producing in parks not appearing on such lists, therefore, are in danger of running into problems even if the individual production plants have been approved.

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Apr 17, 2021: Wanhua's 2020 operating income increased by 7.9% while net profit decreased by 0.9%.

Comment MCC: Given the peculiarities of 2020, this still looks like a very good result.

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Apr 17, 2021: In 2020, the export of organic chemical raw materials, special chemicals and pesticides was 46.7 billion US dollars, 20.43 billion US dollars and 7.62 billion US dollars, accounting for 22.3%, 9.8% and 3.6% of the total exports of the whole industry

Comment MCC: The low share of specialties indicates China's weakness in this segment.

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Apr 16, 2021: From 2013 to 2020, the average capacity of caustic soda companies in China has increased from 220 kt to 283 kt.

Comment MCC: While at first this seems to indicate significant market consolidation, in fact a large share of this capacity increase of 28% is due to the overall capacity increase of 16% rather than purely by consolidation.

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Apr 15, 2021: A Chinese epoxy resin company recently adopted a bidding model for inventory sales, only accepting bids from old customers, setting a starting price for a specific amount of resin and awarding the product to the highest bid received within 24 hours.

Comment MCC: This is a strong indication of this being a seller's market for the time being.

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Apr 14, 2021: PPG is opening a China Application Innovation Center (CAIC), a cross-business R&D center located in the Jiangsu Yangtze River International Chemical Industrial Park next to PPG's Zhangjiagang manufacturing plant.

Comment MCC: Sometimes I wish companies would come up with slightly more creative statements than the ones issues by PPG in this case, such as "The Zhangjiagang CAIC will play an essential role by fostering further collaboration between PPG businesses", "CAIC is a critical component of PPG's global lab footprint and further demonstrates our strong commitment to investing in China" or "CAIC is set to accelerate PPG innovation, research and development in China by sharing PPG global best practices, cutting-edge technologies and sustainable products"

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Apr 13, 2021: Sinopec plans to increase its capital expenditure on chemicals in 2021 by 86% compared to 2020, a much stronger increase than its overall capex increase of 24%. This means chemicals will account for 29% of total 2021 capex spending after 19% in 2020.

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

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Apr 12, 2021: According to ICIS data, average per capita PE demand in China's 10 richest provinces is more than double that of the demand in the 21 remaining provinces.

Comment MCC: This indicates both the substantial income inequality between provinces and the huge potential for further demand growth if the poorer provinces (which account for almost two thirds of the population) catch up.

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Apr 11, 2021: Several producers of chemical products in Inner Mongolia have had to limit their output due to government restrictions. For example, the operating rate of calcium carbide plants decreased from 90% to 70%

Comment MCC: It is a slightly bizarre situation - first companies got encouraged to establish chemical production with high energy consumption in Inner Mongolia, and now the provincial government is restricting them in order to meet targets of the central government.

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Apr 10, 2021: Sinopec successfully issued a "green bond"-equity-funded carbon neutral bond for the first time. The raised funds will be used for the company's photovoltaic, wind power, and geothermal projects.

Comment MCC: Interesting to see how an oil company is now also trying to establish green credentials.

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Apr 09, 2021: CHINA has announced tax breaks to promote its semiconductor industry following US sanctions. Machinery and raw materials that cannot be produced or whose performance cannot meet demand will be exempt from import tax, which applies to photoresists, masks, polishing pads and liquids, silicon crystals and wafers.

Comment MCC: In this case, it seems to be more important to reduce the short-term pain rather than to promote import substitution in the longer run.

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Apr 08, 2021: The Supreme People's Procuratorate and the Emergency Management Department jointly issued 9 typical cases of public interest litigation in the field of safety production.

Comment MCC: Publishing such typical cases is likely to strengthen the supervision of production safety, as it clarifies the role of public interest litigation.

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Apr 07, 2021: China's PTA production capacity has reached 60 million t/a and is estimated to exceed 90 million t/a by 2025 based.

Comment MCC: This will likely mean substantial overcapacity both in the domestic and the global market.

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Apr 06, 2021: The operating income of Luxi Chemical decreased by 3% in 2020 while profit decreased by 52%

Comment MCC: A nice illustration of the higher volatility of profits versus revenue in commodity chemicals.

