Older Industry News (2022-2023)

This section contains information and comments on China´s chemical industry, as posted from January 2022 to December 2023 onwards. Entries are not revised later. For older entries, see separate sections. For daily updates, please join the LinkedIn group "News and Trends in China´s Chemical Industry".

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Dec 31, 2023: In 2022, China's refining capacity reached 920 million t/a while crude oil processing volume was 676 million t/a

Comment MCC: Thus, the utilization rate of the capacity was 73.5%, significantly lower than the world average operating rate of 81% and the rate of developed countries at 86% (CCR)

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Dec 30, 2023: Sika has significantly expanded its research and development capacities in the Asia/Pacific region, opening a new technology center in Suzhou, China.

Comment MCC: The center will focus on activities in construction and environmentally friendly mobility, both chemical segments for which China is of high importance.

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Dec 29, 2023: Law enforcement agencies in northern China have shut down plants manufacturing of counterfeit Viton^TM FreeFlow^TM fluoroelastomer (BUSINESS WIRE)

Comment MCC: According to the report, the plant even purchased genuine fluoroelastomer from local subsidiaries to mask their counterfeiting operations

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Dec 28, 2023: Evonik and Fuhua Tongda Chemicals Company (Fuhua) have signed a license agreement for Fuhua to build a new hydrogen peroxide plant in Sichuan using Evonik's know-how. The two partners will also consider cooperating in joint production and marketing of specialty grades of hydrogen peroxide, e.g., for solar panel production or aseptic food packaging.

Comment MCC: This is one of several cooperations of Evonik with local chemical producers this year, indicating a preference of Evonik for this type of participation in the Chinese market.

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Dec 27, 2023: In September 2023, China was by far the biggest importer of chemical products from Saudi Arabia, accounting for 19.6% of total export value followed by India (13.9%) and the US (8.9%).

Comment MCC: In addition, Saudi Arabia also has massively increased its chemical investment in China along with these large exports to China.

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Dec 26, 2023: China will impose tariffs on some chemicals including paraxylene, propylene and orthoxylene imported from Taiwan

Comment MCC: Both sides state that the other side violated an existing Economic Cooperation Framework - and given the political tensions between them, my guess is that both sides are right.

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Dec 25, 2023: Fitch expects market conditions for chemicals in APAC to improve slightly in 2024 after demand weakened substantially in 2023. For China, the ratings agency forecasts a potential but modest restocking-driven recovery but continuing headwinds from weak the property market.

Comment MCC: The outlook for agrochemicals is more positive as Fitch expects "demand for agrochemicals in APAC to be more resilient than other chemical products in the current downturn"

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Dec 24, 2023: BASF has appointed Markus Kamieth to take over as CEO

Comment MCC: In some ways, this confirms BASF's focus on China, as Kamieth currently leads BASF's China operations. This is despite growing criticism of this focus as some are worried about growing dependency on China.

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Dec 23, 2023: According to the China Chemical Reporter, in 2022 there were more than 6000 coatings manufacturers in China, primarily in architectural coatings

Comment MCC: Other indicators are the small market share of the top 10 companies (17% compared to 28% globally) and the top 100 companies (42% compared to 70-90%). Foreign companies are still among the leaders, accounting for 6 of the top 10 players.

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Dec 22, 2023: According to the US Alliance for Chemical Distribution, the implementation of tariffs on Chinese chemical imports could result in an additional $26 million dollars paid in duties by U.S. chemical distributors.

Comment MCC: The increasing protectionism of the US is indeed a concern, and it seems that US business interests such as those expressed here are currently being trumped by nationalism and populism supported by both major US parties.

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Dec 21, 2023: According to a study carried out for the European Commission by Centexbel, the Belgian Centre for Textiles and Plastics, one garment in six coming from China contains chemicals that contain carcinogenic substances such as bisphenol, nickel, or chromium-6.

Comment MCC: Interesting information, but it is difficult to judge how meaningful this is without a similar test conducted on garments originating from outside of China.

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Dec 20, 2023: China's aromatics capacity had a CAGR of 22% between 2019 and 2023

Comment MCC: However, this high growth rate is expected to slow to a CAGR of about 4.4% between 2024 and 2027 as substantial capacity has already been established. For some materials such as toluene, the self-sufficiency rate is already above 100%.

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Dec 19, 2023: The US is the largest importer into the EU with a 21% share, bigger than China (18%). It is also the most important export destination with 27% compared to 7% for China (Eurostat data)

Comment MCC: Surprisingly, China is only the fourth biggest export destination - both the UK and Switzerland are also bigger at 10% and 9%. Thus, purely in terms of exports, a trade bifurcation may not have as drastic consequences as feared. The reason for the lowish share is probably that many German chemical companies already produce a large share of their China sales in China.

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Dec 18, 2023: According to an article in TNN, Gujarat's chemical industry is struggling due to China's cheaper raw material supply. Apparently, finished products from China are sold at the same price as raw materials.

Comment MCC: This has led to a 17 billion USD trade deficit for India's chemical industry.

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Dec 17, 2023: China is now the world's largest market for e-buses, making up more than 95% of global stock. At the end of 2022, 77% or 542,600) of all urban buses in the country were "new energy vehicles" while around 84% of the new energy bus fleet was pure electric (BBC)

Comment MCC: The transition was fast - in 2015, 78% of Chinese urban buses still used diesel or gas. Probably as a consequence, China is now also home to some of the world's biggest electric bus manufacturers.

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Dec 16, 2023: A recent scientific paper examines how deploying green hydrogen can be utilized to decarbonize China's coal chemical sector

Comment MCC: The paper includes some interesting assumptions and estimates, for example, the assumed 9% contribution of China's coal chemical production to national carbon dioxide emissions, a very high value. The authors estimate that about 50% of these emissions can be avoided by using green hydrogen.

https://www.nature.com/articles/s41467-023-43540-4

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Dec 15, 2023: China has agreed to reduce the flow of precursor materials for the production of the fentanyl into the U.S.

Comment MCC: Of course, these materials can also come from other countries - China in this case seems to be just a convenient scapegoat for what is essentially a domestic problem

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Dec 14, 2023: Covestro will introduce low-carbon footprint polyurethane dispersions into the Asia Pacific market starting in Q1 2024. These materials have a content of up to 80 percent alternative raw materials based on solids.

Comment MCC: Most likely, the customers will be global companies rather than local ones, as they have more to gain in reputation with a statement that their materials are sustainable.

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Dec 13, 2023: Umicore will build the world's largest proton exchange membrane catalyst production facility in China

Comment MCC: China thus wisely pursues several ways to decarbonize transportation, not only lithium batteries.

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Dec 12, 2023: According to CCR, by 2025, China's self-sufficiency rate for ethylene, propylene and PX will reach 90%, 116% and 118% respectively.

Comment MCC: Particularly for the latter two products, this will have a massive negative impact on those foreign producers currently importing these materials to China.

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Dec 11, 2023: A recently published paper is titled "Investigation of Plant-Level Volatile Organic Compound Emissions from Chemical Industry Highlights the Importance of Differentiated Control in China"

Comment MCC: The assessment covered 3461 plants, 127 products, and 50 volatile organic compounds. One key finding is that there is a particular risk from plants in Eastern China (due to their proximity to highly populated areas) and plants producing chemical fibers (due to their release of ozone and secondary organic aerosol).

https://pubmed.ncbi.nlm.nih.gov/38064660/

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Dec 10, 2023: According to ChemAnalyst, in the week ending on November 3, 2023, China's paraxylene production capacity utilization increased substantially, reaching 80%.

Comment MCC: The report attributes the high utilization to both a healthy economy and efforts of key producers to improve their performance. Politically, a high domestic capacity utilization is also desirable as China still depends on imports.

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Dec 10, 2023: A former Chinese University of South Florida chemistry Ph.D. student who was arrested after trying to poison his neighbor with opiods was deported to China.

Comment MCC: Readers are advised that this is not the right way to apply chemical knowledge.

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Dec 09, 2023: Sinopec signed a 27-year LNG supply and purchase agreement with QatarEnergy

Comment MCC: This is the third long-term supply deal between Sinopec and Qatar Energy, the world's biggest LNG supplier

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Dec 09, 2023: At the Third Belt and Road Initiative Conference, China and Nigeria announced a methanol plant in Nigeria, with the methanol produced exported to China.

Comment MCC: Chinese companies such as CNOOC have made investments in Nigeria in the past.

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Dec 09, 2023: According to The Economist, "China is winning Africa's ‘white-gold' rush for lithium

Comment MCC: The Economist sees China's grip on clean-energy minerals as a challenge for the West.

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Dec 09, 2023: Covestro has forged a global partnership with Chinese automotive trim company Xinquan Automotive

Comment MCC: Such partnerships are promising for German chemical companies with substantial sales to Chinese customers in China as these Chinese companies expand internationally and thus may require chemical products in Europe, North America and elsewhere.

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Dec 09, 2023: The profit of large-scale Chinese chemical companies dropped by 47% in the period from Jan-Sep 2023 compared to the previous year.

Comment MCC: This is much more than the 9% drop for all industries.

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Dec 09, 2023: Huafon Group and Covestro aim to cooperate on the development of bio-based MDI.

Comment MCC: Apparently, the collaboration will focus on MDI produced by Covestro based on a mass balance approach, which results in a lower carbon footprint due to the use of alternative raw materials containing plant waste.

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Dec 08, 2023: UNCTAD published a paper titled "China's Policy Strategies for Green Low-Carbon Development: Perspective from South-South Cooperation"

Comment MCC: As this paper has a length of 95 pages, I cannot provide a meaningful summary here, particularly as the paper unfortunately lacks a summary or conclusion. So, check it out yourself if the topic is relevant to you.

https://unctad.org/system/files/official-document/gds2023d6_en.pdf

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Dec 07, 2023: BASF has been criticized in the German business press for their plant in Xinjiang run in a JV with Chinese company Markor.

Comment MCC: This puts BASF in a difficult position - on the one hand, China is a very important market and the site of massive BASF investments, on the other hand, any association of BASF with claimed human rights violations in Xinjiang may hurt the company outside of China.

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Dec 06, 2023: China accounts for more than 80% of the global solar cell exports, more than 50% of lithium-ion batteries, and more than 20% of electric vehicles (China Dialogue)

Comment MCC: Reasons behind China's strong position include government support, a huge home market, and well-established manufacturing capabilities. As a consequence, combined exports of EVs, lithium-ion batteries, and solar cells increased by 67% year-on-year in the period from January to March, and a 62% increase for 1H 2023. EVs have the strongest growth of the three categories while the more mature solar cells have the lowest.

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Dec 05, 2023: Wanhua Chemical plans to acquire part of Tongling Chemical, and retain the chemical business while spinning off the non-chemical business.

Comment MCC: Presumably Wanhua is primarily interested in Tonglings upstream resources in phosphate and sulfur, which can be utilized as raw materials for the battery business.

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Dec 04, 2023: The American Chemical Society published a paper titled "Advancing ‘Carbon Peak' and ‘Carbon Neutrality' in China: A Comprehensive Review of Current Global Research on Carbon Capture, Utilization, and Storage Technology and Its Implications"

Comment MCC: Worth checking out for those interested in the topic. https://pubs.acs.org/doi/full/10.1021/acsomega.3c06422#

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Dec 03, 2023: China plans to improve methane emissions control from now through 2025 and significantly improve from 2026-2030, according to the plan (Argus)

Comment MCC: China is the largest emitter of methane from fossil fuels, and methane is the second largest contributor to global warming, thus these controls - if implemented properly - will make a difference.

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Dec 02, 2023: According to Plasteurope, China aims to substitute plastics with bamboo as a way to reduce pollution.

Comment MCC: While the plan - outlined in an article by China Daily - lacks details, it includes the establishment of 10 application centers looking at replacing plastics with bamboo.

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Dec 01, 2023: BASF signed a 40 billion RMB bank term loan facility with a maturity of 15 years for its Verbund site in Zhanjiang.

Comment MCC: Interestingly, the financing is primarily done with local funds, allowing BASF to benefit from the low-interest rates in China and possibly also to reduce risks from a bifurcation of the market - an application of the "In China for China" strategy that extends to funding. Local banks thus will have a strong interest in the site to be profitable, which may also mean strong local support for BASF.

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Nov 30, 2023: A report by Wood Mackenzie is somewhat positive regarding the carbon footprint of the newer overseas Chinese BRI projects.

Comment MCC: While China has not completely stopped financing, almost 90% of the more recent proposed coal-fired projects have already been canceled due to policy changes and increased opposition to coal since 2021. This is a major shift from the initial strong focus on coal projects.

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Nov 29, 2023: China has announced a USD 2.79 billion investment in lithium mining operations in Zimbabwe (Geopolitical Monitor)

Comment MCC: China will also start lithium processing in the country - a step that may potentially be beneficial for Zimbabwe's population - or only for the ruling elites.

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Nov 28, 2023: De Nora opened a new electrode production line at its Suzhou plant. As a result of the expansion, the site's total production capacity has tripled.

Comment MCC: Key products are equipment for chlor-alkali plants, for which China now has 45% of the global market, and electrodes for the production of copper foil used in the manufacture of lithium-ion batteries for electric cars and as a raw material for printed circuit boards.

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Nov 27, 2023: A German website by GTAI highlights the relatively weak situation of China's chemical industry, quoting contributing factors such as lower profits, lower demand from downstream customers as well as other trends such as the one to more sustainable products and the ongoing focus on safety in the chemical industry.

Comment MCC: Overall, the paper is skeptical about the prospects of China's chemical industry.

https://www.gtai.de/de/trade/china/branchen/chinas-chemiebranche-bekommt...

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Nov 26, 2023: RadiciGroup launched a new industrial facility in Suzhou, China, raising the manufacturing capacity of technopolymers by 100%.

Comment MCC: So far, like Radici, most Western chemical companies do not seem to reduce their investment, though they may focus more strongly on the domestic market ("in China for China") than before.

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Nov 25, 2023: In a recent earnings call, Peter Huntsman, CEO of Huntsman, stated that Huntsmans "focus is not on the export segment of the Chinese economy rather the domestic consumption and building side of the Chinese economy."

Comment MCC: This focus is widely shared among foreign chemical companies active in China and may limit the effect of a bifurcation of the global economy on these companies.

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Nov 24, 2023: Sinopec has put China's first LNG storage tank of 270,000 cubic meters into service on November 2 at its Qingdao LNG Receiving Terminal.

Comment MCC: As usual these days, this is also the world's largest LNG storage tank.

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Nov 23, 2023: From 2022 to 2027, China's PE capacity will increase by 57%, which will increase China's self-sufficiency rate and decrease imports.

Comment MCC: However, according to CCR, 26% of PE imports are specialties - and these will be hard to replace with domestically produced material.

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Nov 22, 2023: According to Nikkei Asia, in an analysis of the net incomes of about 13,000 Western companies, the chemical industry showed the largest year-on-year decline for Q3 2023 (43%).

Comment MCC: This is compared to a 3% increase for the total set of companies, indicating that the chemical industry indeed faces industry-specific issues.

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Nov 21, 2023: McGill University published a very interesting paper titled "No, Traditional Chinese Medicine Has Not Been Vindicated by Science". In it, they look at a new study claiming to prove the scientific foundation of traditional Chinese medicine.

Comment MCC: Basically, the McGill paper remains highly skeptical about both the study analyzed and the validity of TCM, highlighting "the implausibility of TCM: its herbs are variable mixtures of chemicals and its practices are incongruous and were repackaged by Mao Zedong in the middle of the 20th century to provide some kind of healthcare in the countryside even though he did not personally believe in their validity"

https://www.mcgill.ca/oss/article/medical-critical-thinking-health-and-n...

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Nov 20, 2023: The Hubei Provincial Government announced the "Implementation Plan for the Transformation and Upgrading of the Chemical Industry in Hubei Province (2023-2025)", which proposed that by 2025, the chemical industry will strive to achieve operating income of more than one trillion yuan.

Comment MCC: In line with the resources available in the province, a particular focus will be on phosphorus-based chemicals.

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Nov 19, 2023: The magazine Fortune India has a long article comparing the Chinese and the Indian chemical industry and forecasting a substantial strengthening of India's position from its current 4% of the global chemical market to 10-12% in 2040 (though this is still low compared to China's current 45%).

Comment MCC: Too long to summarize here - better read it yourself if you are interested. Some of the statements in the article are obviously wrong - for example, China's strength in chemicals is not primarily based on coal gasification - but worth reading.

https://www.fortuneindia.com/long-reads/indian-chemical-firms-take-fight...

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Nov 18, 2023: According to Asia Financial, China plans to increase its focus on the strategic rare earths industry, aiming to coordinate their exploration, development, utilization, and management.

Comment MCC: Of course, this has to be seen in the context of the trade war with the US. In rare earths, China has leverage as it produces about 70% of global supplies.

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Nov 17, 2023: Evonik entered a strategic cooperation with Baolijia, a Chinese leading emulsion manufacturer, to build a bio-based joint technology platform, especially in the field of coating applications for methacrylic acid bio-based monomers and emulsion products.

Comment MCC: Apparently, Evonik will provide Baolijia with application and technical support for VISIOMER® bio-based methacrylate monomer products produced by Evonik.

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Nov 16, 2023: China dominates the global iron oxide market with a total production capacity of about 800 kt in 2022 compared to 900-1000 kt global capacity (CCR)

Comment MCC: As domestic market demand is only around 300-350 kt, a large share of China's capacity is utilized to satisfy export demand.

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Nov 15, 2023: The share of coal-based PE in China is forecast to increase from 18.2% in 2022 to 20.5% in 2027

Comment MCC: This seems to contradict China's stated policy of aiming to reduce the emission of greenhouse gases such as carbon dioxide.

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Nov 14, 2023: After investing over US$130 billion into the solar industry in 2023, China will have more than 80% of the world's polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026 ( Wood Mackenzie)

Comment MCC: Given the scale of China's production, it is hard for foreign companies to compete even with local subsidies aiming to reduce the dependency on Chinese imports.
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Nov 13, 2023: Wanhua plans to expand its SAP capacity at its Wanhua site, adding another 30 kt of capacity.

Comment MCC: Currently, Wanhua is a small player as the global capacity is more than 4000 kt. However, Wanhua has plans to add more production bases for the material and to eventually reach a capacity of 500 kt, which would put the company in a similar league as the five global producers currently dominating the market.

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Nov 12, 2023: According to Reuters three Chinese companies (CNOOC, Eversun Holdings, and Wanhua Chemical) are evaluating Shell's Singapore assets that have been put up for sale, and are considering non-binding bids.

Comment MCC: The Shell assets include a 237,000 barrels per day refinery and a one million metric ton per year ethylene cracker.

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Nov 11, 2023: According to Statista, China produced 72% of the global chemical fiber in 2022.

Comment MCC: This is of course a much larger share than the second biggest producer India (8%) and the USA (3%).

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Nov 10, 2023: An NPR article describes the struggle of U.S. makers of medical gloves as they cannot compete with low-priced Chinese imports.

Comment MCC: While US producers got funding during the pandemic in order to create domestic production capacity, they now struggle to get the funds to complete the investments.

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Nov 09, 2023: According to an article in Nature, factories in Eastern China continue to release rising amounts of a powerful greenhouse gas, HFC-23, which is commonly produced as a by-product of refrigerant manufacture

Comment MCC: This is alarming as China has agreed to reduce its emissions - and with the tightened control of the chemical industry in China it becomes harder to believe that these emissions are not known to the government.

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Nov 08, 2023: While BASF will cut its investment budget, the company stated growth areas such as China were not likely to be affected.

Comment MCC: BASF's CEO also commented positively on demand from China, stating that although prices were still low in China, there had in recent weeks been a considerable recovery in demand for chemical products (Financial Times).

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Nov 07, 2023: Arkema has begun the production of specialty UV/LED curing resins at its expanded facility in Nansha, China

Comment MCC: According to the company, target industries include electronics, 5G technology, and renewable energy

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Nov 06, 2023: DuPont lowered its revenue and EPS guidance for the full year on slowing demand from China.

Comment MCC: The information on the development of the Chinese economy is conflicting - positive news tends to alternate with information on weaker demand.

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Nov 05, 2023: Croda has broken ground for a multi-purpose plant in Guangzhou, tripling its production capacity in China

Comment MCC: Croda entered China via the acquisition of Iberchem in 2020.

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Nov 04, 2023: Sabic reported a loss for the third quarter.

Comment MCC: One of the reasons given is the decline in global demand for chemical products, particularly from China.

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Nov 03, 2023: A subsidiary of China National Chemical Corporation (Donghua Engineering Science and Technology Co.) signed an EPC contract with a South African company for an 80 kt sulfuric acid process titanium dioxide project.

Comment MCC: Apparently, this will be the first titanium dioxide plant in Africa. It also indicates the rising level of process knowledge among Chinese companies.

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Nov 02, 2023: Evonik China and Shandong Vland Biotech Co. will establish a 55:45 JV in gut health solutions products for farm animals globally.

Comment MCC: While the main contributions from Vland are market access, regulatory capabilities in China and fast innovation, Evonik will contribute its global sales force and market access, R&D and global regulatory capabilities.

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Nov 01, 2023: China will require export permits for some graphite products from December.

Comment MCC: Graphite is used in the batteries for electric vehicles, and China provides 67% of global supplies of the natural form as well as more than 90% of the refined graphite used in EV battery anodes. The Chinese action likely is a retaliation for restrictions on Chinese companies.

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Oct 31, 2023: Wanhua will open an innovation center in Catalonia, Spain.

Comment MCC: This will be the third presence of Wanhua in Europe after Hungary and the Czech Republic, indicating further ambitions for global growth.

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Oct 30, 2023: According to the MIIT, there are more than 20,000 new materials companies in China, and the total output value in the first nine months of 2023 exceeded 5 trillion yuan.

Comment MCC: While somewhat undefined, the industry is regarded as strategic by the government, helping it to achieve a claimed double-digit growth. It supports or enables many relevant areas of new technology, particularly in new energy. And so far, China's strategy of heavily supporting new technologies in order to establish itself as a global leader seems to be quite successful.

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Oct 29, 2023: Arkansas officials took steps to force a Chinese government-owned agricultural company to divest itself of 160 acres of Craighead County farmland and pay a $280,000 fine for failing to file timely disclosures to the state.

Comment MCC: The land is ultimately owned by ChemChina via a subsidiary of Syngenta, and used for seed research. However, the claim of the Arkansas governor that "Seeds are technology. China's state-owned corporations filter that technology back to their homeland, stealing American research and telling our enemies how to target American farms. That is a clear threat to our national security and to our great farmers." sounds more like propaganda than reality at a time when China-bashing is popular in the US.

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Oct 28, 2023: Wacker China contributes about 30 percent of the group's sales

Comment MCC: This makes it the German chemical company with the biggest reliance on China among the larger ones - a fact that is reflected in recent massive investments in dispersions and dispersible polymer powders as well as functional silicone products. The latter benefit from China's shift toward EVs.

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Oct 27, 2023: Trina Solar, a Chinese producer of solar panels, plans to build a large-scale photovoltaic manufacturing base in the United Arab Emirates. The planned capacity includes 50,000 tons of high-purity polysilicon, 30 gigawatts of crystalline silicon wafers, and 5 gigawatts of photovoltaic (PV) modules, to be built in three phases.

Comment MCC: Given the conditions in the UAE, the location should be well-suited for the generation of solar power - and Trina has the expertise to set up local production.

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Oct 26, 2023: According to the BASF website, by 2030, Asia Pacific will represent around 70 percent of the global chemical market with more than half of the global chemical industry sales and about three quarters of global chemical production growth coming from China alone.

Comment MCC: Of course, BASF needs to justify its heavy (and occasionally criticized) investment in China - still, the prediction seems credible.

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Oct 25, 2023: Clariant will open a new production facility for halogen-free flame retardants in Daya Bay, Huizhou.

Comment MCC: The reasons for the establishment of local production are the usual ones given by foreign chemical companies - easier customization and shorter lead times: "Local production means we can improve cooperation and design tailored solutions to their developing needs as well as significantly reduce delivery lead times."

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Oct 24, 2023: Akzo Nobel International Paint will add production capacity for 8,000 tons of high-performance wind turbine blade coatings per year in China.

Comment MCC: China is already the country with the largest installed wind power capacity in the world, and supportive government policies suggest further growth. That makes it an attractive market for these coatings.

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Oct 23, 2023: China's output of coatings fell by 8.5% in 2022 (CCR)

Comment MCC: Factors likely to have caused this decline are Covid and the depressed state of the real estate sector. For example, Shanghai's coatings output was 26% lower than in the previous year. The longer-term growth prospects are also somewhat limited and are estimated to be between 1.4 to 2% annually.

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Oct 22, 2023: Domestic output of titanium dioxide grew 3.27% YoY in 2022

Comment MCC: This is an indicator that the past high growth rates for commodity chemicals in China are probably a thing of the past.

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Oct 21, 2023: China's Petroleum and Chemical Industry Prosperity Index rose to 96.38 in July 2023, up by 1.63 percentage points month on month. It is thus back in what is considered the normal range.

Comment MCC: However, it is still below the value of 100 which is the neutral one.

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Oct 20, 2023: The locations of new maleic anhydride plants tend to be in Southern coastal areas such as Fujian rather than in the traditional North China locations such as Hebei and Shanxi.

Comment MCC: A major factor is the shift from using coal as raw material (which is easily available in the Northern provinces) to LNG (which can be imported directly to Southern port locations). In addition, consumers of maleic anhydride are also more likely to be located in the South.

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Oct 19, 2023: In 2022, the domestic apparent consumption of styrene was about 14.1 million tons, a year-onyear increase of 3.8%.

Comment MCC: This comes after annual growth rates between 6.3% and 8.9% for the previous four years, suggesting that the fast growth of the past is finally coming to an end. Realistically speaking, styrene production should in the future grow below GDP (which presumably will be in the 5% area) as services should have higher growth than goods, and specialty chemicals higher growth than commodities such as styrene.

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Oct 18, 2023: Hengyi Group will build the country's largest nylon production base in Qinzhou with a total investment of 12 billion yuan and an annual output of 800,000 tons.

Comment MCC: This is indeed a huge production capacity given that global caprolactam production capacity is about 9 million metric tons per year.

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Oct 17, 2023: LG Chem will partner with Huayou Cobalt to establish a joint venture for the construction of an electric vehicle battery material factory in Morocco, which is to produce 50 kt of lithium iron phosphate cathode materials annually.

Comment MCC: Huayou Cobalt is a listed Chinese company with a focus on new energy Li-ion battery materials and advanced cobalt materials.

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Oct 16, 2023: LG Chem will sell its polariser business division to Shanjin Optoelectronics and its polariser material business to Hefei Xinmei Materials Technology, with a combined transaction of about 800 million USD.

Comment MCC: The rationale given by LG Chem is the alignment of the business with LG Chem's growth strategy - which of course does not explain very much.

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Oct 15, 2023: The list of the top 500 Chinese companies in 2023 includes more than 60 petroleum and chemical companies, with high-ranking chemical companies on positions 2, 3, and 9 (National Petroleum Corporation, China Petrochemical Corporation, Sinochem Holdings)

Comment MCC: With 12% of all companies in the list, this highlights the high importance of the chemical industry for China's overall economy.

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Oct 14, 2023: The Yushen Coal Yushuwan Coal Mine of Yulin City, Shaanxi Province and Caojiatan Coal Mine of Shaanxi Coal Caojiatan Mining Co., Ltd. have received approval to increase their production capacity

Comment MCC: Of course, it is hard to align these approvals with China's stated commitment to reduce carbon dioxide emissions. Maybe nobody will notice.

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Oct 13, 2023: China National Chemical Engineering Corporation and Russia's Baltic Methanol Co. agreed on a contract for the construction of a natural gas-to-methanol unit with an annual output of 5 million tons.

Comment MCC: This is claimed to be the world's largest methanol project. It seems to offer substantial advantages to both sides, allowing the Russian company to turn natural gas which in the current political situation is hard to sell to Western buyers into the more valuable methanol while allowing the Chinese company to utilize its engineering know-how.

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Oct 12, 2023: Shanxi province, a major coal producing province is aiming to expand its biomaterials industry in the face of economic and environmental pressure.

Comment MCC: Areas regarded as important in the relevant government plans include biomaterials, bio-agriculture, bio-energy, and bio-medicine. Specifically, this includes the development of bio-based nylon, the development of high-performance biodegradable materials such as dibasic acid glycol copolymers, development of specialty human collagen, development of biodegradable polymer materials, and the use of biotechnology to promote clean utilization of coal

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Oct 11, 2023: China's styrene production increased from 10.1 million tons in 2020 to 13.9 million tons in 2022, a CAGR of 17%.

Comment MCC: As a consequence, China's self-sufficiency reached 96% in 2022, and China is likely to become a net exporter as early as 2024 or 2025 - as it already is for more and more chemicals.

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Oct 10, 2023: The US Justice Department released eight indictments China-based companies and their employees with crimes relating to fentanyl and methamphetamine production, distribution of synthetic opioids, and sales resulting from precursor chemicals.

Comment MCC: According to press reports, the Chinese companies "often attempt to evade law enforcement by using re-shippers in the United States, false return labels, false invoices, fraudulent postage, and packaging that conceals the true contents of the parcels and the identity of the distributors. In addition, these companies tend to use cryptocurrency transactions to conceal their identities and the location and movement of their funds."

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Oct 09, 2023: A start-up meeting was held for a,000 tons/year pilot test project of Shaanxi Coal Group Yulin Chemical Company. It is the initial phase of a larger 4 million tons/year CCS demonstration project.

Comment MCC: While it is hard to imagine that such projects can be commercially viable in China under current conditions, it will help China gain expertise should the economic rationale change.

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Oct 08, 2023: The Chinese Ministry of Science and Technology published the "National Green and Low-Carbon Advanced Technology Achievements Catalog". It lists 85 technological achievements related to energy conservation, emission reduction, and other environmental advances in areas such as water pollution control, air pollution control, solid waste treatment, soil restoration, and environmental monitoring.

Comment MCC: Many of these achievements are applicable to the chemical industry, and some of them are likely to become mandatory sooner or later - a good reason for chemical companies to examine the catalog in detail.

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Oct 07, 2023: Sinopec plans to maintain steady refinery output during the second half of 2023. In a statement, Sinopec said "The Chinese economy is seen extending its recovery. Domestic refined fuel demand is looking up and natural gas demand will maintain growth and that of chemical products will rebound gradually"

Comment MCC: The statement about a recovery of the Chinese economy is in contrast to many voices in Western media stating that the recovery is lackluster - though it may not be possible for an SOE to echo such a statement. In any case, a steady output of refinery products seems to be a better indicator of economic stagnation than of a recovery.

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Oct 06, 2023: The All-China Federation of Industry and Commerce released the list of the top 500 Chinese private enterprises in 2023. After JD.com Group and Alibaba, Hengli Group is ranked at number 3.

Comment MCC: Further indication - if still needed - of the importance of chemical companies for China's overall economy.

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Oct 05, 2023: Huafeng has put its 1.15 million ton adipic acid project into production. It is the world's largest such plant.

Comment MCC: Indeed, the capacity of this plant theoretically is sufficient to supply about 25% of global adipic acid demand, which for 2023 is estimated at about 4.6 million tons. In 2020, Huafeng's production capacity was given as about 17% of the global total capacity - after the start of this project, this share likely has risen further. Companies and projects like this explain the growing dominance of China in the global market for commodity chemicals.

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Oct 04, 2023: The chemical raw materials and chemical products manufacturing industry grew by 14.8% year on year in August 2023.

Comment MCC: To quote from the original source, this underscores"its significance in driving overall industrial growth"

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Oct 03, 2023: China's toluene capacity has increased at a CAGR of 9.2% between 2018 and 2022.

Comment MCC: The main driver and application is the production of PX via disproportionation.

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Oct 02, 2023: According to ICIS, China currently accounts for 45% of global chemical production capacity and anticipates achieving 62% market share by 2035.

Comment MCC: This may indeed be achievable as recently, Chinese chemical companies have expanded their lead in commodity chemicals into some innovative areas such as battery materials. One driver of this move into innovative segments is overcapacity in commodities.

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Oct 01, 2023: A paper by Joseph Zenick and Keith B. Belton of the American Chemistry Council indicates that China's portfolio of chemicals exported has become more complex and high-end between 2000 and 2021.

Comment MCC: The authors conclude that China's capabilities in chemical manufacturing have greatly increased during this period.

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Sep 30, 2023: Solvay expanded its R&D center in Shanghai. The company has now invested a total of about 500 million Euro in its Chinese R&D hub since 2005, indicating a substantial commitment.

Comment MCC: Statements by Solvays CEO also underline the continued importance of China for the company despite geopolitical tensions: "The Chinese market is strategically important in our global strategy, and we are willing to increase our investments to address the demands here ... With a stronger research force in China, we will accelerate innovations that drive circular economy solutions and a sustainable future in response to the global megatrends and the ever-changing local needs."

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Sep 29, 2023: A paper titled "Textual quantitative analysis on China's local hydrogen energy development policies" analyses local Chinese hydrogen policies released between 2017 and 2022.

Comment MCC: While the analysis showed that the local hydrogen policy in China presents a high consistency to the national development goals, it also identified a lack of synergies between the individual locations - not a very surprising finding given China's issues in other areas.

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Sep 28, 2023: The annual N2O emissions from adipic acid production facilities in China is estimated to be about 134 million tons (Mt) of CO2eq/yr for 2021 while the rest of the world is estimated to contribute just 8.5 Mt CO2eq/yr. China thus accounts for 94% of global annual N2O emissions from adipic acid production (source link).

Comment MCC: This is something that can be remedied relatively easily, and should be. It is one of these markers that will indicate whether China's ostensible efforts to limit global warming are for real or not.

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Sep 27, 2023: Wanhua plans to expand its TDI capacity at its Fujian site by 330 kt/a.

Comment MCC: This reverses a recent rend of declining Chinese production of TDI after two TDI sites were phased out.

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Sep 26, 2023: China's PBAT production capacity is 63.4% of global capacity while for PLA it is is 15.3%.

Comment MCC: PBAT is also by far the most important degradable polymer produced in China, accounting for about 65% of total output followed by 29% for PLA. However, about half of China's PBAT production is exported as the domestic market is still relatively small. This may be a problem in the future - according to the CCR, in 2026, China's production capacity of biodegradable polymers may be up to 7 million t/a while the output may only reach 1.6 million.

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Sep 25, 2023: SK Enpulse, a chip material division of Korean SKC, will sell a 75% stake in its wet chemical subsidiary SKC-ENF Electronic Materials Ltd. to Jiangsu Yoke Semiconductor Materials for USD 37.6 million and a 90% stake in its chip materials cleaning affiliate SKC Solmics Hong Kong Ltd. to Shenyang Yichuang Precision Technology for USD 28.4 million.

Comment MCC: While in principle, Chinese companies should be very eager to snap up assets in these areas, the low sales price seems to indicate that the SK subsidiaries sold do not have access to cutting-edge technology.

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Sep 24, 2023: Evonik relocated and expanded precious metal powder catalyst factory in Shanghai, China.

Comment MCC: As common these days, the rationale is to localize the production of higher-end products.

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Sep 23, 2023: China considers penalizing university students who earned a degree using AI tools to manipulate data or write their thesis (chemistryworld)

Comment MCC: While this is probably not yet applicable to many students right now, it may become much more widespread in the future, meriting a proactive approach by the Chinese legislature.

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Sep 22, 2023: Six foreign companies, namely PPG, BASF, Kansai, Nippon Paint, Axalta, and KCC, hold over 80% of the market share in the passenger car coating segment in China.

Comment MCC: This segment is very hard for newcomers including domestic players to penetrate due to the arduous requirements to be listed as a supplier.

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Sep 21, 2023: There were 12 organic silicon monomer producers in China at the end of 2022, indicating some expertise in the production of these materials.

Comment MCC: However, in 2022, the average price in China was only RMB 43 000/ton compared to the global average of RMB 68 000/ton, indicating an overall lower level of product sophistication.

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Sep 20, 2023: The Shandong Provincial Safety Committee issued the "Shandong Province Safety Production Undercover Inspection System". It states that undercover inspections are carried out on a regular and irregular basis, with the provincial departments organizing no less than 2 unannounced inspections each year and the lower-level departments organizing no less than 4 unannounced inspections per year.

Comment MCC: While I am a tiny bit confused by the idea of "regular undercover inspections", overall the installation shows that nowadays government officials are more worried about losing their jobs after a chemical accident than being criticized for achieving only limited growth in chemical production.

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Sep 19, 2023: According to Envirotech online, China may be moving towards stricter PFAS regulation after recent research shows that drinking water in various cities across China has dangerously high levels of perfluoroalkyl and polyfluoroalkyl substances.

Comment MCC: In the past, China has been reluctant to phase PFAS out despite global efforts to ban hazardous substances, asking for exemptions to a U.N. agreement banning them.

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Sep 18, 2023: In an interview with China Daily, the chairman of SABIC stated that China's massive market is expected to provide substantial opportunities for major chemical corporations.

Comment MCC: Consequently, SABIC aims to expand its China investment in areas including renewable energy and petrochemical plants, for example by expanding its its investment in Fujian province with Fujian Energy Petrochemical Group to build and operate a world-class mega petrochemical complex.

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Sep 17, 2023: Sinopec will increase investment in refinery and petrochemical assets overseas in a bid to leverage its expertise and resources.

Comment MCC: This is as Sinopec's domestic growth potential is limited due to slower demand growth and restrictions on building new refineries.

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Sep 16, 2023: Qixiang Tengda started up a 300 kt/a hydrogen peroxide to propylene oxide (HPPO) complex in Zibo. It is under license from Evonik and thyssenkrupp Uhde.

Comment MCC: The process is described as sustainable as there are no byproducts generated - such processes may become more and more widespread as environmental regulation tightens and frequently the government even sets targets regarding resource utilization and efficiency for individual chemical processes.

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Sep 15, 2023: Wanhua Chemical (Fujian) plans to expand the capacity of 400 kt/a MDI plant to 800 kt/a

Comment MCC: Obviously, Wanhua does not have the slightest intention to lose market share in the MDI market which is the original basis for its success.

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Sep 14, 2023: Fitch Ratings has revised the Rating Outlook of China-based specialty-chemical manufacturer Wanhua Chemical Group Co., Ltd to Negative from Stable.

Comment MCC: This is a bit surprising given the generally rather good image of Wanhua in the Western world. Reasons cited by Fitch are a negative free cash flow in 2023-2024 due to high capex as well as refinancing risks related to Wanhua's short-term oriented funding structure.

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Sep 13, 2023: The "Work Plan for Steady Growth of the Petrochemical and Chemical Industry " issued by various ministries aims for an annual growth of the industry of 5% from 2023 to 2024.

Comment MCC: While not overly ambitious, this target may still be difficult to achieve given that some of the drivers of chemical demand - such as the construction sector - are experiencing difficulties.

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Sep 12, 2023: Ningbo Ronbay New Energy Technology will invest about CNY 2.6 billion in the construction of two battery materials factories in South Korea.

Comment MCC: As a relatively new segment, battery materials offer a chance for Chinese companies to become not only local but global leaders - this investment emphasizes the ambitions of Chinese companies in that regard.

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Sep 11, 2023: Zhejiang announced a fourth list of chemical parks that passed certification, bringing the total number in the province to 44.

Comment MCC: This is a fairly high share of China's about 600 parks, indicating that in contrast to neighboring Jiangsu province and Shanghai, Zhejiang still seems to have a high interest in hosting chemical companies.

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Sep 10, 2023: In the S&P list of largest global chemical companies, in the top 20, China leads the list with 5 mainland and one Taiwanese company compared to 4 US companies, 2 German ones, and 2 UK ones (though the UK list includes Linde, which though headquartered in the UK may still to some extent regarded as a German company).

Comment MCC: It is not surprising that the large Chinese share of the chemical market (about 45%) is also reflected in its high (30%) share of the top 20 companies.

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Sep 09, 2023: In May 2023, the operating rates of domestic PP plants decreased to a nearly five-year low (below 78%).

Comment MCC: Indeed, the market is weak and of course not helped by the somewhat depressed state of the Chinese economy. And the situation may well get worse - according to one source, there are currently 47 PP-related projects going on in China.

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Sep 08, 2023: In August, a groundbreaking ceremony was held in Zhoushan - the largest acetic acid production plant in the world of Zhejiang Petrochemical, with a capacity of 1 million tons per year.

Comment MCC: The fact that this is the largest in the world indicates the high and increasing share of China in the global acetic acid market. On a lighter note, the press release reads slightly comical and reminds me of the voiceover of an old newsreel (machine translation from Chinese): "At the ceremony, colorful flags were displayed, mechanical arrays, whistles and cheers continued, demonstrating the confidence and determination of Sinochem Liujian to do a good job in the acetic acid plant, showing the fighting attitude that the beginning is a decisive battle and the start is about to sprint."

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Sep 07, 2023: Mexico raised the import tariffs on various products including chemicals from China.

Comment MCC: This may be a reaction to the recent realization by the US that the restrictions on direct imports from China mainly just lead to these chemicals (or resulting end products) being imported via third countries such as Mexico.

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Sep 06, 2023: The 260 kt/a PC project of SINOPEC SABIC (Tianjin) Petrochemical has passed its environmental assessment.

Comment MCC: Once started, this will put further pressure on the PC market. In addition, as the plant uses a non-phosgene process, the acceptance of plants working with phosgene (such as those of Wanhua and Covestro in China) may decline.

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Sep 05, 2023: From 2018 to 2022, Chinese PVC imports shrank from 0.9 million tons to 0.5 million tons while exports increased from 0.8 million tons to 2.4 million tons.

Comment MCC: Thus China turned from a net importer to a major exporter of PVC. One issue remains - the average price of the imports (at 1387 USD/ton in 2022) is still higher than that of the exports (1310 USD/ton), indicating that the average quality of the Chinese product is at the lower end of the market. A look at the main import sources (TW, USA, JP) compared to the main export destinations (India, Vietnam, Russia) confirms this analysis.

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Sep 04, 2023: Wanhua Chemical will add a 30,000-ton/year superabsorbent (SAP) resin production line.

Comment MCC: While market demand for SAP is expected to increase as a result of an aging population, another likely driver for Wanhua's investment is to utilize existing overcapacities for acrylic acid - and of course, Wanhua has always favored highly integrated value chains. If the quality of the newly produced SAP is good, it could reduce China's import dependency, which still exists at the higher end of the SAP market due to the low quality of domestically produced material.

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Sep 03, 2023: China currently (2022) accounts for about 22% of the global ethylene production capacity, making it the largest global producer.

Comment MCC: Furthermore, as China's production capacity is forecast to expand by another 20 mt/a by 2025, its capacity share will increase further and reach about 26% by then.

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Sep 02, 2023: Baling Petrochemical has relocated its 150 kt/a polyamide plant. The relocation is a consequence of the old plant being too close to the Yangtze River - the new plant is 2 km behind the old site.

Comment MCC: While of course requiring substantial investment, the relocation also offers opportunities by doubling production capacity and - through process improvements - energy and material consumption. Having new plants may thus help companies such as Baling compete on better terms with foreign players producing in older plants.

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Sep 01, 2023: The Yantai Municipal Bureau of Ecology and Environment accepted the environmental impact assessment documents for a 10 kt/a lithium hexafluorophosphate project of Wanhua Chemical Group

Comment MCC: This illustrates the continuing move of some Chinese chemical companies away from commodities and into high end / high growth chemicals.

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Aug 31, 2023: In recent editions, The Economist frequently contrasts India's high growth with the somewhat sluggish growth in China.

Comment MCC: While this is undoubtedly true, there sometimes seems to be a bit of a loss of perspective involved. Based on 2021 nominal GDP, China's economy is more than five times as big as India's, meaning that for each percent of GDP in China, India would have to grow by more than 5% in order to achieve the same absolute growth. And that is for the general economy - for the chemical industry, the numbers will be even more different given that China's chemical industry is 16.6 times larger than India's (based on 2021 figures of the chemical market as published by CEFIC). Thus, China is still a much more important growth driver than India even if GDP growth should end up just reaching 3-4%.

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Aug 30, 2023: An interesting paper titled "Why do major chemical accidents still happen in China: Analysis from a process safety management perspective" was recently published.

Comment MCC: While the study finds that the number of chemical accidents has decreased, it also highlights the reasons for those accidents still occurring. In particular, inferior process safety culture, intentional violation (rule-breaking) of procedure, inadequate safety training, and illegal operations were the most frequent causes of the accidents examined.

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Aug 29, 2023: Lotte Chemical Corp. has sold all shares in its Chinese joint venture Lotte Sanjiang Chemical to its Chinese partner Sanjiang Chemical after the JV lost money in the last two years.

Comment MCC: The JV produces ethylene oxide, the price of which declined due to capacity expansions by Chinese competitors, leading to the losses. Lotte has also divested some assets in other countries including Pakistan and Poland.

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Aug 28, 2023: China has banned the production, use, import and export of five POP chemicals, effective in June 2023.

Comment MCC: The chemicals are Decabromodiphenyl ether, Hexachlorobutadiene, Pentachlorophenol (and salts and esters), Polychlorinated naphthalenes (including dichloro-, trichloro-, tetrachloro-, pentachloro-, hexachloro-, heptachloro- and octachloronaphthalenes) and selected short-chain chlorinated paraffins

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Aug 27, 2023: Honeywell and Tianjin Bohai Chemical Group will jointly establish a plastics recycling factory in Tianjin. The plant will use Honeywell technology to convert mixed waste plastics into recycled polymer feedstock, potentially increasing the amount of global plastic waste that can be recycled to 90 percent.

Comment MCC: While I doubt that this will be commercially viable at present, it certainly allows Honeywell to locally showcase its technology, and both companies to display their environmental credentials - and the pressure to recycle will certainly grow with time.

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Aug 26, 2023: According to Nikkei, China is leading global research on perovskite solar cells, an alternative to the current technology that could make renewable energy more widespread. Since 2019, China has accounted for about 30% of all academic papers on perovskite, far exceeding the share of the USA (slightly below 20%) and South Korea (somewhat below 10%).

Comment MCC: This trend of China leading the research in certain areas of new materials can of course also be seen in other areas such as the materials used in electric vehicles, particularly batteries.

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Aug 25, 2023: Both Hengli Petrochemical and Hengyi Petrochemical released 1H results. Operating income declined by 8% and 19%, respectively, while net profit declined by 62% and 96%.

Comment MCC: This illustrates two things - the relatively weak state of China's economy, particularly the real estate sector, and the volatility of profits in chemical commodity businesses.

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Aug 24, 2023: China has announced a plan to establish a recycling system for retired solar PV panels (pv-tech.org)

Comment MCC: The objective is to have a full recycling system for solar PV plants in place by 2030, and to make such recycling mandatory.

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Aug 23, 2023: A recent paper examines the chemical composition of Chinese wines from different origins based on the phenolic metabolites present in the wines.

Comment MCC: While I prefer beer, maybe this study is interesting for readers who prefer wine.

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Aug 22, 2023: BASF and Huntsman and their Chinese partner companies Shanghai Huayi, Sinopec Shanghai Gaoqiao Petrochemical, and Shanghai Chlor-Alkali Chemical plan to separate their joint MDI production in Shanghai, with each company operating one of the two MDI plants at the Caojing site independently.

Comment MCC: Like Hollywood marriage, most JVs including this one eventually end up in divorce as the interests of the two partners diverge.

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Aug 21, 2023: Hubei Yihua Chemical will invest 5.2 billion RMB in the relocation of a 200 kt/a refined phosphoric acid and 650 kt/a ammonium phosphate plant.

Comment MCC: This relocation is a consequence of the national policy of shifting chemical production away from the immediate vicinity of the Yangtze River - one of the more convincing parts of Chinese environmental policy.

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Aug 20, 2023: Imports of active pharmaceutical ingredients from China to India have increased from a value share of 62% to 75% in the past 9 years.

Comment MCC: Interestingly, this is despite efforts by the Indian government to decrease the dependency on such imports and to build up domestic production capacity. It seems that the advantages China has in the form of economies of scale and a well-established infrastructure and supply chain trump political objectives.

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Aug 19, 2023: The Ministry of Commerce imposed anti-dumping duties on polycarbonate imported from Taiwan, finding that these imports hurt domestic companies.

Comment MCC: This indicates the quick expansion of domestic polycarbonate production - a few years ago, there would not have been too much domestic production that could have been hurt, except for that of a few foreign entities producing in China.

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Aug 18, 2023: Shandong province announced a policy in which chemical companies that have safety accidents - whether involving their own workforce or that of third parties - will be ordered to suspend business.

Comment MCC: This may be a good idea as it provides a major economic incentive to avoid accidents - in the past, fines imposed for noncompliance with safety regulations tended to be too low to have any impact on the behavior of companies.

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Aug 17, 2023: Evonik has expanded production at its Chinese rubber silanes plant, Evonik Lanxing (Rizhao) Chemical Industrial, a JV between Evonik and Rizhou Lanxing Chemical Industry

Comment MCC: This expands the portfolio of silanes produced by Evonik in China rather than just in Europe - the "in China for China" strategy that Western companies will likely continue to pursue in the face of political tensions between China and the West.

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Aug 16, 2023: US company Milliken will expand its cooperation with Chinese (Spartanburg, South Carolina; www.milliken.com) plans to expand its cooperation with Shaanxi Yanchang China Coal Yulin Energy Chemical in the production of polyolefin additives. The companies have established an R&D-focused JV named Shanghai Yumei New Materials.

Comment MCC: While politicians both in the US and in Europe promote de-risking, chemical companies so far mostly seem to continue investing in China and cooperating with Chinese companies.