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Apr 05, 2021: Shanghai Kangpeng Technology was denied listing on the sci-tech innovation board

Comment MCC: The rejection seems to be due to environmental issues and accidents of the chemical company, indicating that companies interested in a future listing need to pay substantial attention to related issues.

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Apr 04, 2021: There are 21 universities in China ranked among the top 100 universities in the world including the Chinese Academy of Sciences ranked first as well as universities ranked 11th, 12th, 13th, 15th, 16th, 21st, 31st, 33rd, 43rd, 50th, 56th, 60th, 62nd, 66th, 70th, 72nd, 94th, 95th, and 99th.

Comment MCC: This is an indication of China's potential for becoming a leader in innovation.

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Apr 03, 2021: As of the end of December, there were 22,973 enterprises above designated size in the Chinese chemical industry, a decrease of 362 from the previous year

Comment MCC: In the past few years, this number has been shrinking, though not at a very rapid pace. This indicates consolidation of the industry rather than a shrinking of the industry itself.

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Apr 02, 2021: The merger of Sinochem and ChemChina has been approved by the State Council.

Comment MCC: The stock of Sinochem rose by 10% on the news, indicating investor support. However, in some way the merger creates a conglomerate that is even more unwieldy than the two merger partners, operating "in a wide array of business sectors covering life science, materials science, basic chemicals, environmental science, rubber and tires, machinery and equipment, industrial finance and other businesses". A clearer focus on chemicals would be preferable.

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Apr 01, 2021: A "China Carbon Price Survey 2020" predicts that by 2030, China's average carbon price will rise from RMB 49 per ton of carbon dioxide equivalent in 2020 to RMB 93, and will exceed RMB 167 by the middle of this century.

Comment MCC: Even the 2030 price is still quite low compared to current prices in Europe (somewhat above 300 RMB). This is in line with pursuing coal chemistry and building new coal-fired plants, but not necessarily with achieving carbon neutrality in the long run.

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Mar 31, 2021: Shandong province has enacted incentive measures for observers to report safety issues in the chemical industry. If verified, a reward of 50,000 yuan will be given.

Comment MCC: Another indicator of how seriously the local government takes preventing accidents (and thus presumably saving their own jobs), as the chemical industry accounted for 1095 safety-related reports last year.

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Mar 30, 2021: In electronic gases, international gas companies occupy most of the market in China. The market share of domestic local gas companies is less than 20%. Similarly, in high-end wet electronic chemicals, the localization is only about 10%.

Comment MCC: As this clearly worries the government, expect continuing support for local companies trying to upgrade their technologies in order to expand their portfolio from the 8-inch wafers (where China already has a huge share) to 12-inch wafers.

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Mar 29, 2021: In 2020, the operating income of coal chemical products in China fell by 14.7% year-on-year, and the annual loss was 1.94 billion yuan.

Comment MCC: Most coal chemicals projects were started based on the assumption of much higher oil prices than those observed throughout 2020 - according to some estimates, an oil price of about 80 USD/barrel is required to make coal chemicals profitable.

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Mar 28, 2021: Axalta will buy Anhui Shengran Insulating Materials Co., Ltd., a Chinese producer of wire enamels used in a range of consumer electronics, electric vehicle, and industrial applications

Comment MCC: According to Axalta, this will complement Axalta's existing Energy Solutions portfolio, which includes three distinct product segments - wire enamels, impregnating resins, and electrical steel coatings. The acquisition will add wire enamel products and capabilities to Axalta customers across several end markets, including automotive, renewable energy, and consumer electronics. This points to Axalta seeing further growth potential in the Chinese market.

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

Comment MCC: As China is expanding its own capacity for producing basic chemicals, Korea's chemical companies relying on the export of such materials to China are vulnerable. SK is reacting by moving into slightly more complex businesses, as indicated by the expansion of its packaging material business.

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Mar 26, 2021: On March 13, the "Outline of the Fourteenth Five-Year Plan for the National Economic and Social Development of the People's Republic of China and the Long-Term Goals for 2035"was officially released. Focus areas include information technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, aerospace, marine equipment and other strategic emerging industries.

Comment MCC: Many of these areas - particularly new materials - will rely heavily on chemical companies to achieve progress.

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Mar 25, 2021: In 2019, the global annual production capacity of biodegradable materials was about 830 kt, of which China accounted for about 310 kt. It is estimated that the global annual production capacity of degradable materials will reach 2 million tons in 2023.