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Aug 15, 2023: China's production of dimethyl carbonate (DMC), an important electrolyte in lithium ion batteries, grew at an average rate of 33.4% between 2018 to 2022.

Comment MCC: While only about 40% of DMC are used in the battery application, this is indeed the major growth driver. One example of a company profiting from this is Shandong Haicenxin Yuan Material Technology, which was recently listed on the ChiNext board of the Shenzhen Stock Exchange.

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Aug 14, 2023: The EU passed a law requiring producers of EV batteries to calculate the carbon footprint during the production cycle. Products not meeting the EU standards are banned from sale.

Comment MCC: This will pressure Chinese producers to comply with these standards or forego the export market to the EU.

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Aug 13, 2023: China's self-sufficiency rate for butadiene rubber has increased from 87% in 2018 to 96% in 2022.

Comment MCC: The longer-term decline in butadiene rubber imports may particularly hurt Russia, which in 2022 contributed by far the largest share (40%) of these imports.

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Aug 12, 2023: 20 out of 21 Chinese chemical companies reported a year-on-year decrease in net profit for the first half of 2023.

Comment MCC: Reasons given include higher costs and weaker demand. Somewhat alarmingly, most companies do not expect the situation to improve soon.

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Aug 11, 2023: China accounts for about 44% of the global styrene production capacity of about 43.5 million t/a.

Comment MCC: China's share is expected to rise further as local capacity increases - quite likely leading to overcapacity.

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Aug 10, 2023: According to the Commerce Ministry, China's chemical industry faces obstacles due to the politicization of global trade. In particular, this has resulted in production and orders being relocated away from China, hurting the industry.

Comment MCC: A potential remedy mentioned by the ministry is focusing on innovative areas such as electric vehicles, renewable energy, and high-tech materials - which already seems to be underway.

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Aug 09, 2023: According to a market study, the global capacity of Purified Terephthalic Acid (PTA) will likely increase from 104 million t/a in 2021 to 140 million t/a in 2026, a CAGR of 6.1%.

Comment MCC: With a capacity of 17 million t/a, Hengli is the largest global producer with a capacity share of about 16%.

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Aug 08, 2023: According to a plan by the Shandong government, the chemical revenue derived from high-end chemical businesses should account for more than 50% before the end of 2023.

Comment MCC: This seems to be a very tall order given Shandong's traditional focus on basic chemicals - or it may just require a generous definition of what counts as "high-end".

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Aug 07, 2023: The National Development and Reform Commission clarified the benchmark energy efficiency levels for oil refining, coal-to-coke, coal-to-methanol, coal-to-olefins, coal-to-ethylene glycol, caustic soda, soda ash, calcium carbide, ethylene, p-xylene, yellow phosphorus, synthetic ammonia, monoammonium phosphate, diammonium phosphate, and added ethylene glycol, urea, titanium dioxide, polyvinyl chloride, and others.

Comment MCC: The timeline for adoption of the benchmarks via technological transformation or closure of capacity is the end of 2025 and is thus relatively tight.

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Aug 06, 2023: In the 2023 "Fortune" list of China's top 500 listed companies, Sinopec and PetroChina ranked first and second respectively, Rongsheng Petrochemical ranked 46th, Wanhua Chemical ranked 86th, Dongfang Shenghong 211th, North Huajin 264th, Satellite Chemical 343rd, and Qixiang Tengda 422nd.

Comment MCC: With only 8 entries, or 1.6% of the total number in the list, the representation of the chemical industry is surprisingly small, though partly compensated by the leading position of the first two companies

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Aug 05, 2023: The 2023 version of the "Guiding Catalog for Industrial Structure Adjustment" promotes the development and production of a number of new materials related to the chemical industry.

Comment MCC: In particular, the catalogue covers new materials (including low-VOC adhesives, water treatment agents, catalysts, electronic chemicals), silicone materials, and fluorine materials - opportunities for chemical companies.

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Aug 04, 2023: Sinopec, Shell, Baosteel, and BASF agreed on a joint research project, a feasibility study for building first open 10 million-ton Carbon Capture and Storage (CCS) cluster project in East China

Comment MCC: One would not necessarily expect these four parties to share many common interests, but CCS is one of them - presumably as it shows a way to continue the current business of all of these companies rather than providing any individual one of them with a competitive advantage.

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Aug 03, 2023: According to Fu Xiangsheng, vice president of the Petrochemical Federation, China's chemical industry is shifting from east to west and south to north.

Comment MCC: Drivers of this shift include coal and natural gas resources in the west, energy prices and labor costs in the central and western regions, and increasingly strict regulation of the chemical industry in the eastern region. Segments affected include basic chemicals such as caustic soda, polyvinyl chloride, fertilizer, methanol, and coal chemicals as well as pesticides, pharmaceutical intermediates, and chemicals requiring processes such as nitrification, chlorination, or, hydrogenation.

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Aug 02, 2023: Several major Chinese chemical producers have started shifting some of their focus from basic chemicals to more advanced materials as there is a glut for the former and good demand and policy support for the latter.

Comment MCC: Examples include investments by Sinopec (in EVA, carbon fiber), Hengli (biodegradable plastics, battery materials including separators and electrolytes), and Wanhua (Lithium-ion battery materials). These activities will place the Chinese companies in greater competition with leading Western chemical companies, many of which have already left the production of basic chemicals.

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Aug 01, 2023: The C&EN list of the biggest global chemical companies includes 7 Chinese companies, putting the country in second position with Japan (also 7) but behind the US (10 companies) and ahead of Germany (4), UK (3) and South Korea (2).

Comment MCC: The 7 Chinese companies are Sinopec (rank 2), Taiwan's Formosa Plastics (7), China National Petroleum (10), Hengli Petrochemical (11), Syngenta (15), Rongsheng Petrochemical (16), and Wanhua Chemical (18). It is somewhat curious that there are no Chinese companies in the second half of this top 50 list.

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Jul 31, 2023: The Chinese government announced that it will control new coal-to-chemicals more strictly

Comment MCC: This seems to be less aimed at reducing carbon dioxide emissions and more at securing the supply for domestic coal-fired power plants (which incidentally also power most of the electric vehicles on China's roads). However, somewhat contradictory, it was also announced that a big coal chemicals project in Ordos resumed work.

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Jul 30, 2023: According to the Financial Times, BASF China executive Markus Kamieth is the favorite to Martin Brudermueller as CEO.

Comment MCC: This again highlights BASF's continuing commitment to China despite some criticism. In a related move, BASF also plans to expand its capacity for photovoltaic EVA by 300 kt/a in the existing plant of Yangzi Petrochemical and BASF.

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Jul 29, 2023: In 1H 2023, profits of the Chinese chemical industry decreased by 52.2% year-on-year (Chinese National Bureau of Statistics)

Comment MCC: This adds to the emerging picture of the chemical industry not doing very well at the moment.

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Jul 28, 2023: In 1H 2023, China's fixed-asset investment increased by 3.8% while the investment in the chemical raw materials and chemical products manufacturing industry increased by 13.9%.

Comment MCC: This indicates that investors regard the chemical industry as offering above-average opportunities for returns - somewhat surprising given the not-very-rosy state of the industry at the moment.

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Jul 27, 2023: According to CCR, relevant Chinese ministries will set more than 200 standards to achieve China's double carbon goals.

Comment MCC: At the same time, and incidentally on the same page of the CCR edition of June 06, it is reported that the April 2023 output of raw coal was up 4.5% yoy. Talk about inconsistent policies.

 

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Jul 26, 2023: The Ministry of Industry and Information Technology (MIIT) approved 586 industrial standards, including 32 chemical industry standards - e.g. Ethylenediamine Tetraacetic Acid for Industrial Use (HG/T 6142-2023)

Comment MCC: Some of the events happening in China's chemical industry are interesting to follow. This is not one of them.

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Jul 25, 2023: PPG opened its Electric Vehicles and Intelligent Mobility Innovation and Application Center in Tianjin, aiming to showcase PPG's innovative technologies, materials and system solutions in electric vehicle power batteries.

Comment MCC: Of course, with China being the leading global producer of EVs, it makes sense to locate the center in China despite offering services to the whole world. PPG also opened a digital color laboratory in cooperation with Chery Automotive, allowing Chery to improve color personalization in automotive.

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Jul 24, 2023: In 2022, about 26% each of China's vinyl acetate capacity was located in Inner Mongolia and Ningxia.

Comment MCC: This is due to the main production process in China being coal-based - in fact, about 57% of China's capacity are coal based, a figure almost matching that of the two provinces combined. Unfortunately for China, demand for ethylene-based vinyl acetate (24% of Chinese production) is much higher than for calcium carbide-based vinyl acetate, meaning China is not self-sufficient but produces only about 91% of its own demand.

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Jul 23, 2023: According to BASF, China is now the second biggest market of the company after the US, accounting for 14% of its sales.

Comment MCC: This explains BASF’s continuing engagement in China despite growing scepticism from some board members and the business press.

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Jul 22, 2023: The top 10 domestic MTBE producers account for 25% of China's total capacity. Despite some capacity growth (CAGR of 3.4% between 2018 and 2022), capacity utilization grew from a low of about 57% in 2020 to about 73% in 2022, partly driven from China being a net importer to a net exporter of MTBE.

Comment MCC: The low share of the top 10 players is a sign of the fragmentation of the industry.

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Jul 21, 2023: Four Chinese chemical companies eight Chinese nationals were charged by the US with trafficking chemicals used by Mexican drug cartels to manufacture fentanyl later sold in the United States, federal officials said on Friday.

Comment MCC: According to DEA, the Chinese companies "even disguised the chemicals at a molecular level, adding a molecule to mask the precursors so they would not be detected as banned substances during transport ... They taught their customers how to remove that molecule after they received the chemicals."

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Jul 20, 2023: Global chemical distributor Brenntag acquired Chinese chemical company Shanghai Saifu Chemical, a distributor of personal care ingredients, coatings, emulsion polymerization, and cleaning chemicals and provides related solution services.

Comment MCC: This continues a stream of acquisitions of Chinese specialty chemicals distributors by leading global players.

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Jul 19, 2023: Cepsa considers selling its 75% stake in a Shanghai plant producing phenol, acetone, and cumene.

Comment MCC: Possible reasons for this step are the company's shift towards a more sustainable portfolio or increasing competition in the market for these chemicals.

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Jul 18, 2023: Henkel has started building a new plant for manufacturing adhesives in Yantai, Shandong.

Comment MCC: Target industries include electronics, automotive, medical, equipment manufacturing, and aerospace.

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Jul 17, 2023: China extended subsidies for electric vehicles for another four years via an exemption from the purchase tax in 2024 and 2025 and a 50% reduction of the tax in 2026 and 2027

Comment MCC: This is an extension of the existing tax break that was to expire at the end of 2023. It has been very successful in commercial terms, helping China become the global leader in EVs, but arguably a disaster for the environment as a Tesla running on coal-powered electricity is worse regarding carbon dioxide emissions than an internal-combustion-driven car. And in 2022, coal accounted for 61% of China's electricity generation.

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Jul 16, 2023: A recent paper discusses smart chemical parks in China. It is titled "Smart chemical industry parks in China: Current status, challenges, and pathways for future sustainable development"

Comment MCC: According to the abstract, the paper "proposes a systematic methodology in order to conduct an integrated and in-depth review on the standardization construction status (framework with Chinese characteristics, key events, spatial features, and national pilots), future tasks, problems, and sustainable development pathways of China's SCIPs."

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Jul 15, 2023: China's pesticide production still suffers from fragmentation and low scale. There are almost 600 producers of technical pesticide, but fewer than 200 have a production capacity of at least 2000 t/a.

Comment MCC: In addition, many technicals are produced by dozens of companies, with very limited differentiation.

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Jul 14, 2023: The US Department of Homeland Security included Xinjiang Zhongtai Chemical in the entity list of the "Uyghur Forced Labor Prevention Law" and banned imports of the company to the US.

Comment MCC: As Xinjiang Zhongtai's exports account for less than 7% of its total sales, this should have limited impact on the company.

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Jul 13, 2023: According to Saudi Arabia's energy minister, Saudi Arabia is eager to collaborate with China in developing crude-to-chemicals projects.

Comment MCC: This is part of Saudi Arabia's strategy to focus more on higher-value chemical products rather than just exporting crude, both in order to extract more value and to maintain a level of demand once current key oil users such as transportation decline.

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Jul 12, 2023: Sichuan Tianhua terminated the construction of a 60 kt/a industrial demonstration project for PBAT.

Comment MCC: This is probably a reaction to the overcapacity and lack of demand for this material despite government support for such biodegradable materials.

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Jul 11, 2023: Pulcra, a German producer of specialty chemicals for the fiber, textile, and leather industries broke ground on a specialty chemicals plant in Shanghai

Comment MCC: China is a very important market for Pulcra's target industries, so the decision to localize some production seems sensible. However, I am a bit surprised that Pulcra got the go-ahead from the Shanghai government given that chemical companies have recently found it very hard to establish new production or even expand capacities in Shanghai.

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Jul 10, 2023: Chinese companies Xinfengming and Tongkun plan to launch a refining project in Indonesia wth a capacity of 16 million tons/year of oil refining, 5.2 million tons/year of p-xylene (PX) and 800,000 tons/year of ethylene.

Comment MCC: The plan is to not only supply these materials to Indonesia but also ship some back to China for further processing. Of course, this expands China's footprint in Southeast Asia.

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Jul 09, 2023: In an analysis report issued by consulting company World Brand Lab on the most valuable brands in China, a value of 44.5 billion RMB was reported for Three Trees (Sankeshu), a coatings manufacturer.

Comment MCC: I find this number difficult to understand as it would mean that the brand value of Sankeshu is higher than its market cap of about 33.5 billion RMB.

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Jul 08, 2023: A Chinese researcher at the Japanese National Institute of Advanced Industrial Science and Technology was arrested in Tokyo on 15 June for allegedly disclosing research data on fluorine compounds to a Chinese chemical manufacturer.

Comment MCC: I wonder what the motivation is for such deeds (assuming that the accusations are correct). I can understand if this is about money - if it is about doing something for China, it is very misguided as it will cast a shadow on countless Chinese researchers working abroad, and on China's image along with it.

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Jul 07, 2023: The China National Chemical Engineering Corporation has partnered with Aeon Corporation, led by Russian billionaire Roman Trotsenko, to construct a methanol plant in Volgograd

Comment MCC: Russia now lacks willing partners in Western countries while China has the expertise, capital, and markets for chemical products, making the two countries almost ideal partners in such projects

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Jul 06, 2023: According to Fu Xiangsheng. Vice Chairman, China Petroleum and Chemical Industry Federation, China's current total energy consumption intensity is 1.5 times the world average, 3 times that of the United States, 3.8 times the average of EU countries, and 7.2 times that of Japan

Comment MCC: This implies that there is a huge potential for energy conservation and emission reduction without reducing output.

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Jul 05, 2023: China will restrict the export of Gallium and Germanium, two metals used in the production of semiconductor components. Exporters will have to apply to the ministry for permits from the beginning of August.

Comment MCC: Depending on how restrictively permissions are granted, this may become a serious problem for some non-Chinese semiconductor producers as China produces about 80% of the world's Gallium and 60% of the world's Germanium (despite the curious fact that the latter element was named after Germany by a German chemist, Clemens Winkler.

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Jul 04, 2023: BASF undertook or completed a number of activities in China - the third phase of BASF Shanghai Innovation Park was completed, the company signed a strategic cooperation framework agreement with South China University of Technology, and BASF has broken ground on a polyethylene plant at its Verbund site in Zhanjiang, China.

Comment MCC: These are indications that BASF continues to bet on China despite some criticism inside the company's board and in the German business press.

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Jul 03, 2023: An explosion took place at a plant of Jiangxi QianTai New Materials on July 1st in Guixi, Jiangxi. Reportedly, the explosion occurred after silicon oil caught fire.

Comment MCC: Local authorities indicated that all factory staff and the people of the surrounding area were evacuated and no casualties were reported. However, other sources such as the news agency IranPress (possibly not the most reliable source, but also one not obviously intent on spreading bad news about China) stated that "many people were feared dead in the tragic incident".

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Jul 02, 2023: According to the Park Committee of the Petrochemical Federation, there are 643 petrochemical bases and chemical parks across the country, of which 593 have been certified by various provinces, autonomous regions, and municipalities

Comment MCC: This implies a decline of 5% in the total number - at the end of 2018, China had a total of 676 chemical parks. It is somewhat surprising that there are still 50 parks that have not been certified, and this raises the possibility that the final reduction will still increase.

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Jul 01, 2023: While China's oil processing capacity is now larger than that of the US, the volume actually processed in the US (more than 800 million tons) is substantially higher than in China (less than 700 million tons)

Comment MCC: This difference in capacity utilization (approximately 90% versus 70%) is not restricted to crude oil processing but applies to many other basic chemicals as well.

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Jun 30, 2023: From January to April, among China's 41 industrial categories, the total profit of 13 industries increased year on year, 1 industry was flat, and 27 industries decreased. The profit of the chemical raw materials and chemical products manufacturing industry was down by 57.3%.

Comment MCC: A rather bleak figure for the chemical industry.

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Jun 29, 2023: According to Benchmark, an intelligence provider, China will likely become the second-largest global lithium producer, overtaking Chile in the next five years.

Comment MCC: This is a consequence of China increasing local production, aiming at reducing the dependency on lithium from Australia.

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Jun 28, 2023: Chesir, a Chinese producer of pearlescent pigments, is among three of the remaining bidders for the pigment business of Merck which is for sale.

Comment MCC: According to the German business magazine Handelsblatt, Chesir has submitted the highest bid. It will be interesting to see whether Merck will select them as buyer given the current China-critical mood in Europe.

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Jun 27, 2023: Exports of South American gum rosin and gum turpentine to China have resumed after a virtual stop for 1.5 years.

Comment MCC: A key reason is the drop in freight rates - for example, gum turpentine freight rates for 20t isotanks from Brazil to China were down to $1,855 in March, compared with $4,450 in December 2021 while freight rates for 20ft containers from Brazil to China have fallen to $750-$1,000 this year from $2,000 in 2021. Other chemicals and raw materials will be similarly affected.

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Jun 26, 2023: According to Fu Xiangsheng. Vice Chairman, China Petroleum and Chemical Industry Federation, China's chemical industry suffers from a focus on bulk basic chemicals while having a lack of specialty chemicals.

Comment MCC: In detail, Fu stated that China has the largest global production capacity for high-emission bulk chemicals while depending on imports in higher-end areas such as functional chemicals, new chemical materials and their high-end composite materials, high-performance fibers, high-end membrane materials, and specialty chemicals. Indeed, these are the areas in which foreign chemical companies still can achieve good sales in China, whether via imports or local production.

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Jun 25, 2023: A paper in the magazine "The Parliament" worries about the designation of essential oils under EU regulation, which may end up having essential oils classified as dangerous chemicals: "The ECHA's decision will allow China to dominate the essential oils market with impunity."

Comment MCC: Given that we are talking about essential oils - which are somewhat less essential for most people - the following sentences seem rather over the top: "The Chinese state controls Xinjiang Province's lavender reserves. As such, the Chinese Communist Party could cut access to raw materials to make liberal democracies surrender."

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Jun 24, 2023: Wanhua Chemical plans to build a new 10 kt/a lithium hexafluorophosphate project in Yantai Industrial Park of Wanhua Chemical

Comment MCC: It will be interesting to see whether Wanhua's approach of essentially being active in almost any segment of the chemical industry will be successful in the long run. Of course, with lithium hexafluorophosphate being a key material for lithium battery electrolytes, the demand for this product is quite certain, but that does automatically mean Wanhua will be among the top players in this area despite successes in other areas.

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Jun 23, 2023: A Coface report on payment terms in China showed that 34% of respondents from the chemical sector stated that more than they had outstanding payments with ultra-long delays (ULDPs) that accounted for more than 10% of their turnover.

Comment MCC: This is a rather worrying number as many of these outstanding payments may never be paid (Coface states that according to their experience, 80 % of ULPDs are never paid) - and of course, at above 10% of annual turnover, writing off these payments would mean substantial losses. Furthermore, this number of 34% is massively up from 2021, when it was 8%, and higher than for all other segments.

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Jun 22, 2023: Goldman lowered its estimates for China's GDP growth this year to 5.4% from 6% previously

Comment MCC: The bank believes that stimulus measures related to property and infrastructure will probably be relatively limited due to China's shrinking population, high debt levels and previous measures to tame the property market. Not great prospects for China's chemical industry, of course.

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Jun 21, 2023: AstraZeneca has drawn up plans to break out its China business and list it separately in Hong Kong as a way to shelter the company against mounting geopolitical tensions ( Financial Times)

Comment MCC: Apparently, this is not the only company discussing such a step as the tensions between China and the US increase

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Jun 20, 2023: China is now the biggest contributor to the 82 high-quality research journals tracked by Nature.

Comment MCC: However, this may partly be the result of a focus on quantity over quality. Furthermore, fraudulent papers seem to be more common in China than elsewhere, partly issued by "paper mills", companies preparing papers on demand. For example, Elisabeth Bik, a microbiologist, has identified hundreds of Chinese papers that use images from the same source.

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Jun 19, 2023: According to a report by research firm Elliptic, China-based suppliers of fentanyl precursors have received 27 million USD in crypto payments.

Comment MCC: This is despite China's bans on such exports.

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Jun 18, 2023: China's import dependency for PE has decreased from 47% to 35% in the period from 2018 to 2022. According to the CCR, China's new PE capacity in the next five years may exceed 21 million t/a, adding to the existing 30 million t/a and thus potentially exceeding local consumption (which was 38 million tons in 2022).

Comment MCC: However, as usual for China, there is a lack of local production capacity for higher-end materials such as high-end PE packaging films and an oversupply of mid-and low-end products.

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Jun 17, 2023: A Coface report on payment terms in China showed that in the chemical segment, average payment delays rose from 80 to 84 days, making this one of only 3 (out of 13) segments with an increased length of payment delays.

Comment MCC: This is hardly a good sign for the state of the chemical industry in China.

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Jun 16, 2023: According to Benchmark, an intelligence provider, China will dominate lithium production in Africa, with more than 90% of supply coming from companies owned or partly owned by Chinese companies.

Comment MCC: This will further encourage Western countries to seek lithium sources elsewhere.

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Jun 15, 2023: Chemours has entered into an agreement with Zhejiang Juhua Group Co., Ltd. to produce HFO-1336mzzZ, the basis for sustainable foaming agents. The program is expected to start up by the end of 2025, followed by full production in early 2026.

Comment MCC: Interesting to see toll manufacturing by a Chinese company, but possibly a model that will become more common in the future.

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Jun 14, 2023: Chemical M&A acquirers in China in 2022 were almost exclusively strategic buyers rather than financial ones, according to Deloitte. 81% of transactions were in commodity chemicals followed by specialties (11%) and agrochemicals (7%).

Comment MCC: According to the Deloitte report, the main drivers for M&A in commodities are downstream expansion and expansion of products and technologies.

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Jun 13, 2023: On June 8, 2022, an ethylene delivery pump leaked and caught fire in the intermediate tank area of the aromatics workshop of the chemical branch of Maoming Branch of China Petrochemical Corporation, resulting in 2 deaths

Comment MCC: The initial findings on the cause of the accident include focus on efficiency rather than on safety, lack of identification of security risks, limited control of outsourcing companies, and violation of regulations by the personnel involved. In other words, the usual causes.

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Jun 12, 2023: A Coface report on payment terms in China showed the sharpest reduction in payment terms for the chemical segment - from 72 to 61 days.

Comment MCC: This is now the segment (among 13 segments analyzed) with the shortest payment terms - not exactly a vote of confidence by the creditors.

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Jun 11, 2023: BASF will transform two existing dispersion plants in Jiangsu and Guangdong in order to add Licity® and BasonalPower® based on modified styrene-butadiene copolymer emulsion (SBR) to the existing portfolio.

Comment MCC: These products are used in EVs and electricity storage, which strengthens BASF's position as a supplier of battery cell materials.

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Jun 10, 2023: According to Wanhua, the company will further increase its MDI production capacity and claims to be the only one doing this. After the expansion, the company will account for 47% of global production capacity.

Comment MCC: This is despite the current low price level of MDI - however, in the past, the continuous expansion of MDI capacity has paid off for Wanhua.

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Jun 09, 2023: Solvay has licensed its proprietary hydrogen peroxide process technology to Guangxi Chlor-Alkali Chemical. GHCAC will build a hydrogen peroxide megaplant at Qinzhou to support its 300 kilotons propylene oxide production.

Comment MCC: An interesting aspect of the deal is that Solvay will have a hydrogen peroxide offtake after the plant starts up, which is to support the growth of Solvay's hydrogen peroxide business particularly in Southern China.

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Jun 08, 2023: China's PA66 production capacity has increased strongly in the past 5 years, for example, by 20% in 2022. Import depencence has decreased from about 55% to 35%. Domestic capacity utilization is relatively low at around 60%.

Comment MCC: The reason for the combination of low capacity utilization and high imports is the usual one for China's chemical companies - a focus on low-end grades, which means high-end grades still need to be imported.

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Jun 07, 2023: Chinese domestic polycarbonate capacity increased by 154% between 2018 and 2022, a CAGR of more than 26%.

Comment MCC: This has obviously led to a reduction in imports and declining profits, and resulted in a low capacity utilization of typically around 60%.

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Jun 06, 2023: Sinopec has agreed to potentially partner with Kazakhstan's state-owned JSC NC KazMunayGas to develop a grassroots polyethylene plant planned in Kazakhstan's western Atyrau region.

Comment MCC: With Chinese companies now having huge experience in such projects and countries like Kazakhstan providing the raw materials, such projects are likely to become more frequent, bypassing Western countries completely. 

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Jun 05, 2023: China was the second biggest target country for chemical M&As in 2022, accounting for about 10% of transactions, far below the about 35% accounted for by the US but above the about 6% each for the UK and Germany (Deloitte)

Comment MCC: The number of China-related transactions dropped by 23% compared to 2021, a drop similar to the overall global drop (21%), and by 33% compared to the five-year pre-covid level.

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Jun 04, 2023: Zhongjing Petrochemical will build a 900 kt/a BDO plant in Fujian.

Comment MCC: As often these days for new plants in China, this will reportedly be the biggest such plant in the world.

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Jun 03, 2023: Three major projects were started in Shandong province, one for 400 kt/a PA6, one for 10 kt/a POM and one for 100 kt/a of epoxy resin.

Comment MCC: This indicates the shift of China's chemical industry from basic chemicals to more advanced materials such as engineering plastics.

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Jun 02, 2023: China is a net exporter of PVA with a degree of self-sufficiency of around 120% in the period from 2019 to 2022

Comment MCC: But there is the usual China catch - domestic PVA products are generally low-end and homogeneous, and therefore cannot compete with foreign-made PVA in some applications.

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Jun 01, 2023: According to the National Bureau of Statistics, the PMI subindexes for May showed factory output swung to contraction from an expansion. The chemical industry was among those 3 with significant decline in production and demand.

Comment MCC: In April, I did a number of interviews with chemical industry participants - they suggested that the industry is facing difficulties. At that point, this was not reflected in official data yet - now it is.

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May 31, 2023: According to a survey conducted by Deloitte among managers of European chemical companies, 71% of them plan to manage digital and physical assets located in China more independently from their other businesses.

Comment MCC: This is likely to be due to the tensions between the US and China and the resulting regulatory changes for example in the area of data protection.

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May 30, 2023: According to Agropages, more than 94 kt/a of glufosinate capacity is under construction or to be launched in China within the next 2 years. Agropages predicts that global consumption of glufosinate will increase from 45 kt/a in 2021 to about 100 kt/a by around 2027.

Comment MCC: If these predictions are true, it will mean substantial global overcapacity for glufosinate despite the high growth of the market, which will in turn depress profits for established players such as BASF.

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May 29, 2023: China National Coal Group Corp plans to build a modern coal chemical industry park in Ordos, Inner Mongolia.

Comment MCC: China Daily states that"The modern coal chemical industry is an effective way to improve the clean and efficient utilization of coal and transform coal from a single fuel to a fuel and raw material in a balanced way. It is of great significance for ensuring national energy security." Somehow, China Daily forgets to mention that modern coal chemistry is not aligned with the reduction of carbon dioxide emissions, which China also claims to pursue.

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May 28, 2023: An Iranian Petrochemical Special Economic Zone Organization and a Chinese company have signed a memorandum of understanding for the construction of a 30 kt/a sodium formate production plant in Mahshahr, Khuzestan Province, an investment of $4 million.

Comment MCC: Interestingly, the name of the Chinese company has not been revealed, possibly as the company is afraid of Western sanctions.

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May 27, 2023: The Zibo Municipal Bureau of Ecology and Environment approved a 280 kt/a propylene oxide and 600 kt/a of engineering materials green intelligent manufacturing project of Shandong Huifeng Petrochemical Group.

Comment MCC: Naturally, I was curious about the nature of the "green intelligent engineering materials" (machine translation from Chinese). It turns out this is PS and ABS - hardly at the cutting edge of green materials ...

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May 26, 2023: Tianqi Lithium, one of the world's biggest lithium producers, expects more consolidation in the lithium industry.

Comment MCC: While lithium demand is still expected to grow on a massive scale, prices have recently fallen, making it harder for companies to pursue expansion projects. M&As may help speed up such projects via the savings of merged entities.

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May 25, 2023: China's chemical raw materials production grew by 7.5% year-on-year in April 2023

Comment MCC: This is above the 5.6% increase for overall industrial production.

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May 24, 2023: According to Echemi, several domestic chemical companies lost hundreds of millions of yuan, including Bohai Chemical, Shanghai Petrochemical, Kangda New Materials and Shenyang Chemical.

Comment MCC: Despite the end of the covid lockdown, demand is sluggish and prices have declined, leading to these losses of chemical companies.

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May 23, 2023: China's Petroleum and Chemical Industry Prosperity Index continued its downtrend and fell further from the already low February value.

Comment MCC: According to the CCR, "Demand was weak amid the off-season, and the rubber, plastic, and other polymers manufacturing industry was still facing heavy destocking pressure"

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May 22, 2023: Options for ethylene glycol and styrene are now listed on the Dalian Commodity Exchange

Comment MCC: Futures for these two chemicals are already listed at this market - the addition of options expands the way companies can manage their risks.

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May 21, 2023: The number of employees at Sinopec decreased by about 11,000 between 2021 and 2022.

Comment MCC: However, the total number of employees at 375,000 still vastly exceeds that of the largest global chemical company, BASF (111,000 employees) - not surprising given that Sinopec is mainly an oil producer rather than a chemical company.

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May 20, 2023: From January to April 2023, China's fixed asset investment in chemical raw materials and chemical product manufacturing increased by 15.5% year on year.

Comment MCC: This is compared to an increase of 8.4% in the overall secondary industry, indicating investors currently favor the chemical industry. However, this could also mean more overcapacity in the future.

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May 19, 2023: The Ministry of Emergency Management started the supervision of the first special safety inspection in 2023 for enterprises with major hazards of hazardous chemicals.

Comment MCC: The stated aim is to achieve full coverage of nearly 7,000 enterprises with major hazards and more than 23,000 major hazards across the country.

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May 18, 2023: China's import dependence for PX has declined from 61% in 2018 to 30% in 2022, mainly to a huge increase in domestic output from about 10 million tons to almost 25 million tons.

Comment MCC: The CAGR for domestic output was 25% while apparent consumption CAGR was only about 8%, and imports actually declined every year.

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May 17, 2023: According to Reuters, Merck will continue investing in China with the objective of building up domestic supply chains and reducing imports of key raw materials amid rising political tensions.

Comment MCC: In some way, this is just a continuation of the ongoing "In China for China" policy that increasingly dominates the investment strategy of Western chemical companies. At a share of about 45% of the global chemical market - far above what China accounts for as a share of their global sales, which is 15% for Merck and generally around 10-15% for most Western chemical companies - this strategy still has a long way to go.

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May 16, 2023: Sika will invest about 100 million USD into a new production base at the Zhejiang Dushan Port Economic Development Zone, which will be Sika China's largest production base in China with advanced product lines and production technologies

Comment MCC: As of course also frequently remarked in The Economist, foreign chemical companies so far keep investing in China - no decoupling visible.

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May 15, 2023: Jiangsu Province proposed to approve 23 chemical parks and chemical concentration areas.

Comment MCC: While this is only the first batch, it is still an indication of the decreasing importance of the chemical industry in Jiangsu province how late this announcement comes and how few chemical parks are included in this first batch.

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May 14, 2023: Akzonobel and Porsche China have signed a cooperation agreement on repair paint products. Akzonobel China will provide Porsche China with a full range of waterborne paints, including primers, paints and varnishes, enabling Porsche to provide a full range of waterborne repair paint solutions required by its customers.

Comment MCC: The above phrase "required by its customers" is taken from the press release - in reality, this is more about Porsche having to meet its emission targets. Anyone who drives a car that has about 200% more horsepower (and associated fuel use) than strictly necessary for transportation purposes will probably not worry about the environment too much.

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May 13, 2023: Operating rates of Chinese plants producing sodium carbonate, BDO and titanium dioxide are low due to high new capacity.

Comment MCC: Overall, among 28 products monitored, 61% saw decreasing capacity utilization in 2022 while 32% saw increases, indicating an overall increase in overcapacity in the Chinese production of commodity chemicals.

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May 12, 2023: China's self-sufficiency rate for EVA is expected to increase from 49% in 2021 and 60% in 2022 to 80% in 2025.

Comment MCC: EVA is considered a strategic material due to its use in photovoltaics. However, the forecast shown in the CCR also indicates a relatively low capacity utilization for domestic production capacity in 2025, indicating that possibly certain qualities cannot be produced in China yet.

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May 11, 2023: Chinese chipmaking suppliers and state-backed funds plan to spend an estimated RMB 50 billion to strengthen the domestic supply chain as the US curbs tech exports (Nikkei Asia)

Comment MCC: However, this will still be difficult, particularly at the higher end of the market. For example, in 2022, 65% of Chinese semiconductor factories still used imported equipment, though this was down from 79% a year earlier.

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May 10, 2023: China National Petroleum Corporation and China National Offshore Oil Corporation issued warnings about illegal companies posing as subsidiaries of the group.

Comment MCC: In contrast, in Western countries examples of unrelated companies posing as BASF subsidiaries are rare.

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May 09, 2023: The first polyoxymethylene production line in Xinjiang with an initial capacity of 40 kt/a will be put into operation soon

Comment MCC: This is a project of Xinjiang Xinye Energy Chemical - it indicates the ambition of the province to not only produce low-end commodity chemicals and polymers.

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May 08, 2023: In 2022, China accounted for 18% of chemicals imports into the EU but for only 7% of exports.

Comment MCC: This trade balance between the EU and China has shifted dramatically in the past few years. A peak trade surplus for the EU was reached in 2019, almost maintained in 2020 but turned into a slight deficit in 2021 and then a massive one in 2022 as China's exports of chemicals grew massively (+77% in 2021 and +93% in 2022).

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May 07, 2023: A spokesperson for German Chancellor Olaf Scholz stated that Germany is not currently pursuing any export controls on chemicals used in the manufacturing of semiconductors

Comment MCC: This is in contrast to an earlier Bloomberg report suggesting that Germany is looking at controlling the export of such chemicals to China, which would affect China's chip producers.

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May 06, 2023: On May 01, 2023, an explosion at a hydrogen peroxide plant of Liaocheng Luxi Hydrogen Peroxide New Material Technology of Sinochem Group Luxi Chemical Group caused at least 9 deaths.

Comment MCC: Luxi was taken over by Sinochem only in 2020, indicating that such takeovers may come with a reputational risk in case of accidents such as this one.

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May 05, 2023: According to a report by Global Efficiency Intelligence, eleven adipic acid plants in China and one in the U.S. emit nitrous oxide, a potent greenhouse gas, despite low-cost pollution controls being available.

Comment MCC: Despite both countries' pretension to act decisively to prevent climate change, these two countries stand out in this regard as the measures to reduce the emission of this gas are widely used in similar plants in other countries.

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May 04, 2023: Sinopec will build a pipeline to transfer hydrogen from renewable energy projects in China's northwestern Inner Mongolia region to cities in its east (Xinhua). The pipeline will stretch 400km from Ulanqab in Inner Mongolia to Beijing and will have an initial capacity of 100,000 tons per year.

Comment MCC: As stated before, Sinopec aims to maintain its relevance as the Chinese economy gradually shifts away from petrochemicals.

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May 03, 2023: According to Caixin, major EV battery markers in China have been cutting their headcount as they are not receiving enough orders to fully utilize their fast-growing production capacity.

Comment MCC: Likely reasons are the slashing of EV subsidies and rising raw materials costs. As a consequence, some battery makers are shifting their focus to (non-vehicle) energy storage.

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May 02, 2023: AkzoNobel will acquire the decorative paint business of China Resources Paint from Sherwin Williams.

Comment MCC: Apparently, Sherwin Williams will focus on industrial coatings in China while most likely AkzoNobel will use the local brand to broaden its product range at the somewhat lower end of the market, thus not directly competing with its Dulux brand. A statement from AkzoNobel's CEO confirms this: "The acquisition of Sherwin-Williams China's decorative paint business will help AkzoNobel achieve its growth goal of expanding into third-tier to fifth-tier cities in China."

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May 01, 2023: On April 20, the Party Committee of the China Petroleum and Chemical Industry Federation held a mobilization and deployment meeting on the theme of learning and implementing Xi Jinping's new era of socialism with Chinese characteristics.

Comment MCC: I guess it is my Western upbringing, but I still find an announcement like this one somewhat cringeworthy.

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Apr 30, 2023: Evonik will double its global production capacity for VESTAMID®E polyether block amide (PEBA), partly by expanding its multi-user base (MUSC) facility in Shanghai.

Comment MCC: This material is used in the production of athletic shoes - though I sometimes wonder how many of the wearers of such shoes really do any sports at all.

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Apr 29, 2023: The chairman of Sinopec Group visited the joint venture refinery in Yanbu, Saudi Arabia, and other locations in Saudi Arabia.

Comment MCC: This is another sign of the growing cooperation between China and Saudi Arabia as both countries have an interest in bypassing the Western world.

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Apr 28, 2023: BASF's China sales accounted for 13% of the company's sales in 2022.

Comment MCC: While high compared to some other chemical companies, this share is still low compared to the 43% that China holds of the global chemical market. More encouragingly for BASF, by now 80% of the products sold in China are produced in the country.

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Apr 27, 2023: The US Treasury Department imposed sanctions on two Chinese companies that are accused of supplying precursor chemicals to drug cartels in Mexico for the production of fentanyl.

Comment MCC: China condemned these sanctions arguing that the responsibility for preventing the flow of ordinary chemicals into the drug production channel lies with the importing country

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Apr 26, 2023: Sichuan Golden Elephant won a long-lasting patent infringement case against Hua Lu Hengsheng and will receive a total compensation exceeding 200 million RMB. Hua Lu will also have to stop the infringement immediately.

Comment MCC: The case involved a production process for melamine and a former employee of Sichuan Golden Elephant. Such cases between domestic cases also are sending a positive signal to foreign companies fearing patent infringement.

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Apr 25, 2023: Chinese scientists have developed the first superionic hydride ion conductor at ambient conditions, according to the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences.

Comment MCC: These materials are reported to be enablers of advanced clean energy storage and electrochemical conversion technologies, technologies that will be important for future economic development and global leadership.

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Apr 24, 2023: BASF will establish compounding capacities for its certified compostable biopolymer ecovio® in Shanghai, China. It is used in film applications, including certified compostable shopping and organic waste bags, soil-biodegradable agricultural mulch films, and packaging.

Comment MCC: In the past, the demand for such products in the domestic Chinese market has been relatively low, but this may change depending on government regulation and possibly on changing mindsets.

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Apr 23, 2023: A subsidiary of Sinopec won a 30 billion RMB bid for a coal mine in Inner Mongolia

Comment MCC: While coal chemicals have been part of Sinopec's business in the past, this big investment seems to contradict Sinopec's activities in the hydrogen area - unless everything is just about earning money rather than also doing some good, as one might expect from an SOE.

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Apr 22, 2023: Tesla is opening a factory in Shanghai, capable of producing ten thousand Megapack energy products per year, to supplement the output of the Megapack factory in California (Xinhua)

Comment MCC: Reportedly, Tesla thus takes advantage of China's supply chain for this material to lower the costs of its batteries. Tesla also aims to export these batteries globally, another indicator of China's cost advantage in the segment.

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Apr 21, 2023: A paper titled "Applying Chemical and Statistical Analysis Methods to Evaluate Water and Stream Sediments around the Coal Mine Area in Dazhu, China" finds that "According to the Chinese standard and World Health Organization guidelines, the water in the coal mine area is of good quality in terms of its physical and chemical properties, except for the concentration of Mn and Fe".

Comment MCC: However, for these two elements, the limits are vastly exceeded. These limits for drinking water in China are 100 μg/L for Mn and 300 μg/L for Fe while the values found were 1925 μg/L and 12,873 μg/L, respectively. This makes the "good quality" phrase a bit suspect.

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Apr 20, 2023: Sinopec subsidiary Hainan Baling Chemical New Material Co. Ltd. has commissioned the world's largest plant for production of styrene-butadiene copolymer in Hainan. The 170 kta plant will produce 120 kta of SBC and 50 kta of SEBS based on feedstock from the Yangpu refinery.

Comment MCC: Another "world's largest" plant in China, with potential cost benefits related to economies of scale, threatening established players elsewhere.

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Apr 19, 2023: Mexico's president asked his Chinese counterpart for help Tuesday in halting chemicals from China used by Mexican drug dealers to illegally produce fentanyl, while also complaining of "rude" U.S. pressure to curb the drug trade (AP).

Comment MCC: While the US sees fentanyl imports from Mexico (partly produced with raw materials from China) as a major aspect of its fentanyl problem, Mexico and China emphasize that the root cause is in the US itself.

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Apr 18, 2023: China has launched a platform to identify sustainable textile products, in a move the Government says marks the industry's "significant steps" to practice the ‘dual carbon' strategy.

Comment MCC: Such an initiative is particularly relevant in China as it produces about 70% of the world's global fiber output.

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Apr 17, 2023: China's consumption of butadiene has grown at a CAGR of about 6.5% during 2017-2021 while self-sufficiency went up to 98% from 88% in 2017.

Comment MCC: The domestic butadiene supply may soon turn into overcapacity territory as some SOEs (Sinopec, CNPC) will add capacity. Kind of the usual story for commodity chemicals in China.

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Apr 16, 2023: A recent article in the CCR discusses China's synthetic resin industry. Some quotations and phrases from this paper: "The 14th Five-Year Plan period (2021-2025) is a critical period for the transformation and development of China's chemical industry"; "unprecedented challenges and tests", "the next five years are critical"; "it will be a matter of life and death for every enterprise whether a breakthrough can be achieved or not".

Comment MCC: Judging from this paper, it seems Armageddon is near - I wish authors could be a bit more restrictive in the use of hyperbole. Not every moment in history can be one that is unprecedented, in the same way that not every driver can be an above-average driver.

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Apr 15, 2023: An article in the CCR states that China's "petrochemical industry faces the problem of being large but not strong, with overcapacity at the low end and dependence on imports for high-end products".

Comment MCC: Examples given to illustrate this situation include the low self-sufficiency of China for metallocene PE (mPE) of only 22% in 2019, complete dependence on imports for polyolefin elastomers (no domestic industrialized production yet), and the similar complete reliance on metallocene co-catalyst MAO.

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Apr 14, 2023: The number of chemical companies above designated size in China is increasing further - from 26,039 at the end of 2020 to 26,947 at the end of 2021 and 28,760 at the end of 2022.

Comment MCC: This is an increase of 6.7% - not surprising given that the operating income of the industry increased by 14.4% to 16.56 trillion RMB (about 2.40 trillion USD compared to the about 0.53 trillion USD size of the US chemical industry in 2021).

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Apr 13, 2023: A recent (2023) Chinese paper on air pollution in China is summarized as follows: "Research on the sources of Chinese PM2.5 pollution has focused on the contributions of China's domestic emissions. However, the impact of foreign anthropogenic emissions has typically been simplified or neglected. Here we find that foreign anthropogenic emissions play an important role in Chinese PM2.5 pollution through chemical interactions between foreign-transported pollutants and China's local emissions. Thus, foreign emission reductions are essential for improving Chinese air quality."

Comment MCC: While this sounds reasonable, it also might be a bit of an excuse to blame pollution on non-domestic sources. The detailed results in the paper state that 8% of PM2.5 and 19 % of nitrate over eastern China in 2015 was contributed by foreign anthropogenic emissions yet that only 30 % of such foreign contributions were through direct atmospheric transport while majority (70 %) were instead through chemical interactions between foreign-transported aerosol precursors and China's domestic emissions of pollutants. So, it still is mainly a domestic problem.

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Apr 12, 2023: Despite a number of new polyester plants being built in China, PTA capacity grew much faster, leading to a decrease in capacity utilization to an annual average of 75% in 2022 from a peak of more than 83% in 2019. In addition, imports declined massively between 2019 (955 kt) and 2022 (37 kt).

Comment MCC: The situation is likely to get worse as if launched as scheduled, domestic PTA overall capacity will grow by an additional 27% in 2023, 15% in 2024, and 6 % in 2025. Chinese chemical companies are still very susceptible to strategic crowding.

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Apr 11, 2023: A paper by Xuejun Duan and coauthors in Hindawi states that "the chemical industry has gradually retreated from developed cities, such as Beijing and Shanghai, in the eastern region, and has become the inevitable choice for industrialization of less-developed cities, such as Xi'an, Chengdu, and Chongqing, in the western region."

Comment MCC: While this statement sounds a bit too general to me, it is certainly true that prosperous places like Shanghai - which have lots of alternatives to the perceived risky chemical industry - have abandoned a large share of their chemical production.

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Apr 10, 2023: Saudi Aramco will build a refining complex in Liaoning Province, an investment of 83.7 billion yuan. The shareholders are North Industries Group, Saudi Aramco, and Panjin Xincheng, with shareholding ratios of 51%, 30%, and 19% respectively.

Comment MCC: According to Aramco, this is part of Aramco's emphasis on the conversion of liquids into chemicals - in other words, a shift away from fuel and into chemicals, which are likely to have a longer life let than fuel in the ongoing decarbonization of the economy. Separately, Saudi Aramco, entered into a $3.6 billion deal to purchase a 10% stake in Rongsheng Petrochemical Co, one of China's oil refiners.

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Apr 09, 2023: China National Chemical Group Co., Ltd. issued a "Statement on Criminals Forging Documents and Registering Companies with the Name of China National Chemical Corporation" stating that the "company discovered that criminals falsely registered Sinochem Rongtian (Shanghai) Industrial Development Co., Ltd. in the name of China National Chemical Corporation."

Comment MCC: So, if you deal with self-claimed state-owned chemical companies, make sure they are the companies they claim to be.

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Apr 08, 2023: The Shaanxi Bureau of the State Mine Safety Supervision Bureau fined the Shendong Coal Branch of China Shenhua Energy Co., Ltd. Suspend business to the sum of 1.8 million yuan. Reasons cited for the fine include production activities without approval and 13 other illegal acts.

Comment MCC: It is hard to judge the severity of these acts but the fine seems very low given that the daily average net profit is about 188 million RMB. So, the fine is equal to about 1% of the profit of a single day - not much of a deterrent.

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Apr 07, 2023: Brenntag started full commercial operations at a new site in China, located Zhangjiagang, about 150 kilometers from Shanghai. Including the new site in Zhangjiagang, Brenntag now operates four sites providing services from North (in Cangzhou, Hebei Province) to East (in Zhangjiagang) to South (Dongguang, Guangdong Province) and Southwest China (Chongqing).

Comment MCC: According to the company, the new warehouse reduces the current complexity of moving products among several external warehouses. The new warehouse also is a response of Brenntag to increasingly complex local supply chains that include domestic manufacturing and R&D.

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Apr 06, 2023: The website China Dialogue has an interesting article on the emergency response related to chemical spills such as the recent Ohio train accident in the US. Mainly, it compares the response by the US agency (EPA) with that of Chinese authorities.

Comment MCC: The article tends to somewhat favor the US approach, which is interesting given that the author is apparently a Chinese national, Liu Yiman, Ph.D., a visiting researcher at Wuhan University's Institute of Environmental Law.

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Apr 05, 2023: India has initiated an anti-dumping investigation against polyether polyols from China and Thailand

Comment MCC: According to a paper by Ashwani Mahajan in the South Asia Economic Journal, China is the country against which by far the largest number of anti-dumping measures have been taken by WTO members. However, this may just reflect the fact that China's large-scale producers can produce at a lower cost than other companies. Regarding India, the largest number of anti-dumping duties within the period covered in the paper is chemicals, accounting for 39%. But again, this may be more a consequence of economies of scale than of active dumping - one Indian chemicals producer once told me that for some chemicals, there are 20 Chinese producers, each of which has a production capacity equal to the annual Indian demand. This makes it difficult for Indian producers to compete with Chinese imports even without dumping.

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Apr 04, 2023: Currently, there are 643 petrochemical bases and chemical parks in China, of which 593 have been certified by various provinces, autonomous regions, and municipalities. They account for over 50% of the industry's total revenue.

Comment MCC: While this is touted as a success, it still means that a major share of chemical production is outside of chemical parks. It is also surprising that there are still 50 chemical parks that have not been certified by any kind of authority.

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Apr 03, 2023: Fuzhou Customs seized 5 tons of falsely declared dangerous chemical "azodicarbonamide" in a shipment of goods exported in general trade. It was declared as 25% "azodicarbonamide" and 75% "sodium bicarbonate" while in reality, it turned out to be 100% azodicarbonamide.