Comment MCC: China is currently the leader in production capacity, and there is substantial political support for the country to remain in this position.

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

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

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Mar 23, 2021: In 2020, the import volume of organic chemicals into China increased by 20.5%. For synthetic resin, the increase was 11.2% overall. For individual polymers, the figures were 11% (PE), 29% (PP), 36% (PVC) and 2% (PC).

Comment MCC: Mostly, these imports are driven by price and by the lack of high-end products rather than by the lack of domestic capacity.

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Mar 22, 2021: A fine of a combined 15 million RMB has been imposed on Chinese chemical company Guangdong Rongtai Industry for various securities violations including inflating profits.

Comment MCC: The portfolio of the company comprises mostly commodities including amino polymers compound, phthalic anhydride, plasticizers, urotropine, and resin powder, presumably at the lower end of the quality spectrum as most of its sales are domestic. This is not an enviable position and may have led to some pressure to overstate profits.

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Mar 21, 2021: Inner Mongolia will in principle not approve new modern coal chemical projects during the "14th Five-Year Plan" period.

Comment MCC: This reflects both the deteriorating economics of such projects due to the low oil price, and the low ranking of the province with regard to energy consumption per unit of GDP.

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Mar 20, 2021: allnex, a supplier of coatings resins, will establish a new production base in Jiaxing, Jiangsu, an investment of about 200 million USD.

Comment MCC: The production will focus on waterborne resins, aligned with the shift of China's market to these more environmentally friendly products.

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Mar 19, 2021: According to incomplete statistics, in 2020, China has shut down more than 10,000 small and medium-sized chemical companies, and the direct economic loss will be close to 100 billion yuan.

Comment MCC: Jiangsu alone is reported to have closed down more than 8000 companies. As a consequence, it will get harder for all but the biggest chemical companies to establish new production in this province. Instead, they will choose neighboring provinces such as Anhui or relocate to a Western province.

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Mar 18, 2021: A number of the proposals of the two sessions (NPC and CPPCC) are related to the chemical industry.

Comment MCC: Most of these have a broad environmental focus. They include the acceleration of the development of a hydrogen economy, improvements in waste water treatment, increasing the safety in chemical parks and avoiding overcapacity in the production of biodegradable materials.

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Mar 17, 2021: In 2020, the profit of specialty chemicals manufacturing and rubber products in China increased by 13.4% and 39.6% respectively; for synthetic materials manufacturing by 5%, and for pesticide manufacturing by 0.5%. In contrast, the profit from the manufacturing of basic chemical raw materials fell by 2.6% and the profit from the manufacturing of paint (pigment) materials fell by 2.9%

Comment MCC: This indicates the overcapacity in China's basic chemicals segment and the gradual upgrading and move towards specialties.

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Mar 16, 2021: FTSE Russell will include Hengli Petrochemical in its FTSE China A50 Index

Comment MCC: This is an indicator of the strength of this private petrochemical company.

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Mar 15, 2021: Dow will invest about 250 million US dollars to build a South China specialty polyurethane and specialty surfactant plant, with a total production capacity of about 250 kt. The press release states that "this world-class manufacturing base will make it easier for Dow to provide customers in the Asia-Pacific region with locally produced innovative materials" and allow Dow to "better seize the growth opportunities of the world's largest chemical market."

Comment MCC: This highlights both the importance of China as a big market for chemicals and Chinas role as a production hub for Asia.

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Mar 14, 2021: China depends on imports for about 18% of its PP but more than 40% of its PE. In particular, for some of the high-pressure polyethylene products, China is completely dependent on imports

Comment MCC: In combination with the political objective of increasing self-sufficiency, this gives a strong incentive for SOEs such as Sinopec to expand production in this area.

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Mar 13, 2021: DSM won in court against Anhui Tiger Biochemical and Anhui Tiger Vitamin Industry. Tiger can no longer make an important biotin intermediate using a DSM patented process.

Comment MCC: In fact, most IP court cases pitching foreign against domestic companies in China are won by the former, indicating that system may be better than its reputation in the west.

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Mar 12, 2021: In a speech given to the National People's Congress, Yang Hua of Sinochem discussed "the structural contradiction between low-end overcapacity and insufficient high-end supply ... especially in the fields of high-end synthetic materials, functional materials, medical materials, and high-end electronic chemicals.