Comment MCC: Not very surprising to me - I sometimes get emails from people offering to help me ship chemicals with false documentation, presumably due to the word "chemicals" in my company name ...

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Apr 02, 2023: This march, the Yanchang Petroleum Yushen 500,000-ton/year coal-based ethanol project with a total investment of 6.98 billion yuan delivered the first coal-based ethanol. It is cited to be the world's largest coal-based ethanol project.

Comment MCC: The project claims include the statement that the "project uses low-rank coal instead of grain to produce ethanol. Compared with biological ethanol, it can save 1.5 million tons of raw material grain every year, which is equivalent to 60% of Yulin City's annual grain output of 2.52 million tons in 2022. It is important for ensuring national energy security and Food security is of great strategic importance." It seems if there is a trade-off between food security and reducing carbon emissions, the first objective still dominates.

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Apr 01, 2023: In 2022, the capacity utilization rate of China's chemical industry was 76.7%, a year-on-year decrease of 1.4 percentage points, while the total production of major chemicals decreased by 0.4% year-on-year.

Comment MCC: The difference between the two declines is due to ongoing capacity increases in China's chemical industry - despite the (by Western standards) low starting capacity utilization.

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Mar 31, 2023: DOMO Chemicals started construction of its new plant in Haiyan, Jiaxing, Zhejiang, China. The new plant will produce TECHNYL polyamide-based grades and is expected to be in full operation by end Q1 2024.

Comment MCC: This investment may turn out to be somewhat risky as domestic polyamide producers in China get stronger.

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Mar 30, 2023: BASF announced plans to build a second production line at the BASF Huizhou Daya Bay site in Guangdong Province to expand its polymer dispersion capacity. Also, the new production complex of BASF Zhanjiang Integrated Base broke ground, including glacial acrylic acid (GAA) plant, butyl acrylate (BA) plant and 2-ethylhexyl acrylate (2-EHA) plant.

Comment MCC: BASF indeed continues to invest in China despite some criticism of this approach, e.g., in the German business press. Two quotes highlight this: "Not investing in a market with a large scale and strong growth like China will be the biggest risk for BASF", and "For BASF, continuing to increase investment in the Chinese market is the most important source of current and future growth."

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Mar 29, 2023: AkzoNobel received approval for a 2000 t/a waterborne paint project in Changzhou, Jiangsu.

Comment MCC: While this indicates the general trend towards environmentally friendly materials, it is also a relatively small investment of only about 5 million EUR.

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Mar 28, 2023: China's current PA66 capacity is about 700 kta, about 21% of the global capacity.

Comment MCC: This could reach more than 50% by 2027 as new PA66 capacity in China in the next 5 years is expected to exceed 3000 kta. Import dependency has already decreased from 75% in 2012 to 49% in 2022.

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Mar 27, 2023: The average transaction price on China's national carbon emissions trading market rose by 25% from 2021 to 2022.

Comment MCC: However, at a price of about 8 EUR per ton, it is still very low compared to the European price (which exceeded 100 EUR per ton in February 2023), limiting the incentive for companies to reduce carbon emissions.

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Mar 26, 2023: Sabic stated that the Chinese chemical market has yet to recover and that the ending of lockdowns in China has not led to a rapid rebound in consumption: "Things in China are still roughly the same as they were in 2021. So far, we have not seen the high demand that was expected. It seems to me that the second quarter or the second half may witness the return of the Chinese market."

Comment MCC: This is in contrast to reports of a quick recovery of the Chinese economy in other sources such as The Economist.

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Mar 25, 2023: Fragrance company Firmenich opened the Villa Harmony in China, a fragrance center of expertise that is a joint project between Firmenich and a Chinese perfume studio.

Comment MCC: While this may indeed offer some opportunities for creators of fragrances, it is not quite the equivalent of a moon landing that it is described as in the press statement by Firmenich: "The opening of Villa Harmony marks a momentous integration of Art, Technique, Ingredients, and Perfumery ... We are proud to combine our legacies at this center of perfumery culture to support the preservation and revitalization of Chinese perfumery ancestry. Customers in China will benefit from having a completely unparalleled, holistic experience where they can re-discover and replicate ancient Chinese fragrance ingredients, for use in modern-day creations."

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Mar 24, 2023: An expansion project of Wacker Chemical (Zhangjiagang) with an annual output of 100,100 tons of silicone emulsion and silicone oil products was approved by the Management Committee of Zhangjiagang Free Trade Zone of Jiangsu Province.

Comment MCC: This expansion project will be located in direct proximity to the existing Wacker facilities in the park.

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Mar 23, 2023: Hengli Petrochemical, a company with roots in polyester fiber production, is now engaged in various other fields including lithium battery separators, resin materials, degradable plastics and engineering plastics.

Comment MCC: It seems Hengli realizes the limited future growth potential in a traditional chemical area such as polyester - though of course, the new areas require different capabilities, in particular, a stronger focus on R&D. Success is thus far from guaranteed.

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Mar 22, 2023: In 2022, China's ethylene production capacity reached 46.75 million tons per year.

Comment MCC: This makes China the largest global ethylene producer, surpassing the United States. In addition, further capacity expansions are expected, with 2025 ethylene production forecast to exceed 70 million tons per year, covering domestic demand and possibly even reaching a surplus. Not a very comfortable situation for some countries (e.g., South Korea) now supplying China with ethylene-based products such as PE. 

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Mar 21, 2023: Iran and China are holding talks to build a carbon disulfide production plant in Iran's Ilam Province with an investment of $50 million by Shanghai Baijin Chemical Group Company

Comment MCC: Iran's choice of investment partners is severely limited due to its political isolation, making any engagement by a Chinese company particularly welcome.

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Mar 20, 2023: BASF will invest in a new citral plant at its integrated base in Zhanjiang, China, with production expected to start in 2026.

Comment MCC: This is both a global capacity expansion and a regional expansion in China, as production by MNCs in China shifts to products with a higher specialty character.

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Mar 19, 2023: Petro Vietnam Ca Mau Fertilizer signed a strategic partnership with Yunnan Yuntianhua Honglin Chemical Company, an affiliate of the Yuntianhua Group Company.

Comment MCC: Yuntianhua is a large producer of Diammonium Phosphate, of which it ships large amounts to Vietnam. The partnership may improve access to this fertilizer for Vietnamese farmers.

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Mar 18, 2023: China's output of lithium-ion batteries increased by more than 130% YoY to 750GWh in 2022, and the total output value of the lithium-ion battery industry grew to over RMB1.2 trillion.

Comment MCC: It seems that China's policy of strongly supporting the industry - e.g., by subsidizing electric vehicles - has been quite successful in establishing China as the global leader in this area.

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Mar 17, 2023: Sinopec started a project for the production of green hydrogen from wind and solar power in Inner Mongolia, for use in the green production of chemicals from coal. It is claimed to be the world's largest green hydrogen-coal chemical project.

Comment MCC: The state-owned Chinese petrochemical companies obviously stake their claims in non-oil areas in order not to get left behind in the energy transition.

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Mar 16, 2023: An evaluation by Hubei province of its 52 chemical parks concluded that 4 of the parks have a relatively high safety risk (graded B) while 48 have a somewhat lower safety risk (graded C).

Comment MCC: The province aims to reach grade D, low safety risk, for all its parks by 2025. In the meantime, the parks graded B face severe restrictions on chemical projects, giving these parks an incentive to clean up their act.

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Mar 15, 2023: Japan may restrict photoresist sales to China as a response to US export controls against China's semiconductor industry (SCMP)

Comment MCC: While these restrictions have not been confirmed, they have already led to Chinese investors buying into Chinese companies with the potential to replace Japanese photoresist imports.

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Mar 14, 2023: A recent paper by Baoxin Zhang, Leibniz-Institut für Katalyse in Rostock, Germany, and Armin Börner, formerly Universit of Rostock, examines similarities and differences between the chemical formula language and the Chinese written language

Comment MCC: They find that both the Chinese written language and the chemical formula language of formulas are narrative symbolic languages, and conclude that while the Chinese written language is not suitable for unlimited communication, the chemical formula language is infinitely expandable and universal.

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Mar 13, 2023: At the National Congress, representative Zheng Yueming made a case for increased support for the domestic electronic special gas industry.

Comment MCC: According to the representative, China can only produce about 20% of the types of electronic special gases used in integrated circuit production, and nearly 90% of the market is still occupied by foreign-funded companies. Of course, with such a high degree of dependence on imports, China's overall emphasis on self-reliance results in strong demand for domestic substitution.

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Mar 12, 2023: Lithium prices in China have declined by almost a third in the past three months after weaker demand in the world's largest market for electric vehicles

Comment MCC: One reason is the cancelation of subsidies for EVs, leading to a slowdown in demand.

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Mar 11, 2023: Among the 1,400 projects announced by Shandong Province, there are only 79 chemical-related projects, a year-on-year increase of 104 in 2022, a significant decrease of 32%. Also, the number of chemical parks in Shandong declined from 199 to 84, and more than 2,000 chemical enterprises were closed.

Comment MCC: Given Xi Jinping's stated emphasis on environmental protection and the risk of accidents from chemical plants (and the associated career risks for government officials), the chemical industry is gradually falling out of fashion in the richer provinces. Arguably, this is similar to what has been observed in rich Western countries decades earlier. Some of the industry is shifting towards poorer provinces that presumably cannot be too choosy given their weaker economic situation - reportedly, since 2019, there have been as more than 600 projects in which chemical plants were shifted from coastal provinces to the Midwest and Northeast.

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Mar 10, 2023: Recently, caprolactam prices have been declining, leading to losses among producers.

Comment MCC: As a consequence, many newly constructed projects have been suspended or delayed.

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Mar 09, 2023: As of February 2023, there are 17 new EVA proposed projects announced in China, with a total planned production capacity of about 4.34 million tons/year. Among them, there are 11 projects planned to be put into operation before 2025, with a total production capacity of about 3.14 million tons per year.

Comment MCC: If these projects are completed, China's EVA capacity will exceed 5 million tons by 2025. This is likely to be more than global demand in that year - a recipe for future overcapacity.

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Mar 08, 2023: Current global acrylic acid production capacity is close to 9 million tons. Between 2023 and 2027, a total of 1.655 million tons of acrylic acid products are expected to come onstream from seven new Chinese enterprises.

Comment MCC: This represents an increase of 18%, or a CAGR of slightly above 4%. This will likely be above global GDP growth during the same period (CAGR around 3%) and thus lead to overcapacity and/or intensification of competition.

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Mar 07, 2023: Lihua Yiweiyan plans to adjust its original 600 kta propane dehydrogenation and 400 kta high-performance polypropylene project to 600 kta propane dehydrogenation and 200 kta high-performance polypropylene.

Comment MCC: This hints at the increasing pressure on PP producers following continuous expansion in the past few years, and the decreasing amount of PP imported.

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Mar 06, 2023: Covestro will build its largest TPU production base in the world in Zhuhai with an annual capacity of 120 kt when finished in 2033.

Comment MCC: Notwithstanding the issues between China and the Western world, China remains the biggest market for chemicals - and that is reflected in the investments of Western chemical companies.

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Mar 05, 2023: An antidumping investigation by the Chinese Ministry of Commerce covering imports of phthalocyanine pigments from India concluded that indeed dumping had occurred. Anti-dumping duties will be imposed.

Comment MCC: I still do not think much of anti-dumping duties but of course, as long as all countries do it (and India certainly has done it in the past), no country can complain

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Mar 04, 2023: LyondellBasell opened its first olefins and polyolefins business technical center in Asia in Suzhou. The center will provide solutions and products for the polypropylene, polyethylene, PB-1, and Catalloy markets in China and the Asia-Pacific region.

Comment MCC: Given the importance of China and APAC for these products, the surprising thing about this opening is that it only happens now, not earlier.

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Mar 03, 2023: China accelerated its coal power plans in 2022, quadrupling the number of new permits and approving enough new capacity to supply all the UK's needs

Comment MCC: This makes some of the arguments against coal-to-chemicals projects somewhat spurious, as the central government obviously has no issue with increasing domestic coal consumption up to 2030. Most likely, economic reasons are the main reason for the cancelation of some coal chemical projects.

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Mar 02, 2023: The Public Security Traffic Management Bureau of the Beijing Municipal Public Security Bureau issued a notice prohibiting the transportation of dangerous chemicals in Beijing from March 2 to March 15 as this is the period of the "Two sessions" (exceptions are possible). The "Two Sessions" are the yearly plenary meetings of the National People's Congress and the Chinese People's Political Consultative Conference, China's top legislature and top political advisory body respectively.

Comment MCC: Personally, I do not think such a ban makes much sense as while any accident happening during this season might be an embarrassment for public officials, the real damage to people and the environment will be the same as in any other period of the year.

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Mar 01, 2023: ChemChina's China National Chemical Corporation Zhuzhou Rubber Research and Design Institute Co. issued a statement saying that it "is a company that operates in compliance with regulations and produces civil natural rubber latex weather balloons, not a military production company. The products we produce are used for daily weather forecasting by weather stations around the world, and have nothing to do with the so-called airships over the United States."

Comment MCC: Funny, I guess.

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Feb 28, 2023: In 2022, China's import-export balance in chemicals improved. The total export volume of organic chemicals was 80.7 billion US dollars, a year-on-year increase of 17%, and the trade surplus was 29 billion US dollars, a year-on-year increase of 216%. The total export volume of inorganic chemicals was 39.4 billion US dollars, a year-on-year increase of 68%. The trade surplus was US$13.5 billion, a year-on-year increase of 57%; the total export of synthetic resin was US$25 billion, a year-on-year increase of 4%, and the trade deficit was US$24.9 billion, a year-on-year decrease of 22%.

Comment MCC: Given the ever-increasing Chinese chemical production capacities and the shift towards higher-end chemicals produced locally, this was to be expected and will likely continue in the same direction.

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Feb 27, 2023: Eastman has acquired Accuride Technology (Dalian), a producer of paint protective films and window film products for the automotive and construction markets in Asia Pacific.

Comment MCC: While the press release states the acquisition demonstrates Eastman's commitment to driving growth in the performance film business and the paint protection and window film markets, more importantly, it demonstrates the importance of the Chinese market.

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Feb 26, 2023: According to statistics from the Logistics Association, the scale of China's chemical logistics in 2021 was 2.24 trillion yuan, a year-on-year increase of 9.3%.

Comment MCC: This growth - likely faster than that of the chemical market in the same period - is despite the trend towards establishing complete chemical value chains at individual locations.

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Feb 25, 2023: Qixiang Tengda, a producer of C4 chemicals, issued a performance forecast on the evening of January 20, warning of a year-on-year profit decrease of 65% to 75%

Comment MCC: Reasons cited include geopolitical conflicts, the high price of crude oil and other raw materials, low demand due to the epidemic and decreasing prices.

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Feb 24, 2023: From Jan. 1 to Jan. 27, Chinese retail sales of EV and hybrid passenger cars plunged 43% from the same period last month to 304,000 vehicles, down 1% from a year earlier, according to industry group CPCA.

Comment MCC: A major reason is the cancellation of a subsidy of up to 12,600 RMB that took effect in 2023.

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Feb 23, 2023: Wanhua will invest a total of 126 billion RMB in the Wanhua New Materials Low-Carbon Industrial Park project, to be implemented in three phases.

Comment MCC: This is again a massive investment by Wanhua, though the name of the industrial park is somewhat misleading as in reality only the phase 3 products truly fall into the low-carbon category.

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Feb 22, 2023: According to the China Automobile Association, in the first 11 months of 2022, 2789 hydrogen vehicles were sold.

Comment MCC: While this is a rapid increase from previous periods and is accompanied by an increase in the number of models, the overall sales are still very small compared to the total automotive market, limiting the relevance to the related chemical market.

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Feb 21, 2023: China's polysulfone production capacity is expanding as new plants by several companies are being commissioned. At the end of 2021, the domestic capacity was about 16 kt. Chinese demand CAGR is forecast to be about 10% between 2021 and 2025.

Comment MCC: Similar to other high-end materials, however, the performance of local materials is below that of those of BASF and Solvay. Thus for high-end applications, China still strongly relies on imports, which accounted for about 80% of domestic demand in 2020.

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Feb 20, 2023: Inner Mongolia Yitai Coal suspended the construction of Yitai Yili Energy Co.s 1 million tons/year coal-to-oil demonstration project.

Comment MCC: This is unlikely to be the only such project suspended or canceled. The reasons provided- high coal cost for coal chemical products, large fluctuations in international oil prices, and major uncertainties in tax and fee costs - apply to all other coal chemical projects as well. On the other hand, Inner Mongolia Zhuozheng Coal Chemical announced a coal chemical project with an annual output of 2.6 million tons starting with a first phase with an output of 1.1 million tons, so the situation may not be as straightforward as proclaimed by Yitai.

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Feb 19, 2023: Ford plans to build a $3.5 billion electric vehicle battery plant in Michigan with its Chinese partner CATL

Comment MCC: It is interesting to see that Ford - despite probably partly aiming at customers looking for vehicles made in the USA is doing this with a Chinese partner, highlighting the global leadership CATL has in EV batteries.

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Feb 18, 2023: On January 15, 2023, an explosion occurred in the alkylation unit of Liaoning Panjin Haoye Chemical during maintenance, resulting in 13 deaths and 35 injuries.

Comment MCC: Unsurprisingly, the preliminary investigation report reads similar to other ones after such accidents, indicating that overall supervision of production safety is still not achieved: "serious imbalances in the relationship between the efficiency and safety of accident-handling enterprises", "responsibility for safety production is suspended", "major loopholes in the safety management".

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Feb 17, 2023: According to the National Bureau of Statistics, in 2022, investment in chemical raw materials and chemical products manufacturing increased by 19% year-on-year.

Comment MCC: Chemicals at the moment continue to be a segment that is regarded as having good potential for growth and profit, and thus attracts investment.

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Feb 16, 2023: According to the National Bureau of Statistics, in 2022, the ex-factory price index of chemical raw materials and chemical products manufacturing increased by 7.7% year-on-year.

Comment MCC: Substantial price increases were reported for caustic soda, potassium chloride, and toluene while prices of sulfuric acid, hydrochloric acid, and MDI declined substantially

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Feb 15, 2023: According to the National Bureau of Statistics, in 2022, the capacity utilization rate of the chemical raw material and chemical product manufacturing industry was 76.7%, a year-on-year decrease of 1.4 percentage points.

Comment MCC: This is most likely due to covid-related factors, though of course increased production capacity will also have contributed.

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Feb 14, 2023: Yabang, a producer of dyes, pesticides, and intermediates, expects a loss of 684 million RMB for 2022, a larger loss than in 2021.

Comment MCC: Reasons cited include the epidemic, weak downstream demand, fluctuations in raw materials prices, increased production costs, and increased competition.

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Feb 13, 2023: In December 2022, PPG completed the acquisition of Huangshan Huajia Surface Technology, a powder coating manufacturer in Huangshan, Anhui Province, China.

Comment MCC: With this acquisition of one of the earliest powder coating manufacturers in China, PPGs market share in this segment is now among the top three in China.

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Feb 12, 2023: Six departments including the Ministry of Ecology and Environment and the Ministry of Industry and Information Technology jointly issued a "List of New Highly-controlled Pollutants (2023 Edition)" which will come into effect on March 1, which includes 14 kinds of new pollutants like PFOS, its salts, and perfluorooctane sulfonyl fluoride.

Comment MCC: Somehow I find it amusing that such lists are issued by multiple ministries - it gives me the impression that none of the ministries involved wants to shoulder all the blame for the potential - though justifiable - economic losses of such bans.

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Feb 11, 2023: The average annual growth rate for Chinese POE consumption is estimated to be about 17% from 2021 to 2025. Currently, all POE is imported.

Comment MCC: Obviously, the reliance on imports does not fit well with China's emphasis on self-reliance, particularly given that about 50% of POE is used in the area of photovoltaics (new energies including photovoltaic were listed in the Fourteenth Five Year Plan as one of top 8
emerging industries of strategic importance). It is therefore not surprising that currently 8 domestic POE projects are underway or planned.

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Feb 10, 2023: According to the CCR, Japan is the global leader in the number of lithium battery applications, with almost three times as many applications as the next country, China.

Comment MCC: However, China's number is more than double that of the US and slightly higher than that of Europe.

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Feb 09, 2023: China's PTA imports increased strongly from 2017 to 2019 but then declined rapidly in 2020 and again in 2021.

Comment MCC: This is another segment in which China's production capacity has increased rapidly, leading to self-sufficiency.

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Feb 08, 2023: Jingdezhen Black Cat High Performance Materials started the construction of a 5 000 tons carbon nanotube powder project, starting with a capacity of 2 500 t/a carbon nanotube to be put into operation by the end of 2024.

Comment MCC: It will be interesting to see how high the quality of the material is once it is available. In the past, many Chinese companies have entered high-end chemical segments such as PEEK, only to later be able to produce only low-quality material that cannot compete with that of the leading Western producers.

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Feb 07, 2023: Shanxi province aims to decrease the energy consumption per unit of GDP by 14.5% from 2020 to 2025, and to have non-fossil fuels account for 12% of total energy consumption by 2025.

Comment MCC: These targets seem rather unambitious - a per-unit reduction by 14.5% will certainly be compensated for by a higher GDP growth rate, meaning overall energy consumption will increase, and the 12% target for non-fossil fuels also seems low. Of course, Shanxi is China's major coal-producing region and has announced plans to increase its coal output.

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Feb 06, 2023: BYK completed the second phase of expansion of its integrated production base in Shanghai, BYK's second production base in China after the Tongling production base.

Comment MCC: This is part of a broader trend of moving even the production of chemicals with a higher specialty nature to China. The localized products include defoamers and additives used primarily in coatings.

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Feb 05, 2023: China's phenol production capacity has been increasing massively in the past few years, for example by 27% in 2020, 35% in 2022 and an expected 27% in 2023.

Comment MCC: Somewhat predictably, this has led to price declines, a reduction in imports and losses for phenol producers.

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Feb 04, 2023: India has initiated an anti-dumping probe into imported Vitamin A from China and the EU.

Comment MCC: Given the scale of China's vitamin production and market, China's vitamin producers very likely have an economic advantage over Indian producers even without resorting to any anti-competitive practices.

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Feb 03, 2023: China approved imports of eight genetically modified crops for the first time after a decade-long wait

Comment MCC: This could substantially increase the market for these crops and their associated chemicals, benefiting agrochemical companies such as Bayer.

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Feb 02, 2023: ASK Chemicals, a supplier of materials for the foundry industry, opened a new production plant in Zhenjiang, China.

Comment MCC: The plant will initially focus on an inorganic binder followed by the production of water-based coatings and feeders, thus highlighting the trend towards environmentally friendly products.

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Feb 01, 2023: The Journal of the Chinese Chemical Society retracted a paper titled "Adsorption of Pb(II) and Cd(II) by magnetic chitosan-salicylaldehyde Schiff base: Synthesis, characterization, thermal study and antibacterial activity" published in 2022

Comment MCC: The rather interesting rationale is as follows: "The retraction has been agreed following an investigation based on allegations raised by a third party regarding authorship for sale. During the publication process, the authors' list was systematically and substantially manipulated. Unambiguous evidence was found that the majority of contributors do not fulfill contributorship criteria for this manuscript."

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Jan 31, 2023: Sinopec published the "The Sinopec Green and Low-carbon Development White Paper 2022" (the "White Paper") on January 13

Comment MCC: This indicates a growing interest in this subject by the oil company. As a side note for bird watchers like me, the press release also features a photo of egrets breeding inside what seems to be a refinery (the photo is titled "Thousands of Migrating Egrets Visit and Breed in the Sinopec ZRCC Egret Nature Reserve Every Year")

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Jan 30, 2023: A recent discussion paper finds that Chinese authored chemical articles receive only half the citations from the US compared to articles from other countries. Even after controlling for the quality of Chinese research, Chinese articles receive 28% fewer citations from US researchers.

Comment MCC: This seems to be a wasted opportunity for US chemical researchers to build upon existing knowledge.

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Jan 29, 2023: Substantial amounts of chemicals that are potential precursors of fentanyl were seized in Arizona this month.

Comment MCC: The chemicals were imported from China, a major source of such chemicals.

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Jan 28, 2023: In 2022, the Chinese PVC capacity via the calcium carbide method is expected to increase by 850 000 t/a, decreasing from 78.72% in 2021 to 76.55%

Comment MCC: While the calcium carbide process has dominated China's PVC production in the past due to the country's coal resources, new projects are no longer approved due to environmental concerns, indicating a shift in the evaluation criteria.

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Jan 27, 2023: Topsoe has been chosen by Mintal Hydrogen Energy Technology as technology provider for a new green ammonia plant in Baotou, Inner Mongolia. The new plant will be the first dynamic green ammonia plant in China (Chemical Industry Digest).

Comment MCC: The process includes the production of hydrogen from wind turbines and thus avoids the emission of carbon dioxide associated with traditional ammonia production.