Comment MCC: This highlights one of the focal points of the 14th Five-Year Plan, the high import dependency for high-end materials, which according to the speech "seriously affects the stability and safety of the industrial chain"

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Mar 11, 2021: The new "Yangtze River Protection Law" clearly prohibits the construction and expansion of chemical parks and chemical projects within one kilometer of the coastline of the Yangtze River's trunk and tributaries. Violators will face a fine of 500,000 yuan up to 5 million yuan.

Comment MCC: Given the number of relocations in the recent past, it is clear that this law is intended to be fully implemented.

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Mar 10, 2021: Hexion Inc has sold its China phenolic resins plant to Red Avenue New Materials Group, a publicly listed Chinese company providing diversified new materials for electronics, environmental protection, tire, and auto markets

Comment MCC: Many Western chemical companies will face the decision whether to continue competing in Chinas chemical market or not. In the case of mature products such as phenol, in which Western players have few obvious advantages, exiting the market via a sale to a domestic player may often be the best solution.

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Mar 09, 2021: Shanghai aims to produce 1.2 million new-energy vehicles a year by 2025 from 238,000 in 2020.

Comment MCC: The city currently produces more than 10% of China's total car production and is understandably keen not to lose this position during the ongoing shift towards electric vehicles.

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Mar 08, 2021: In an infringement case related to technical secrets for vanillin production, Jiaxing Zhonghua was awarded a compensation of 159 million RMB, the highest compensation in the court's history.

Comment MCC: This is quite close to the 177 million RMB requested by Zhonghua, and (together with possible criminal prosecution of the parties benefiting from the stolen trade secrets) sends a strong signal that China is taking IP protection more and more seriously.

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Mar 07, 2021: Wanhua's MDI plant in Yantai Industrial Park been expanded from 600 kta to 1100 kta.

Comment MCC: This new additional capacity helps Wanhua maintain its position as the global leader in MDI with a market share of almost 30%.

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Mar 06, 2021: The Nanjing Emergency Management Bureau investigated a case of illegal storage of hazardous chemicals by Nanjing Rubber Co., Ltd., and imposed a penalty of 3.45 million yuan, the highest fine ever issued in the case of illegal storage of hazardous chemicals in Jiangsu.

Comment MCC: The company had built an oil product warehouse without authorization, including 12 underground storage tanks buried in the warehouse. These are now being dismantled, which may be a more effective deterrent than the fine alone.

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Mar 05, 2021: Shandong province has issued a notice asking local refineries not to carry out plant maintenance in the summer months in order to reduce summer smog. However, only one of ten independent refineries agreed.

Comment MCC: Similar to the Western world, it seems many ambitious environmental goals can only be achieved by setting strict laws rather than by asking for cooperation from the industry.

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Mar 04, 2021: Sales of electric cars, plug-in hybrids and fuel-cell vehicles hit a record of 179,000 last month, increasing nearly 300 percent from a year earlier. Sales of pure electric vehicles accounted for 151,000, the vast majority.

Comment MCC: There may be a shift away from plug-in hybrids as some cities including Shanghai may in the future no longer give favored license plates to these cars. Currently, fuel-cell vehicles are almost irrelevant, with only about 1000 sold per month, despite the plans of companies such as Sinopec to establish a refueling infrastructure.

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Mar 03, 2021: The Jiangsu Provincial Department of Emergency Management validated the "Safe Production Permits for Hazardous Chemicals Production Enterprises" of 1,131 hazardous chemical production enterprises in the province while the licenses of 133 hazardous chemical production enterprises were canceled.

Comment MCC: This is slightly above 10% of the enterprises - a substantial share, indicating that Jiangsu province is quite serious about safety, not surprising given the past accidents.

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

Comment MCC: From the perspective of Mr. Xu, this is probably mostly to secure Ningbos position in the chemical industry. However, an extensive chemicals futures trading place could also support the chemical industry nationwide.

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Mar 01, 2021: Dow will sell the infrastructure of petrochemical plants in Stade, Schkopau and Boehlen

Comment MCC: In some ways, this means that the traditional Western model of the chemicals producer also owning the local infrastructure will be more and more replaced by the Chinese one, in which the infrastructure is provided by a third party, such as a chemical park.

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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 13^th 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.

---

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.