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Jan 26, 2023: US chemical engineer Feng Tao was sentenced to time served for failing to disclose ties to China on a university form.

Comment MCC: This is a mild sentence and indicates a rebuke of the US government's strict China Initiative aimed at preventing espionage.

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Jan 25, 2023: According to a paper in Science, a Chinese team of researchers became the first scientists to control chemical reactions at the atomic level

Comment MCC: This could eventually lead to more efficient production of chemicals and indicates the high level of Chinese chemical research in at least some areas.

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Jan 24, 2023: A report in the C&EN predicts that China's chemical industry will in 2023 benefit from the country's recent lifting of its zero-COVID-19 policies.

Comment MCC: Pharmaceuticals and agrochemicals are the sectors particularly highlighted in the report as having good growth prospects.

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Jan 23, 2022: A fire and explosion at Panjin Haoye Chemical, a refinery and petrochemicals complex in China has killed at least 12 people. The incident happened during maintenance work at an alkylation facility (Reuters).

Comment MCC: The cause of the accident is still under investigation by the State Security Commission.

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Jan 22, 2023: Many small and medium-sized Chinese glyphosate producers have been closed in recent years due to increased environmental protection and outdated capacity, leading to China's capacity getting reduced to 713 kt in 2021 from 1030 kt in 2009.

Comment MCC: The capacity is likely to remain low - small producers will not easily be allowed to resume production, and some producers may face capacity restrictions.

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Jan 21, 2023: In 2021, Chinese propylene oxide production capacity was 5.39 million tons while the output was 3.7 million tons.

Comment MCC: As capacity expansions are still continuing, with production capacity increasing to about 8 million tons by the end of 2023, overcapacity is likely.

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Jan 20, 2023: China's newly installed PV capacity is predicted to increase by 19.5% annually in the next few years. In specific areas of the segment, the Chinese market share is extremely high - for example, the market share of China's top four PV adhesive film producers accounting for nearly 90% of the global total in 2021 (CCR).

Comment MCC: This is the type of dependency that is a success for China but a worry for Western countries, particularly the USA.

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Jan 19, 2023: Chinese battery makers dominate the global market, reaching 50% of global supply. In particular, CATL extended its 2022 share to 37% from 32% in 2021.

Comment MCC: BYD also increased its market share to about 14% during that period.

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Jan 18, 2023: Shandong province states that the enrollment rate of the chemical industry into designated chemical parks has reached more than 45%.

Comment MCC: While this is claimed as a success, it seems low compared to the eventual goal to have essentially all chemical industry in China in chemical parks. My understanding this goal was to be achieved by 2025, a time not too far in the future.

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Jan 17, 2023: In 2022, China had 41 normally operating full-process titanium dioxide manufacturers. Production increased by 1.9% compared to the previous year. Rutile and chlorination products showed increases compared to the overall figures.

Comment MCC: A growth rate of 1.9% is a rate more familiar to Western chemical companies in their mature markets than to Chinese ones.

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Jan 16, 2023: Shanxi Province announced six typical cases of hazardous chemical violations.

Comment MCC: However, the fines imposed are quite low, ranging from 70,000 RMB to about 500,000 RMB. For example, Shanxi Datuhe Coking "failed to maintain emergency rescue equipment, operated in violation of safety management regulations, installed safety equipment that did not meet national standards, failed to maintain safety equipment, and locked the safety exit of the production site" and got a fine of only 94,000 RMB. That still seems remarkably low and seems to put a low value on the risk these violations impose on the lives of workers in the company.
Separately, Anhui province also posted a list of 60 chemical companies violating regulations - at least the publication of such findings indicates progress.

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Jan 15, 2023: While Western paint producers started marketing bio-based paints in China from 2017, more recently Chinese producers have also entered the field, and most recently some of their raw materials even come from Chinese producers such as Wanhua.

Comment MCC: Still, given the relatively low eco-consciousness of Chinese customers, the market share of these products will likely remain low as long as their price (as currently) is 15-20% higher than the alternatives.

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Jan 14, 2023: In 2021, China accounted for 61% of the global PBT capacity of 2.41 million t/a, with all 8 Chinese producers among the top 10 global producers. In addition, new capacity will also be mainly built in China and the Middle East.

Comment MCC: Given that Chinese output in 2021 was only 863 kt, capacity utilization is relatively low at 59%, and China is a net exporter, it seems China is basically the global producer for this material and will remain in this position for at least the next few years.

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Jan 13, 2023: A recent paper titled "Effect of Chemical Fertilizer Application on Maize Production in China over the Past 15 Years: A Meta-Analysis" states that "the maize production of China has improved significantly in terms of FUE and its carbon footprint in recent years. Because of improvements in maize cultivars and cultivation technologies, it is possible to decrease N, P, and K application rates and reduce per unit area carbon footprint of maize, without compromising yield".

Comment MCC: The resulting recommendation to reduce nitrogen fertilization by 10% from current levels should have a substantial impact on chemical fertilizer production if implemented.

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Jan 12, 2023: In the first 9 months of this year, China's cumulative export volume of styrene was 542 kt, a year-on-year increase of 190% while imports were 826 kt, down 35% year-on-year.

Comment MCC: This leaves China a net importer despite increased domestic production capacity and partly due to a decrease in utilization rate by almost 9%.

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Jan 11, 2023: According to a recent paper in the Journal "Environmental Science and Pollution Research", substituting chemical potassium fertilizer with crop straw residues in China could substantially reduce annual emissions of greenhouse gases, ammonia, nitrogen oxide, and fine particulate matter.

Comment MCC: It remains to be seen whether this research will be implemented, with potential losses for companies producing potassium fertilizer.

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Jan 10, 2023: According to the "Forecast Report on the Development of Oil and Gas Industry at Home and Abroad" by the China National Petroleum Corporation Economic and Technological Research Institute, as of January 2022, China's oil refining capacity is larger than that of the US, making China the largest oil-refining company.

Comment MCC: As the report points out, "this also means that China is more likely to become the largest producer of downstream products that rely on crude oil as raw materials, such as ethylene, propylene, refined oil and other chemicals."

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Jan 09, 2023: Pilbara Minerals, one of Australia's biggest lithium producers, plans to build a demonstration plant in Western Australia capable of refining the lithium ore into lithium salt rather than exporting the raw ore to China.

Comment MCC: Given the tensions between China and the US, this is an initiative to bypass China in supplying lithium required for EV batteries to Western markets.

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Jan 08, 2023: The Shandong Provincial Department of Industry and Information Technology and the Provincial Enterprise Confederation announced the list of top 100 enterprises, 8 of which are chemical companies.

Comment MCC: This highlights the importance of the chemical industry for this province.

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Jan 07, 2023: Based on currently announced projects, China's nylon 66 production capacity is likely to exceed 2.6 million tons by 2025.

Comment MCC: Given that current domestic consumption is only about 0.5 million tons, this means the industry will become a massive exporter or face substantial overcapacity.

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Jan 06, 2023: BSM, a Chinese producer of environmentally friendly pesticides, plans to pay ¥85 million in cash for a 20% stake in Generic, an international trader of pesticides.

Comment MCC: Up- and downstream integration is always popular with Chinese chemical companies, and in this case, does seem to make sense given the importance of export registration in the overseas registration of pesticides.

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Jan 05, 2023: The New Year Greetings of the China Petroleum and Chemical Industry Federation contain the sentence "In the new year, the petroleum and chemical industry should be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era".

Comment MCC: It is very hard to imagine a similar statement being issued in the Western world.

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Jan 04, 2023: China's chemical fiber industry grew by 6.8% yoy in the period of Jan-Oct 2022 while output increased by 0.4%.

Comment MCC: However, profit declined by 65.5%, indicating that raw materials price increases more than eliminated any changes in topline growth.

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Jan 03, 2023: PPG's Global Coatings Innovation Center in Tianjin has entered the commissioning stage and is expected to be put into use in 2023.

Comment MCC: The importance of the Chinese market for PPG is highlighted by the fact that this is the second largest global R&D center for PPG. Another potential trend indicator is that it will support not only China but the whole APAC region.

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Jan 02, 2023: Clariant will expand its Care Chemicals facility in Daya Bay, Huizhou, China, by investing CHF 80 million in capacity increases for existing products and introducing new products.

Comment MCC: According to the company, the site will also become a new global hub for Clariant's healthcare business support, speeding up the supply of high-quality ingredients for life-changing medicines. Increasingly, Chinese sites thus take up global roles in the network of multinational chemical companies.

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Jan 01, 2023: China is Saudi Arabia's largest buyer of chemicals (it consumes 25% of Saudi output) and oil (27% of total production).

Comment MCC: Indeed, trade between the two countries is almost exclusively in these goods - in 2021, oil, plastics, and other chemical goods accounted for 95 percent of the $87 billion in bilateral commerce

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Dec 31, 2022: Saudi Basic Industries Corp. has signed a memorandum of understanding with energy giant Saudi Aramco and Sinopec, to assess the economic and technical feasibility of developing an integrated petrochemical complex with an existing refinery in Yanbu.

Comment MCC: According to a Senior VP of Aramco, "These projects represent an opportunity to contribute to a modern, efficient and integrated downstream sector in both China and Saudi Arabia", something both countries should be highly interested in.

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Dec 30, 2022: An organization named "World Brand Lab" published a ranking of the 2022 top 500 world brands. The list includes PetroChina (rank 124), Sinopec (135), Sinochem (309), and Hengli Group (369)

Comment MCC: It seems to me that such lists are primarily issued to promote the companies preparing the lists. Otherwise, it is difficult to understand how another organization (Brandirectory) gets completely different results, with PetroChina at rank 55 and Sinopec at 70 while Sinochem and Hengli are not even among the top 500.

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Dec 29, 2022: The South Korean government has issued a ruling on the dumping of polyamide film from China, Thailand and Indonesia. India launched an anti-dumping review on aniline from China.

Comment MCC: While deplorable, as long as China uses similar measures, the country should not complain too loudly.

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Dec 28, 2022: An article in the SCMP by a Bejing-based lawyer states that manufacturing potential in the United States is derailed by the tariffs on imports from China. Specifically, the author writes that "A client looking into a billion-dollar chemical manufacturing investment in the US canceled the plan after the tariffs were imposed, because the cost of setting up the plant using construction components from China became prohibitive."

Comment MCC: The law of unintended consequences strikes.

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Dec 27, 2022: Hempel plans to invest 170 million USD in a coatings plant in Jiangsu with a capacity of 105 kta marine coatings, 75 kta industrial coatings and 20 kta of water-based coatings.

Comment MCC: While Jiangsu province has become substantially more restrictive for chemical investments in the past few years, larger investments in upmarket chemical products still seem to be possible.

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Dec 26, 2022: Sika will open a new plant in Chongqing to produce liquid film and mortar. According to the company, this will strengthen its "position in this booming market".

Comment MCC: Given the recent problems of China's property market and thus the construction industry, this view is remarkably optimistic.

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Dec 25, 2022: Shandong Haili Chemical was fined for 2 violations of environmental laws and regulations. One fine of RMB 512,000 was for starting construction without approval of the environmental impact report of the caprolactam waste liquid incinerator technical transformation. The other of RMB 465,625 was for failing to store hazardous waste in accordance with national environmental protection standards.

Comment MCC: The total fine of slightly below one million RMB still seems very low given that with more than 3000 employees, this still is well below 1/10,000 of the companies' annual revenue. Furthermore, it seems strange that the fine for starting construction without approval is higher than for properly storing hazardous waste. Finally, the fine does not seem to take into account that Haili is a repeat offender, having in the last two years been fined 887,500 yuan for emitting air pollutants by evading supervision, 775,000 yuan for failing to store hazardous waste in accordance with national environmental protection standards and 685,000 yuan for discharging air pollutants in excess of the air pollutant emission standards.

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Dec 24, 2022: Xinlianxin Chemical New Material Project plans to invest 10.36 billion yuan in the production of high-end fertilizers, high-end new materials organic amines, caprolactam, nylon 6, nylon 66, furan resin, phenolic resin, and electronic special gas, electronic grade ultra-pure ammonia, etc.

Comment MCC: This illustrates that Chinese chemical companies are still mainly interested in production synergies rather than in having a portfolio focused on specific products or industries.

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Dec 23, 2022: In the first 10 months of 2022, the profits of the chemical raw material and product manufacturing industry fell by 3.6%.

Comment MCC: This is similar to the drop for all industries (-3.0%).

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Dec 22, 2022: The energy crisis affecting Europe's chemical industry so far has resulted in a trade deficit in chemicals of €5.6 billion for the first half of 2022, it said in the October paper - for the first time ever, the EU now imports more chemicals than it exports, both in volume and value.

Comment MCC: This may further shift market share from the EU to China, which according to CEFIC already has a market share of 44.6% compared to 14.4% for the EU.

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Dec 21, 2022: According to the Washington Post, China uses only about 54% of its oil consumption for transportation while using 42% as a petrochemical raw material, a much higher share than in the US and the EU.

Comment MCC: The article states that this may mean any covid recovery in China will have a relatively low impact on Chinese oil consumption, as petrochemicals are more exposed to exports and thus depend on demand from outside of China.

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Dec 20, 2022: A paper in the Journal of Cleaner Production predicts that depending on the scenario, carbon dioxide emission from Chinese production of coal chemicals will increase rapidly between 2020 and 2030 and that the "coal-to-olefins industry will take the place of coal-to-ammonia and turn to be the largest one in 2020 and 2030 if no CO2 capture, utilization, and storage (CCUS) technologies are adopted". It also states that it is "probable that the contribution from coal-to-methanol will also play an important role for CO2 emission due to its rapid development".

Comment MCC: This is a paper by Shanghai-based authors, some of the Chinese Academy of Sciences - in effect, its statements seem to question the rapid expansion of coal chemicals in China, as they contradict China's proclaimed efforts to reduce carbon dioxide emissions. The paper can be found here:
https://www.sciencedirect.com/science/article/abs/pii/S0959652618333894?via%3Dihub

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Dec 19, 2022: Wanhua Chemical and Longi Green Energy, a large Chinese photovoltaic company, signed a cooperation agreement and intend to form a JV active in fields such as photovoltaics, new materials and hydrogen energy.

Comment MCC: Wanhua seems well aware of being left behind as a producer of chemicals that more and more turn into commodities, and thus tries to integrate itself into the fastest-growing segments via relevant materials such as olefin elastomer (POE), modified polycarbonate, polyurethane, battery positive electrode and lithium battery raw materials

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Dec 18, 2022: Ineos and Sinopec signed a JV agreement for a new petrochemicals complex in Tianjin, China. Ineos will acquire a 50% share in the Tianjin Nangang Ethylene Project, which is currently under construction by SINOPEC and is expected to be on-stream by the end of 2023. The cracker complex will include a 1.2 mtpa cracker, and 12 other derivative plants, including a 300ktpa ABS plant and a 500ktpa HDPE plant using INEOS technology as announced in July.

Comment MCC: Apparently, these JVs work well for both parties - it is already the fourth between the two.

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Dec 17, 2022: China and Saudi Arabia signed a "Comprehensive Strategic Partnership Agreement between the People's Republic of China and the Kingdom of Saudi Arabia.

Comment MCC: This may mean even more intensive cooperation in petrochemical projects, of which several large-scale ones have already been established.

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Dec 16, 2022: According to data from the IEA, China has both the highest stake in some technologies with high carbon dioxide emissions and in technologies that can help reduce these emissions.

Comment MCC: For example, China has about 70% of the global coal-power capacity that is younger than 20 years and about 45% of global heavy industry energy demand - both factors making the reduction of emissions more difficult. On the other hand, the country also has about 80% of global solar PV manufacturing capacity and more than 60% of global road transport electricity use - both factors which could facilitate a shift towards emission reduction.

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Dec 15, 2022: Zhongjing Petrochemical Group's annual output of 1.2 million tons of multi-component copolymerized polypropylene plant was officially put into operation in Fuzhou Jiangyin Zhongjing Petrochemical Science and Technology Park.

Comment MCC: According to the company, this is the largest copolymerized polypropylene plant in the world, again highlighting the continuing shift of the production of commodity chemicals to China.

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Dec 14, 2022: Saudi Arabia's Aramco and Shandong Energy group signed an MOU to cooperate in refining petrochemical products in China.

Comment MCC: Such cooperation seems sensible given Aramco's access to crude and China's big downstream market for petrochemical products.

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Dec 13, 2022: A chart published by the IEA shows employment changes in China as a result of carbon emission reduction pledges. The biggest losses are in the coal industry (about 1.5 to 2 million jobs lost to 2030 depending on the scenario) while major gains in the range of 1 million each are achieved in the segments "Non-fossil electricity and grids" and "Low-emissions buildings retrofit" as well as smaller gains in bioenergy, battery manufacturing, and CCUS/hydrogen.

Comment MCC: Some of these gains could be beneficial for the chemical industry, e.g., in buildings retrofit (PU demand) or in battery production.

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Dec 12, 2022: Saudi Aramco recently launched a non-metallic excellence and innovation center for building materials in Beijing. The center will focus on the research and development of non-metallic materials, including petroleum-based polymers that are more durable, have lower life cycle costs than conventional materials, and have the potential to reduce the carbon footprint of the construction industry.

Comment MCC: Statements from an Aramco executive indicate a slight fear of being left behind in a world with reduced or zero oil consumption, as indicated in the press release: "The Saudi executive said that oil and gas will continue to be critical to the world economy for decades to come. Therefore, new energy sources need to operate in parallel with hydrocarbons for a long time, and reducing the industry's emissions must be a priority for climate goals to be met, he noted."

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Dec 11, 2022: BASF introduced a biomass balance automotive OEM coating in China, the first such introduction to Asia after its launch in Europe in May. The coating is claimed to have a carbon footprint that is about 20% reduced without an impact on performance or formulation.

Comment MCC: It is interesting to see this introduction to China, as the demand for environmentally friendly products from Chinese car buyers currently is likely to be quite limited.

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Dec 10, 2022: The National Development and Reform Commission published a catalog of industries with a substantial share of production capacity exceeding the benchmark level of energy consumption. The list includes p-xylene, calcium carbide, caustic soda, ethylene glycol, ammonium phosphate, and yellow phosphorus.

Comment MCC: Energy laggards in these industries may see closures or forced upgrading.

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Dec 09, 2022: The operating performance of China's carbon black industry this year has declined significantly. The profit in the first three quarters was down 81% year-on-year.

Comment MCC: This is despite an increase in output value of 21% and a sales revenue increase of 20%. Factors cited for this include high oil prices, weakened demand, and repeated epidemics.

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Dec 08, 2022: The Ministry of Commerce has decided to initiate an anti-dumping investigation on imports of polycarbonate originating in Taiwan.

Comment MCC: According to a source reporting on this, "If the anti-dumping of polycarbonate in Taiwan can be implemented smoothly, the pressure of overcapacity of polycarbonate in China will be alleviated to a certain extent". To me, this clearly illustrates the spurious rationale behind such anti-dumping activities. But I guess as long as every country does this, none can complain too loudly.

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Dec 07, 2022: Indian analysts are optimistic about the prospects of Indian specialty chemicals producers: "We remain positive on the specialty chemicals sector owing to strong growth visibility on the back of new capacities along with the thrust by global chemicals majors de-risking their supply chains away from China - and now Europe" (Rohan Gupta, analyst, Nuvama Wealth Management)

Comment MCC: Indeed, covid-induced supply chain disruptions in China may want Western companies to source more of their chemicals from India rather than from China.

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Dec 06, 2022: According to China's agriculture ministry, the country aims to reduce the use of pesticides for cultivation of fruit and vegetables by 10% and for rice, wheat and corn by 5% within the next 3 years.

Comment MCC: While environmentally sensible, these measures may hurt chemical companies unless they can successfully shift demand towards more effective but pricier pesticides.

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Dec 05, 2022: Hainan Huasheng has officially started its 2×260 kta non-phosgene polycarbonate (phase II) project.

Comment MCC: This will further increase overcapacity in this area, continuing the commoditization of polycarbonate and increasing the difficulties for multinationals such as Covestro to stay profitable in this area. In addition, the phosgene production process may increasingly be viewed critically as non-phosgene alternatives are shown to be viable.

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Dec 04, 2022: Domestic PBAT production capacity is 873 kta with another 1660 kta to be added soon. By 2025, the production capacity will be about 25,000 kta.

Comment MCC: Given that the global production of PBAT was only around 500 kta in 2021, this represents a vast overcapacity that is likely to increase further. Tulip mania, railroad bubble, cryptocurrencies anyone?

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Dec 03, 2022: Shandong province publicly exposed 11 typical cases of safety production violations including the case of a petrochemical company in Longkou engaging in port operations without obtaining a port operation license according to law

Comment MCC: It seems this public exposure of companies violating safety regulations is still necessary to keep companies in line.

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Dec 02, 2022: According to Greenpeace, the Chinese fashion brand SHEIN has a business model based on hazardous chemicals and environmental destruction.

Comment MCC: Greenpeace tested 47 SHEIN products and found that 15% of them contained hazardous chemicals above EU regulatory limits. According to Greenpeace, this "SHEIN's careless attitude towards environmental and human health risks associated with the use of hazardous chemicals, in pursuit of profit."

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Dec 01, 2022: Asymchem Labs, a Chinese CDMO, plans to build a 4-5 billion RMB manufacturing site outside of Shanghai.

Comment MCC: The reported focus is on R&D as well as on production of chemicals. The company apparently benefits from the increased demand following the corona pandemic.

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Nov 30, 2022: Dongjing Bio-Environmental Protection Technology started up a BDO project with an annual output of 280 kt and a purity of 99.9%.

Comment MCC: According to the company, this is the world's largest integrated BDO production base - an example of the biggest and most modern chemical production now frequently being located in China.

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Nov 29, 2022: SABIC is collaborating with Jinming Machinery (Guangdong, China) and Bolsas de los Altos (Mexico) to focus on polyolefin based innovative applications in flexible packaging. The collaborative efforts will feature installation of Jinming's multilayer coextrusion machinery at Bolsas' Mexico facility using SABIC materials.

Comment MCC: It is interesting to see a cooperation between these three countries and an indication of China's growing sophistication in providing machinery.

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Nov 28, 2022: A fire at a factory at Kaixinda Trading Co Ltd in Anyang, Henan killed 38 people. It was caused by electric welding that flouted regulations.

Comment MCC: While some sources mention a connection to chemicals (e.g., NYT: "Kaixinda Trading sells, among other items, clothing, furniture, chemical products, and industrial equipment"), others do not mention this. Given the cause of the fire (electric welding) and the details provided by the NYT ("the fire had been fueled by the burning of plastics, cloths, furniture, and medications, among others"), it probably was not a chemical accident in a narrow sense.

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Nov 27, 2022: The surface treatment BU of BASF's Coatings division inaugurated its state-of-the-art surface treatment production site in Pinghu City, Zhejiang Province, China

Comment MCC: In line with BASF's pivot toward China, it is its largest surface treatment site globally.

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Nov 26, 2022: According to a 2022 paper in the Int. J. Environ. Res. Public Health, the annual number of hazardous chemicals road transportation accidents in China has not substantially changed between 2013 and 2020, a period with about 2600 such accidents. Mortality per accident is also relatively stable after 2013, reaching about 0.1 deaths on average per accident.

Comment MCC: Presumably this is a success of sorts, as the number of such transports has very likely increased - still, 250 accidents such as occurring in 2020 is still a high number.

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Nov 25, 2022: Among the 2657 accidents reported in China between 2012 and 2020 that involved the transportation of hazardous chemicals, 63% were related to flammable liquids, 14% to gases, 14% to corrosive substances, and 4% to toxic and infectious substances.

Comment MCC: This is more a reflection of the relative importance of these substances than the level of danger they pose in transportation.

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Nov 24, 2022: According to the National Bureau of Statistics, main business revenue of the major enterprises in China's chemical industry increased by 8.2% yoy in the period from January to September 2022

Comment MCC: On the other hand, industrial added value only rose by 3.9% and profit decreased by 2.3%, painting a less rosy picture.

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Nov 23, 2022: China controls about 60% of the world's capacity for processing raw lithium products into battery-grade chemicals

Comment MCC: This has led some countries to be concerned about their own supplies, and may thus lead to a longer-term shift away from China.

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Nov 22, 2022: The Chinese market for hazardous chemicals and dangerous products logistics industry exceeds 2 trillion yuan. There were 13,000 hazardous chemical road transport enterprises in September 2020, employing 1.62 million workers and operating 575,000 transport vehicles nationwide. The transport volume is approximately 1.2 billion tons, accounting for 70% of the total transport volume (source: Liu, Y.H. Operation report of China's hazardous chemicals logistics industry in 2021. In Proceedings of the China Chemical Logistics Industry Annual Meeting, Wuhu, China, 8 December 2021)

Comment MCC: The size and fragmentation of the industry explain why accidents are relatively common (2657 were reported between 2012 and 2020).

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Nov 21, 2022: The first phase of the 200 t project of Luxi Group's 1.2 million-ton bisphenol A project was started

Comment MCC: This will allow backward integration of the PC production, and thus will put further price pressure on the PC market.

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Nov 20, 2022: Wanhua's operating income in the third quarter increased by 4% year-on-year while net profit decreased by 46%

Comment MCC: Factors cited for the decrease in profit and the low growth include the covid lockdowns, high energy prices, and high inflation in some Western countries.

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Nov 19, 2022: The Ministry of Industry and Information Technology announced the National Recommended Catalogue of Energy-Saving Technology and Equipment in the Field of Industry and Information Technology

Comment MCC: This includes 12 energy-saving and efficiency-enhancing technologies in the petrochemical and chemical industry such as semi-water-dihydrate wet phosphoric acid technology

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Nov 18, 2022: The NDRC clarified that raw materials not used as fuel or power will not be included in the calculation of total energy consumption.

Comment MCC: Given that most of these materials will eventually end up as carbon dioxide anyway, this feels a bit dishonest to me, but it seems the authorities deem it necessary to protect certain segments such as coal chemistry.

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Nov 17, 2022: Canada ordered three Chinese companies to divest their investments in Canadian lithium miners, citing national security concerns

Comment MCC: Given such bans, the increasing Chinese focus on self-sufficiency is hardly surprising.

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Nov 16, 2022: Chinese acrylonitrile capacity grew at a CAGR of 11.4% from 2017 to 2022.

Comment MCC: As domestic consumption grew only by a CAGR of 4-5% during the same period, prices declined despite growing exports.

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Nov 15, 2022: Wanhua Chemical launched a new product, polyamide 12 (nylon 12)

Comment MCC: This marks a further step of Wanhua into higher-end chemicals and is aligned with China's focus on specific high-end engineering plastics, as outlined in relevant government plans.

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Nov 14, 2022: A 500 kt methanol-to-ethanol project of Shaanxi Yanchang Petroleum Yulin Kaiyue Coal Chemical passed the filing review of the Yulin Municipal Administrative Approval Service Bureau

Comment MCC: This represents an extension of the value chain building on the existing 600 kt coal-to-methanol project (to be extended to 1400 kt) and thus is part of the long-desired shift of coal chemicals into higher-value products.

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Nov 13, 2022: The operating income of Wuxi Acoli, a supplier of polyether amines, in the first three quarters of 2022 decreased by 10% while profit increased by 52%.

Comment MCC: According to the company, the revenue loss is due to logistics issues during lockdowns while the profit increase is due to lower raw materials prices and higher margins.

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Nov 12, 2022: From January to August 2022, the total output of the paint industry was down by 4.3% year-on-year while revenue was down by 2.0% year-on-year and profit was down by 26%.

Comment MCC: The largest declines were in areas most strongly affected by lockdowns, e.g., Shanghai.

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Nov 11, 2022: Covestro announced that it will suspend investment in a world-scale MDI factory construction project in response to economic uncertainty, energy crisis and global economic weakness

Comment MCC: The U.S. and China were potential locations for the new plant

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Nov 10, 2022: ThyssenKrupp and Binhua Group will cooperate in the Binzhou Beihai Polyether and Polyurethane New Material Industrial Park, focusing on extending the PO-PPG-PU integrated industrial chain

Comment MCC: Despite Germany being criticized by other Western companies for cooperating too closely with China, individual German businesses still seem to regard such cooperation as beneficial.

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Nov 09, 2022: DuPont terminated its $5.2 billion buyout of Rogers Corp due to a failure to clear Chinese regulatory hurdles (Reuters)

Comment MCC: According to DuPont, the company had received all approvals except from China. On the other hand, some sources speculate that DuPont may have been happy to get out of the deal in the current difficult market conditions. In any case, a Chinese source reporting on the termination did not provide the rationale of the lacking Chinese approval.

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Nov 08, 2022: From 2017 to 2021, Chinese supply and demand of pure benzene had an average annual growth rate of 8.7% in production, 4.3% in imports, and 10.5% in downstream consumption within five years.

Comment MCC: Consumption increased particularly in 2021 (by 19%) driven mainly by the production of styrene, which accounts for about 45% of Chinese benzene consumption.

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Nov 07, 2022: In China's coatings market, architectural coatings account for 52% of the total, about 10% higher than the global share.

Comment MCC: This highlights the importance of the real estate segment to the Chinese economy, and the risks of its current wobbly state, for the producers of chemicals.

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Nov 06, 2022: The National Development and Reform Commission officially released the newest Catalogue of Industries Encouraged for Foreign Investment

Comment MCC: Chemical materials covered include 50,000 tons/year or more of butadiene adiponitrile, hexamethylene diamine, high carbon alpha olefin copolymerized metallocene polyethylene, COC/COP cyclic olefin polymer, polyphenylene sulfide, polyether ether ketone, polysulfone, polyethersulfone, polyarylate, polyphenylene ether, and special polyamide

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Nov 05, 2022: Wanhua started a recycling factory for polyurethane hard foam recycling with a capacity of 60 tons per year

Comment MCC: Obviously, this is a very small capacity compared to the PU produced by Wanhua, but it is a start.

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Nov 04, 2022: Chinese electric vehicle maker Nio has suspended production due to COVID-19 ( Reuters)

Comment MCC: One of many examples of how China's zero-covid policy reduces demand for chemicals.

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Nov 03, 2022: Shandong province has given guidelines clarifying the conditions under which chemical parks will be allowed to extend their area.

Comment MCC: Key aspects include management quality, the relative importance of the chemical industry in the park, operating income per area, and the level of utilization of the current area. Overall, this should benefit well-run parks and allow the chemical industry to develop further

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Nov 02, 2022: Evonik's first lithium-ion battery center in the world will open in Shanghai on Nov 4.

Comment MCC: According to Evonik, more than 90% of the world's lithium-ion battery manufacturers are based in Asia, primarily in China. Thus it makes sense to focus R&D on materials for this segment here.

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Nov 01, 2022: The PMI for China's manufacturing sector was 49.2 in October, indicating an economic contraction and down from 50.1 in September.

Comment MCC: ... with obvious implications for the demand for chemical products.

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Oct 31, 2022: China's self-sufficiency rate of domestic para-aramid fiber production capacity is only about 20%, and it is heavily dependent on imports.

Comment MCC: As a consequence, Sinochem is expanding its production capacity for this material - presumably as it is seen as strategic due to its use in industries such as aviation.

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Oct 30, 2022: Chinese capacity utilization for the manufacturing of chemical raw materials and chemical products was 75.3% in the third quarter of 2022.

Comment MCC: This is likely to be a decline of between 1-2% compared to one year earlier, as the overall manufacturing capacity utilization (which includes chemicals) was down by 1.4%.

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Oct 29, 2022: BASF will reduce annual costs by 500 million euros in Europe up to 2024, or about 10%, including job cuts while maintaining its investment in China.

Comment MCC: The CEO has emphasized that BASF's China business is very profitable, and has warned against China-bashing: "We have a very, very profitable China business. Half of the world market is there. What kind of a risk does a company run into if it renounces half of the market?"

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Oct 28, 2022: Trading house Mercuria Energy Group has bought back the minority stake that Chinese state-owned ChemChina held in the Geneva-based company since 2016 (Reuters)

Comment MCC: Originally, ChemChina intended to increase its stake in Mercuria, but these plans got scrapped after the merger with Sinochem.

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Oct 27, 2022: The UK government denied permission for work to continue at two major research centers involving Imperial College London and Chinese companies with links to China's defense industry (chemistryworld)

Comment MCC: Indeed, given the increasingly critical attitude in Europe toward China, any such collaborations will get harder.

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Oct 26, 2022: In the first half year of 2022, China's production of chemical pesticides was 1.297 million tons, a year-on-year decrease of 0.3% (agropages)

Comment MCC: This is in line with China's declared target to not increase the level of pesticide use in China (though of course production may also be exported)

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Oct 25, 2022: Xi Jinping secured a third term as general secretary of the Communist Party

Comment MCC: Just a quick reminder that he actually studied chemical engineering at Tsinghua University.

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Oct 24, 2022: Chinese production of silicon may soon start to exceed demand. Currently, at least 13 silicon companies have expansion plans for the next 2-3 years, with a combined project scale of 2.1 million tons compared to the current production of 0.8 million tons and 1.2 million tons of capacity in 2022. By 2025, global demand is expected to reach 1.9 million tons while Chinese capacity is expected to be at least 5 million tons.

Comment MCC: It seems China's chemical industry is still prone to its boom and bust cycles. With China currently accounting for 85% of global silicon production, these cycles also matter on a global level.

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Oct 23, 2022: Chinese refiner Zhejiang Petrochemical Corp has been awarded a 10 million ton additional crude oil import quota for 2022 (Reuters)

Comment MCC: With this additional amount, the company can fully utilize its refining capacity. While the government may to some extent restrict private refiners, at the moment the support of a weak economy seems to be more important.

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Oct 22, 2022: According to CGTN, Chinese researchers have invented an AI system that facilitates chemical research and experiments. The system can perform the essential steps for chemical research including data collection, processing, analysis and visualization.

Comment MCC: Without working with such a system, it is hard to judge whether this really is a breakthrough or basically just a gimmick.

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Oct 21, 2022: China's demand share of a portfolio of common polymers rose from 6% in 1990 to 42% in 2021 (ICIS)

Comment MCC: Interestingly, 2021 is the only year in which the share dropped, though only by one percent (from 43% to 42%)

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Oct 20, 2022: China's demand share of a portfolio of common polymers rose from 6% in 1990 to 42% in 2021 (ICIS)

Comment MCC: Interestingly, 2021 is the only year in which the share dropped, though only by one percent (from 43% to 42%)

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Oct 19, 2022: Sinopec has successfully produced its first batch of large tow carbon fiber in Shanghai. It claims this is the first time in the country and only the fourth time in the world.

Comment MCC: The problem of China's chemical industry in many areas - including carbon fiber - is overcapacity at the low end of the quality spectrum but a lack of high-end grades. Sinopec's activities reflect the ambition to overcome this issue.

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Oct 18, 2022: According to ICIS, China contributed 33% of global demand growth of a portfolio of basic polymers between 1990 to 2001 but 63% between 2002 and 2021.

Comment MCC: Seeing these figures, the often-quoted forecast that half of the global chemical growth to 2030 will come from China sounds credible.

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Oct 17, 2022: Linde has started up a new air separation unit to supply gaseous oxygen and nitrogen to Wanhua

Comment MCC: This is the fifth plant on the site - all are built, owned and operated by Linde

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Oct 16, 2022: In 2021, China was the largest global producer of chemical fibers accounting for 73% followed by India with 7%.

Comment MCC: This figure highlights the high share of China's chemical industry for some key chemical products, and will be hard to reduce given the new and large plants located in China.

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Oct 15, 2022: Shanghai plans to establish a material industry cluster with a focus on high-end membrane materials, high-performance composite materials, and non-silicon-based core materials.

Comment MCC: This is part of a longer-term shift - Shanghai is no longer interested in production of chemicals but rather in functions such as administration, R&D and marketing, particularly in innovative areas of the chemical industry.

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Oct 14, 2022: BASF will invest in a new 80 kt neopentyl glycol plant at its Zhanjiang integrated site in China.

Comment MCC: The rationale given is the usual one heard for foreign chemical investment in China these days - "the investment in the neopentyl glycol plant at the Zhanjiang integrated base will allow BASF to support the growing needs of customers in Asia".

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Oct 13, 2022: Chinese electric-vehicle battery maker Gotion High-Tech Co. Ltd. will invest $2.36 billion to build a battery material plant in Michigan

Comment MCC: Michigan is a center of the US auto industry, and building a plant there may strengthen the position of Chinese battery producers with regard to trade conflicts.

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Oct 12, 2022: Johnson Matthey started the recycling of fuel cells recycling at Zhangjiagang, specifically the platinum group metal content from membrane electrode assemblies from Unilia

Comment MCC: Despite the current low importance of this recycling, it is important for companies to establish a position in this segment, which is likely to massively increase in importance.

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Oct 11, 2022: The US was the biggest export destination for chemicals in 2020 followed by India, South Korea, and Japan (Statista).

Comment MCC: European countries (Germany, the Netherlands) are only in positions 6 and 7 while the other countries in the top 10 are mostly in Asia, except for Brazil.

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Oct 10, 2022: Arkema announced the successful start-up of the production facility for its fluorinated specialty 1233zd at its partner Aofan in China.

Comment MCC: Zibo Aofan Chemical is a smallish Chinese chemical company specializing in fluorine refrigerants and foaming agents. Possibly, letting Aofan produce the material for Arkema reduces costs or reduces the time for the setup of production.

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Oct 09, 2022: According to a report just published, the market for IoT in the chemical industry is expected to grow at a CAGR of 8.5% between 2022 and 2028.

Comment MCC: Growth is forecast to be particularly driven by China.

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Oct 08, 2022: CALB, China's third-largest lithium battery manufacturer after CATL and BYD with a market share of about 6% had a relatively weak IPO on the HK stock market.

Comment MCC: This is probably more a consequence of the general downturn in global stock markets than investors thinking that the segment no longer has huge growth potential.

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Oct 07, 2022: Shandong Province has the largest total number of petrochemical projects followed by Zhejiang Province and Guangdong Province, though Zhejiang Province is the largest by amount of investment.

Comment MCC: The chemical industry in China is relatively concentrated in 6 provinces, Liaoning, Shandong, Jiangsu, Zhejiang, Fujian and Guangdong. These six provinces account for 80% of investment volume of current and planned projects.

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Oct 06, 2022: China has substantially increased its export of solar panels to Europe, already exceeding the total exports of 2021 in the first seven months of the year.

Comment MCC: China is the largest producer of solar panels and ships about 55% of its total exports to Europe. As a consequence of Europe's energy crisis, the EU plans to more than double its solar capacity by 2025

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Oct 05, 2022: China will extend the 10% tax exemption on purchases of new-energy vehicles (NEVs) until the end of 2023 to support development of the NEV market

Comment MCC: This support has contributed strongly to making China the biggest market for electric vehicles with strong growth of about 74% in September 2022 compared to September 2021.

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Oct 04, 2022: Shandong Yike is planning to build a 450 kt ABS plant.

Comment MCC: While this plant is not extremely large compared to global annual demand of about 11,380 kt, it is substantial compared to South Korean exports of ABS to China (499 kt in 2020).

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Oct 03, 2022: Several government departments issued an action plan for the protection of the Yangtze river.

Comment MCC: A core part of the plan is the prohibition to transfer backward chemical production capacity across regions - if applied, this would mean that affected companies cannot just move their old plants to provinces with less strict regulations.

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Oct 02, 2022: In 2021, Southeast Asia accounted for more than 48% of China's polypropylene exports.

Comment MCC: Primarily, this is PP exported to Vietnam (34% of total Chinese PP exports).

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Oct 01, 2022: PVC demand in China is under pressure as China's construction sector is declining.

Comment MCC: The real estate segment accounts for more than 60% of China's PVC demand - any weakening thus seriously affects PVC demand.

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Sep 30, 2022: China's operating rate of ethylene glycol production is currently about 58%.

Comment MCC: This is a considerable decline from the 74% rate in 2019, though, in 2020, the operating rate was even lower at about 56%.

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Sep 29, 2022: The number of calcium carbide producers in China has dropped by about half between 2015 and 2021, but there still are 120 domestic producers, indicating a highly fragmented market

Comment MCC: Calcium carbide demand is under pressure as the production of PVC via ethylene is more economic. Consequently, the share of calcium carbide-based PVC has decreased from 83% in 2014 to 77% in 2022, with corresponding gains for ethylene-based PVC.

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Sep 28, 2022: The Ministry of Industry and Information Technology has announced 2025 goals for the energy electronics industry including an annual output value of 3 trillion yuan

Comment MCC: This segment includes several areas which strongly rely on chemical materials, e.g., solar photovoltaics and energy storage batteries. The chemical industry could thus profit from public support for these goals.

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Sep 27, 2022: BASF announced that its multifunctional fuel additive production unit has been put into operation in Shanghai to meet the growing demand for fuel additives in the Asian market

Comment MCC: Increasingly, even smaller-scale products that in the past were partly imported are being localized in order to secure supply chains.

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Sep 26, 2022: Goldman Sachs has cut its 2023 growth forecast for China to 4.5% while forecasting 3.0% for 2022.

Comment MCC: At the basis of this forecast is the assumption that China will keep its strict anti-COVID measures for at least the first quarter of 2023. These have a substantial effect on the economy - for example, Shanghai's economy shrank by 13.7% in Q2 2022 due to the lockdown of the city.

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Sep 25, 2022: July 2022 was the first month in which Chinese caprolactam exports were larger than imports. In 2021, exports were still far below imports.

Comment MCC: This is partly the result of differences in energy costs, as these have risen far more in Europe than in China. Of course, added production capacity for caprolactam in China is also an important factor.

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Sep 24, 2022: A coal chemical project, the Yulin Chemical Project, is the largest coal chemical project under construction in the world, with a planned total investment of about 125 billion yuan and an annual conversion of about 24 million tons of coal.

Comment MCC: Constructing the largest coal chemical project in the world while at the same time aiming to reduce carbon dioxide emissions seems like a contradiction to me.

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Sep 23, 2022: Wuxi Akeli Technology canceled a project with an annual output of 20 kt of polyetheramine and an annual output of 30 kt of optical materials (cyclic olefin monomers and polymers)" to be built in Taixing Economic Development Zone.

Comment MCC: Reasons given for the cancelation include the epidemic situation, the concentration of production bases in Jiangsu, the adjustment of downstream customers of major products, and other factors. My personal guess is that the main factor is that Jiangsu province is less and less keen on chemical production.

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Sep 22, 2022: The German Chemical Industry Association (VCI) forecasts a decline of 8.5% of German chemical production in 2022.

Comment MCC: Reasons indicated are supply bottlenecks (particularly for natural gas) and sharply rising input prices - factors that should affect Chinese companies much less, increasing their relative competitiveness.

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Sep 21, 2022: According to a senior BASF China employee, China is the second biggest market for BASF after the US, contributing about 12 billion EUR in sales.

Comment MCC: Even more importantly, the company states that over the next decade, 60% of the growth in global chemical demand will come from China.

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Sep 20, 2022: The acquisition of Snapdragon Chemistry, a US drug services firm specializing in flow chemistry technology, by Asymchem, a pharmaceutical research and manufacturing company based in China, will not proceed.

Comment MCC: This is due to a lack of agreement on mitigation terms by the US Treasury's Committee on Foreign Investment in the United States (CFIUS).

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Sep 19, 2022: The chemical industry accounts for 25.6% of the operating income and 27.8% of the profit of Shandong province.

Comment MCC: Indeed, Shandong has the biggest concentration of chemical companies in China and depends strongly on this industry - much more than Jiangsu, which has substantially more alternatives and thus seems to take a stricter approach to the industry.

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Sep 18, 2022: Gulf Resources, a Chinese manufacturer of bromine, crude salt, and specialty chemicals, is building a new production plant, with a planned investment of about 70 million USD.

Comment MCC: This is the replacement of an older plant that needed to be relocated to a chemical park. The company took a write-down of about 17 million USD.

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Sep 17, 2022: BASF has started production of the first chemicals (60 kt of engineering plastic compounds for automotive and electronic applications) at its new site in southern China's Zhanjiang.

Comment MCC: When completed in 2030, this will be the third-largest of BASF globally.

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Sep 16, 2022: According to a Huachuang report, Chinese chemical businesses will increase their competitiveness compared to European companies that suffer from high natural gas prices as a consequence of the Russian-Ukrainian war (Quartz).

Comment MCC: Indeed, companies such as BASF depend heavily on relatively cheap natural gas, a source that is unlikely to be available in the future, while China's chemical companies are largely unaffected.

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Sep 15, 2022: BASF and Ingredi, a China-based supplier of natural actives and solutions for the personal care industry, agreed on a partnership, including a strategic equity investment into Ingredi by BASF.

Comment MCC: BASF's contribution will be in demonstrating how to add these ingredients into personal care formulations and market these products globally to its customers.

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Sep 14, 2022: Shanghai issued policies to support the development of a hydrogen energy industry including supporting leading enterprises, establishing a hydrogen energy trading platform, improving policies, and supporting research.

Comment MCC: Hydrogen is clearly seen as one of the leading coming technologies and supported accordingly.

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Sep 13, 2022: The world's largest photovoltaic film material project officially started construction at the Lianyungang Petrochemical Industrial Base. It will consist of three sets of photovoltaic film material installations, a high-performance engineering plastics installation, and a high-end polyolefin installation.

Comment MCC: The main objective is to lower the current high import rate of photovoltaic film materials (more than 60%), increasing China's self-sufficiency.

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Sep 12, 2022: China's toluene capacity increased by 3.36
million t/a to 20.407 million tons in 2021 while output was 8.58 million tons (CCR).

Comment MCC: A large but not absolutely atypical mismatch in China's chemical industry.

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Sep 11, 2022: An order of the State Council requests to "cancel all unnecessary environmental law enforcement"

Comment MCC: While it remains to be seen what specific consequences this order will have, it seems to indicate a backlash against environmental regulation, possibly against the background of a weakening Chinese economy. One practical consequence is the decline of on-site inspections, which should lead to a decrease in fines and potentially to weaker enforcement of environmental regulation.

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Sep 10, 2022: 1,139 of the 1,176 hazardous chemical production enterprises included in the government relocation and transformation plan have been completed, with a completion rate of 97%. All 1,089 enterprises included in the tasks of the first stage (to 2020) have been completed. 50 of the 87 large and super-large enterprises included in the tasks of the second stage (to 2025) have been completed while the remaining 37 are progressing as planned.

Comment MCC: It seems that overall, the relocation is a success and has not caused massive disruptions to the chemical industry in China.

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Sep 09, 2022: SK Geo Centric and Weixing Chemical will establish a new 40 kta Ethylene Acrylic Acid production facility in China in a 60/40 JV.

Comment MCC: The company already has production plants for this chemical in Europe and the USA - adding capacity in China is the logical step in being a worldwide player.

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Sep 08, 2022: In 2021, China was the third-biggest global exporter of chemicals with a share of 9.6% of total global exports (Statista)

Comment MCC: This may be somewhat surprising given China's much larger share of the global chemical market (about 45%). China's chemical industry produces primarily for domestic consumption, though some of the final goods are subsequently exported. On the other hand, China's share of global chemical exports is increasing - it doubled from 2010 (4.8%) to 2021 and is likely to increase further given that many new chemical plants are being built in China.

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Sep 07, 2022: JinkoSolar will procure 336 kt of primary polysilicon from Xinte Energy Company from January 1, 2023 to December 31, 2030 at a current value of about 90 billion yuan.

Comment MCC: Apparently, this is the largest polysilicon order in history.

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Sep 06, 2022: Sinopec launched China's largest demonstration base for carbon capture, utilization and storage, the "Qilu Petrochemical - Shengli Oilfield million-ton CCUS project".

Comment MCC: China is thus making progress with regard to mastering the CCUS technology - at the same time, highly emission-intense projects such as coal-to-chemicals and coal power generation are continuing, which seems to contradict such efforts.

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Sep 05, 2022: In August 2022, the groundbreaking ceremony of the 500,000-ton/year LDPE plant of the ExxonMobil Huizhou Ethylene Project was held. This is an investment of about 10 billion USD, with the first phase including an output of about 1.5 million tons of different PE types

Comment MCC: This project was planned long before the worsening of US-Chinese relations - it will be interesting to see whether similarly, large projects will still be possible in the future.

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Sep 04, 2022: China National Petroleum Corporation ("PetroChina") issued a statement saying that it took "PetroChina", "PetroChina" and "PetroChina" as its corporate abbreviation and core name.

Comment MCC: Apparently, about 136 enterprises not part of the corporation still have the word "PetroChina" in their names, potentially misleading their business partners about their capabilities and financial stability.

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Sep 03, 2022: Among the top 50 global chemical companies by sales in 2021, the companies with the highest year-on-year sales growth are Syngenta, Wanhua Chemical, and Rongsheng Petrochemical, whose sales in 2021 increased by 122%, 113%, and 90% respectively.

Comment MCC: It is not an accident that all three are either Chinese companies (Wanhua, Rongsheng) or owned by Chinese ones (Syngenta).

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Sep 02, 2022: Wanhua Chemical received the approval to build a 1.2 million tons/year ethylene cracking unit, 250 kt LDPE unit, and 2×200 kt POE unit (along with others) at the Yantai Chemical Industrial Park, an investment of 17.6 billion RMB.

Comment MCC: While Western chemical companies more and more focus on specialty chemicals, Chinese chemical companies such as Wanhua invest in expanding their value chain even into upstream areas that have more or less been abandoned by the leading Western players.

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Sep 01, 2022: In 2022, China's MMA capacity will increase by 56% after an annual CAGR of 14% between 2017 and 2021.

Comment MCC: This will put substantial pressure on the industry to expand exports.

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Aug 31, 2022: Chinese self-sufficiency for isobutylene-isoprene rubber has increased from about 30% in 2017 to about 62% in 2021.

Comment MCC: With some new capacity coming on stream soon, this will potentially result in overcapacity at the lower end of the quality spectrum, as high-end products may still need to be imported.

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Aug 30, 2022: PetroChina, Sinopec, and Sinopec Shanghai Petrochemical will voluntarily delist their American Depositary Shares from the New York Stock Exchange.

Comment MCC: The rationale given is the heavy compliance costs given the small trading volumes of the US listing. Of course, this is also an indication of the ongoing bifurcation of the global economy.

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Aug 29, 2022: The Jiangsu Provincial Department of Ecology and Environment announced 16 typical cases of violations of pollutant discharge permits.

Comment MCC: It is interesting to see that apparently the positive expected effect from naming and shaming offenders is regarded as more important than the potential negative effect on the companies or the image of the responsible authorities.

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Aug 28, 2022: In the first half of the year, the operating income of the petrochemical industry was 8.13 trillion yuan, accounting for 12.4% of the national total industrial income above the designated size, an increase of 1.0 percentage points over the same period of the previous year (11.4%)

Comment MCC: Another indicator of the high importance of the chemical industry in China compared to most other countries.

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Aug 27, 2022: China's carbon black output has increased at a CAGR of 1.1% between 2014 and 2021 while capacity grew at a CAGR of 3.8%.

Comment MCC: This has led to capacity utilization declining from 78% (2014) to 65% (2021), with further announced capacity expansions likely leading to even lower utilization rates in the future. It is also interesting to see that demand for some of the very basic chemical materials such as carbon black do not really grow much faster than in the developed markets (even though producing companies still act as if they do).

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Aug 26, 2022: After Wanhua's current MDI projects in Fujian and Ningbo are put into operation, the total MDI production capacity of Wanhua Chemical will reach 3.65 million tons per year.

Comment MCC: This means that Wanhua will have more than double the MDI capacity of Covestro, the second biggest player, cementing the company's dominance.

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Aug 25, 2022: Covestro started construction of its first physical recycling production line dedicated to the blended production of polycarbonate recycled materials at its integrated base in Shanghai.

Comment MCC: Providing recycled material is now important for many customers, even if the price of that material is above that of virgin resin. 

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Aug 24, 2022: CATL, the world's largest producer of lithium-ion batteries, has announced plans to build Europe's largest battery plant, in Debrecen, Hungary.

Comment MCC: The plant is to supply batteries to European carmakers including BMW and VW, and should substantially increase the demand for the materials going into these batteries in Europe.

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Aug 23, 2022: In August 2022, the Ministry of Ecology and Environment announced 4 typical cases in the field of whistleblowing and rewarding.

Comment MCC: In an example case, Weifang city received reports from the public that a criminal gang planned to illegally dump hazardous waste. I have seen similar waste dumps in Shanghai - if rewards for such whistleblowing help, it is a good thing for the environment, though from my experience the local authorities often are not particularly interested in pursuing such hints.

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Aug 22, 2022: The 2022 list of China's top 2000 industrial enterprises by market value contains 179 chemical and chemical fiber companies while the top 500 include a total of 51 companies in the petroleum, petrochemical and chemical and chemical fiber industries.

Comment MCC: Another indicator of the high importance of the chemical industry in China compared to most other countries.

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Aug 21, 2022: In the first half of the year, the total import and export volume of the petrochemical industry was US$515.72 billion, a year-on-year increase of 28.6%. Among them, the export value was 171.64 billion US dollars, a year-on-year increase of 24.6%; the import value was 344.08 billion US dollars, a year-on-year increase of 30.7%. In the first half of the year, the trade deficit was US$172.45 billion, a year-on-year increase of 37.4%.

Comment MCC: The value increases are primarily due to the high prices as they were accompanied by volume decreases. However, overall China's position as a strong net importer of chemicals remains unchanged.

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Aug 20, 2022: In the first half of 2022, Chinese petrochemical and chemical enterprises above designated size achieved an operating income of 8.13 trillion yuan, a year-on-year increase of 20.9%; a total profit of 752.12 billion yuan, a year-on-year increase of 24%; and a total import and export volume of 515.72 billion US dollars, a year-on-year increase of 28.6%

Comment MCC: While some weakening is expected, the recent past has been very good for China's chemical industry.

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Aug 19, 2022: Power cuts are affecting several chemical companies in Sichuan province.

Comment MCC: For example, Lutianhua expects to reduce its urea production by about 35 kt.

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Aug 18, 2022: As of the end of June 2022, the number of regulated enterprises in the petrochemical industry was 28,500, an increase of 1,823 compared with 26,677 in the same period last year

Comment MCC: This marks the end of a long trend of decreasing numbers, probably due to the rise of new entrants in new fields of the chemical industry.

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Aug 17, 2022: Shenyang Chemical will shut down a 250 kta polyether polyol plant in Shandong due to policy requirements of the local government - the plant is located in a prohibited development zone of Zibo district.

Comment MCC: While this will bring losses, it also offers the chance to replace an aging plant with a newer one with slightly higher capacity (300 kta). Depending on the amount of government support received, this may not be such a bad deal for the company overall.

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Aug 16, 2022: China's apparent EVA consumption in 2021 was about 2.05 million tons, up 10.1% from 2020

Comment MCC: Photovoltaic is by far the biggest application with about 40% of consumption and also the major growth driver (it accounted for only 18% in 2020, according to CCR). Other, more stable applications are foaming (27%) and wire & cable (17%)

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Aug 15, 2022: Chinese production capacity for fuel ethanol - mostly based on fermentation of corn - has increased at a CAGR of 10.8% from 2017 to 2021 while production volume increased by a CAGR of 9.4% and apparent consumption by a CAGR of 10.8%.

Comment MCC: Still, capacity utilization of domestic capacity is only about 63%, hinting at issues such as low profits or even losses.

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Aug 14, 2022: China's new photovoltaic generating capacity is expected to reach 100 GW in 2022 (CCR)

Comment MCC: This is indeed a huge number given that China reached "only" 48 GW in 2020, a record (up to then) 53 GW in 2021 and that total global capacity added in 2022 is likely to be below 200 GW. All this obviously makes China the market to be in if you are a supplier of chemical materials to the industry, such as EVA or silicon.

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Aug 13, 2022: The Shanghai municipal government has released guidelines for achieving peak carbon emissions by 2030 and carbon neutrality by 2060. According to the guidelines, Shanghai will implement a low-carbon action plan in 10 industries, aiming to cut carbon dioxide emissions per unit of GDP by 70% of the 2005 level by 2030

Comment MCC: China generally leaves itself some wiggle room by only committing to emission cuts per unit of GDP, meaning in principle emissions can still increase despite achievement of the emission goals. Still, a 70% cut sounds impressive, though it is probably less impressive if one considers the shift Shanghai has undertaken from being a major location for production of physical goods to one focusing on services.

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Aug 12, 2022: Covestro broke ground on two new Shanghai plants for polyurethane dispersions (PUDs) and elastomers.

Comment MCC: Investment by foreign chemical companies in China is likely to continue, as these new plants target the local rather than export markets.

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Aug 11, 2022: WuXi STA, the pharmaceutical contract services division of WuXi AppTec, has expanded oligonucleotide and peptide manufacturing with a new large-scale facility at its Changzhou, China, complex after announcing the opening of a plant for high-potency active pharmaceutical ingredients at Changzhou in June, and the opening of a continuous manufacturing plant at the site in July.

Comment MCC: These expansions highlight the fast expansion of WuXi AppTec - in 2021, revenue grew 38.5% year-on-year

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Aug 10, 2022: The 2022 Fortune Global 500 list contains 19 petrochemical companies based in Greater China.

Comment MCC: This is a significant share of the 145 companies from the same region in the list. In addition, 7 of these 19 companies are among the top 100 in the list, further emphasizing the importance of the chemical industry for Greater China.

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Aug 09, 2022: China's domestic sales of new-energy vehicles (NEVs) grew by 120% year-on-year to 2.6 million in the first six months of 2022 while exports grew by 113%. Main export destinations are Western Europe (34% of total exports) and SE Asia (16%). However, exports are still relatively small compared to domestic sales, reaching only 14% of domestic sales. Meanwhile, BYD became the second biggest seller of pure EV in 1H2022 after Tesla, overtaking SAIC Motor and VW.

Comment MCC: This again highlights the high importance of China for EV and thus also for providers of materials to the industry.

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Aug 08, 2022: Tianjin will build a "world-class green chemical new material base" in Tianjin Nangang Industrial Zone

Comment MCC: As more and more usual these days for Chinese chemical projects, the inclusion of the word "green" seems not to have any specific meaning. The two biggest projects announced are one by Sinopec for various PE types, one by Tianjin Bohua Nangang New Material which includes the production of PVC, and one by Zhongsha New Material for the production of polycarbonate. None of these - and in particular the PVC production - strike me as particularly green.

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Aug 07, 2022: Henan province forbids hazardous chemical production and construction projects with a one-time fixed asset investment of less than 300 million yuan (excluding land costs) except for projects listed in the National Strategic Emerging Industry Key Products and Services Guidance Catalogue, and chemical projects outside chemical parks.

Comment MCC: It is an interesting and probably sensible regulation to require potentially dangerous chemical projects to have a certain minimum size - it is well aligned with the overall government assumption that larger, fewer companies pose fewer risks than a multitude of small chemical companies. They are easier to control and supervise, too.

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Aug 06, 2022: An explosion in a raw material tank farm of the 300,000-ton/year coal tar hydrotreating unit of Henan Yutian Chemical Co., Ltd. in January 2022 was examined for the causes of the accident.

Comment MCC: The analysis indicates that the direct cause of the accident was improper cleaning of a tank with volatile organic compounds. Indirect causes included the use of temporary staff not familiar with the safety procedures and the regulation regarding checking the licenses of other operators.

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Aug 05, 2022: The construction progress of Huayi Qinzhou's 750,000-ton PDH project is above 90%, and completion is expected for September.

Comment MCC: PDH is one of the areas in which future overcapacities are very likely. Chinese propylene capacity is expected to increase by 17% in 2022, and operating rates are expected to drop considerably due to this increased production capacity. The herd mentality of Chinese chemical companies has not changed.

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Aug 04, 2022: The State Council decided to continue the acquisition tax exemption for new energy vehicles, presumably for another year or longer.

Comment MCC: This exemption was set to end at the end of the year - its continuation will further encourage the production of EVs, something that China promotes both for environmental and economic reasons. It should give a further boost to producers of materials going into EV.

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Aug 03, 2022: Ineos has agreed to buy a 50% interest in Shanghai SECCO Petrochemical from Sinopec, and will partner with Sinopec on projects in acrylonitrile-butadiene-styrene (ABS) and high-density polyethylene. The total deal size is about 7 billion USD.

Comment MCC: Given the massive importance of China in basic organic chemicals and commodity polymers as well as Ineos' focus on this area, these seem sensible steps.

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Aug 02, 2022: Hubei Hongrui New Materials Co., Ltd., a wholly-owned subsidiary of Dongfang Shenghong, will start a new project with an annual output of 1.5 million tons of acetic acid and other special chemicals.

Comment MCC: This is one example of the massive scale of some of the new commodity chemicals plants being built in China. 1.5 million tons is about 9% of the current global annual consumption of 16.7 million tons, and about 7% of global capacity. Or to put it into even more striking terms, it is about 130% of current annual Indian consumption. Very hard for other countries to compete with these new producers as long as they fully exploit their scale advantages.

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Aug 01, 2022: Air Liquide will operate its first biomethane production unit in China by
the end of 2022. It will have a production capacity of 75 GWh per year, producing biogas from
agricultural and livestock waste coming from local farms and purifying it into biomethane. The biomethane will then be used for household consumption and to generate electricity.

Comment MCC: This sounds like an interesting - though smallish - demonstration project on the long road to a more sustainable energy supply.

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Jul 31, 2022: According to the National Energy Administration, China's energy regulator, the share of national energy consumption produced from sources other than fossil fuels grew 0.7 percentage points to 16.6% in 2021 (Caixin). The target is for the proportion of green energy in the national energy mix to rise at an average annual rate of 1% over the next eight years.

Comment MCC: Compared to other countries, this share seems low, and the targets relatively unambitious. Germany currently gets 41% of its energy from non-fossil fuels and targets 100% by 2035, by which date China will probably only reach 25%. Even the USA - hardly a leader in this area - already gets 21% of its energy from non-fossil sources.

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Jul 30, 2022: In 2022, the Ministry of Emergency Management dispatched 8 working groups to inspect 60 districts and cities, 54 chemical parks, and 184 hazardous chemical enterprises. More than 2,700 potential problems were found.
 
Comment MCC: In particular, 19 enterprises were found not to meet safety production conditions and thus had to suspend business at least temporarily - this seems like a high share (10%) of the companies inspected, indicating that there still is a lot of work ahead.

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Jul 29, 2022: According to Sun Lianying, President of the China Coatings Industry Association, from January to May, the total output of coatings nationwide decreased by 2% yoy; total main business income decreased by 1.2% yoy and total profit decreased by 26.2% yoy.

Comment MCC: Four main reasons are indicated for the negative development: the impact of the pandemic, the negative effect of the Ukraine conflict, the weak Chinese property market and the high price of raw materials & supply chain interruptions.

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Jul 28, 2022: India will extend anti-dumping measures on TDI from China, India and South Korea. China will extend anti-dumping measures against acrylic fibers from Japan, South Korea and Turkey.

Comment MCC: Anti-dumping measures are almost always bad, unless you impose them yourself. Then they are justified, obviously.

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Jul 27, 2022: In the first half of 2022, the output of raw coal was up 11% YoY to 2.19 billion tons (CCR)

Comment MCC: I thought my view that China might try to push coal consumption as much as possible until 2030 to make the targeted decline afterward easier was a rather cynical one, but I am not so sure anymore.

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Jul 26, 2022: The 2021 C&EN ranking of top 50 global chemical companies now has 7 mainland Chinese entrants - the expected state-owned petrochemical ones (Sinopec, Petrochina), the MDI-producer-turned-BASF-imitator (Wanhua) as well as four lesser-known companies producing relatively basic petrochemicals and fibers (Hengli Petrochemical, Hengyi Petrochemical, Rongsheng Petrochemical, and Tongkun Group).

Comment MCC: A few observations - China is now the country with the second biggest number of entries (7 compared to 8 for the USA but only 5 for Germany and 6 for Japan), and except for one company (Petrochina), all Chinese companies kept or improved their position in the ranking (two are completely new in the ranking). This indicates the continuous growth in the importance of Chinese players. On the other hand, except for parts of Wanhua, all Chinese players are still firmly in the commodity/volume segment of the chemical industry, relying on massive investments close to the start of the chemical value chain rather than on sophisticated products - a weakness compared to countries such as Japan and Germany.

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Jul 25, 2022: Chinese output of NEVs rose by 111% YoY in 1H 2022 while solar cells rose by 32% and mobile communication base station equipment by 20% (CCR)

Comment MCC: These are all products that require significant chemical input and should therefore drive the sales of relevant chemical companies.

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Jul 24, 2022: The China Chemical Reporter states that "In spite of the coronavirus and more complicated international environment, China's economy, due to factors like policies to stabilize the economy and combat against the Covid-19, rebounded in the first half of 2022, with H1 GDP rising 2.5% YoY ... and Q2 GDP rising 0.4% YoY ..."

Comment MCC: I admire the sunny disposition of the writer of this statement - to call an increase of 0.4% in Q2 a rebound when the official growth target is about 5.5% is indeed a very optimistic view of the situation.

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Jul 23, 2022: According to a recent study published by Deloitte, China was the second biggest market for chemical M&A in 2022. The number of deals in 2021 increased slightly from 2020. Foreign investment accounted for about 14% of the deals.

Comment MCC: According to Deloitte - and confirmed by my own experience - a major driver of domestic M&A is the objective of companies to achieve a greater degree of vertical integration, i.e., the acquisition of suppliers or customers.

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Jul 22, 2022: Hubei province set up 7 basic rules which recognized chemical parks in the province must obey, including having government approval documents, assessments of environmental, risk and other impacts, not being within one km of the Yangtze, having a big enough safety distance from habitation outside the park, and having professional wastewater treatment.

Comment MCC: None of these rules are surprising or very specific to Hubei - I still do not quite see why there is a need for each province to set these rules separately though.

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Jul 21, 2022: China's State Administration for Market Regulation has launched an investigation against chemical fertilizer producers and distributors over suspicions of price gouging

Comment MCC: The watchdog emphasized its focus on monitoring fertilizer prices and punishing acts such as price collusion.

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Jul 20, 2022: On May 11, 2022, the Emergency Management Agency of Jiaxing city published a WeChat post regarding a company that used and produced hazardous chemicals, but did not register them or store them in a separate storage place as required, and which was fined 110,000 yuan (enviliance)

Comment MCC: The fine still seems somewhat low given the potential risks of inappropriate storage and the cost of setting up a dedicated warehouse, leaving some incentive for future lawbreaking. The other interesting aspect is to see how WeChat now completely dominates public communication in China.

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Jul 19, 2020: China's biggest lithium compounds producer Ganfeng Lithium will buy Argentina-focussed Lithea Inc for up to $962 million

Comment MCC: Obviously, Ganfeng aims to secure the key raw material for the production of batteries for EVs and other applications

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Jul 18, 2022: The 1H 2022 results of a number of big Chinese chemical companies are likely to be below those of 1H 2021, for example, Wanhua (profit forecast -3% compared yoy), Shanghai Petrochemical (loss compared to profit before), Sinochem International (profit decrease of about 50% yoy), and Weiyuan (profit decrease of about 65%).

Comment MCC: The obvious reason is the impact of the anti-Covid measures on the economy (not just on the chemical industry) - though companies such as Shanghai Petrochemical also claim other reasons such as oil price increases and weakening demand (which may, in turn, be a consequence of the anti-Covid measures - an SOE may be less willing to openly address this issue). Given that some of the restrictions are still being maintained, the impact on the chemical industry may continue to be felt in 2H 2022.

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Jul 17, 2022: Umicore will build a large-scale fuel cell catalyst plant in Changshu in China

Comment MCC: The rationale is to benefit from China's expected partial shift towards hydrogen-based mobility.

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Jul 16, 2022: Chinese GDP fell by 2.6% in the three months to the end of June from the previous quarter while year-on-year growth in Q2 2022 was 0.4%.

Comment MCC: This seems like an obvious consequence of the lockdown of major cities, particularly Shanghai - the author of this post himself was under lockdown for 78 days during that period.

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Jul 15, 2022: DIC Corporation acquired chemical manufacturing operations in Guangdong covering 40 kt of solvent- and water-based resins and chemicals from Guangdong Tong Tak New Materials

Comment MCC: The existence of an expansion plan to go to 150 kt highlights the good prospects DIC sees for the Chinese market.

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Jul 14, 2022: The Ordos Municipal Government, China's largest coal production base, issued the "14th Five-Year Energy Comprehensive Development Plan for Ordos City", with a total investment of 154.847 billion yuan in 27 hydrogen energy projects.

Comment MCC: It is remarkable that a place as strongly relying on coal as Ordos now also promotes hydrogen energy - though many of these products may just be products in which coal is used to produce hydrogen without avoiding carbon dioxide emissions.

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Jul 13, 2022: According to a recent paper, China's PC industry is at the end stage of the capacity expansion period now, with a year-on-year growth of 21%.

Comment MCC: Indeed, domestic PC capacity continues to increase much faster than demand, which has actually suffered from lower demand for some consumer products which utilize PC as a raw material.

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Jul 12, 2022: The Biodegradable Resin Branch of China Synthetic Resin Association issued a warning against capacity expansions for PBAT (polybutylene terephthalate-adipate) stating that the current production capacity of PBAT resins far exceeds market demand and is still increasing further.

Comment MCC: Indeed, some figures show that this warning is justified. By the end of 2022, the annual production capacity of PBAT will reach 2.26 million tons compared to expected domestic sales of 200 kt in 2022.

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Jul 11, 2022: The profit of the Chinese chemical industry was up 13.8% year on year for the period from January to May.

Comment MCC: This is much better than for most other industries, of which more than half saw a decline in profit. Automotive was hit particularly hard, losing 37.5%.

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Jul 10, 2022: Shaanxi Coal Group Yulin Chemical Co. is progressing with constructing the largest coal chemical project under construction in the world. It covers a total area of about 13 square kilometers. The planned total investment is about 125 billion yuan. Products include 5.6 million tons of methanol, 1.8 million tons of ethylene glycol, 2 million tons of olefins, and downstream intermediate raw materials.

Comment MCC: It is hard to see such a project as being aligned with China's official commitment to reduce carbon dioxide emissions. The cynical view might be that as the first target is to reach peak emission by 2030 and only reduce emissions afterward, it could actually be beneficial to emit as much carbon dioxide as possible by 2030, as it makes the required reductions afterward easier to achieve. But of course, only a very cynical person would argue that way.

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Jul 09, 2022: Hengli Petrochemical established Dalian Hengli Fine Chemical Sales Co., Ltd. with a business scope including food sales, petroleum product sales, chemical product sales, plastic product sales, rubber product sales, lubricant sales, and auto parts.

Comment MCC: While I find the combination amusing (auto parts, food - where is the synergy) - this seems to indicate an increased interest of Hengli in downstream businesses.

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Jul 08, 2022: The self-sufficiency rate of carbon fiber in China is less than 40%. This is despite low domestic capacity utilization of only about 55% as local products tend to be of lower quality.

Comment MCC: This may be a worry for the central government as carbon fiber is a raw material used in several important applications - for example, 41% of demand is used in wind turbine blades.

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Jul 07, 2022: In 2021, China's chemical fiber output was 65.24 million tons, a year-on-year increase of 8.29%. China's chemical fiber imports totaled 834 kt while exports reached 5199 kt, an increase of 11.55% year-on-year

Comment MCC: Chemical fiber is another area now strongly dominated by Chinese production.

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Jul 06, 2022: Hebei encourages the development of green pesticides, expands the scale of products such as environmentally friendly coatings and dyes , develops high-end fine chemicals around high added value, substitutes imports, and fills domestic gaps, and promotes the combination of biotechnology and fine chemicals; around emerging industries, high-performance chemicals New materials are the development direction, accelerating the development of organofluorosilicon, polyurethane, polyoxymethylene, polycarbonate, polyamide, polyphenylene ether, polyimide, electronic special gases, photothermal heat media, bio-based materials, degradable plastics, special lubricants and other products. In addition, it is also mentioned to promote the integration, reorganization and green transformation and upgrading of oil refining enterprises in the province, and convert oil products into chemical products such as low-carbon olefins such as propylene.

Comment MCC: The usual - everybody does everything, no discernible focus.

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Jul 05, 2022: Sichuan announced an additional 16 recognized chemical parks, which were added to the list of existing 6 parks, adding up to a total of 22 parks.

Comment MCC: While the province may still add more parks to the list later, any park not on the current list is in danger as it obviously did not easily pass the initial check of criteria. Given my impressions from visiting a few parks in Sichuan a few years ago, that is not very surprising - the concept of chemical parks then seems to have been barely understood.

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Jul 04, 2022: China Petrochemical Corporation (Sinopec) issued a statement clarifying that a number of companies using the name Sinopec have no affiliation with the SOE.

Comment MCC: This highlights several points: the Chinese IP regime is still not very strict (this includes usage of brand names - I cannot imagine a fake "BASF" group operating in the Western world for very long), parties dealing with companies claiming to be part of Sinopec need to verify such claims, and finally, Sinopec still has a strong domestic brand name (otherwise nobody would fake an association with the company).

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Jul 03, 2022: Chinese investment in New Energy Storage may approach RMB900 Billion in 2030 (CCR). Wind and solar power generation will double by 2025.

Comment: Certainly, these are growth areas that will show up in the strategy presentations of chemical companies soon, if they are not already listed there.

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Jul 02, 2022: ExxonMobil, Shell, and CNOOC will evaluate a project to capture and store carbon at China's Dayawan Petrochemical Industrial Park. Shell and CNOOC operate a petrochemical joint venture in the park while ExxonMobil plans to build a large chemical plant there (C&EN)

Comment MCC: These companies presumably want to establish themselves as "model citizens" helping China to reach its target of reaching carbon neutrality by 2060. Indeed, for the chemical industry - which differs from other industries as it uses carbon compounds as direct raw material and not only as an energy source - embracing carbon capture may be unavoidable.

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Jul 01, 2022: Lianchuang (300343.SZ) announced the termination of a biodegradable polymer project with an annual output of 60,000 tons.

Comment MCC: The rationale provided cites market immaturity and low industry profitability with no short-term changes expected despite favorable policies. This sounds quite mature, which makes me wonder whether this is the real reason. I guess I am getting more and more cynical with age.

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Jun 30, 2022: The number of Chinese companies producing polysilicon has been between 11 and 43 between 2010 and 2021. In this period, China domestic polysilicon production capacity increased by five times, with an average annual growth rate of 17.9%. As of the end of 2021, domestic polysilicon production capacity as a share of the global capacity increased from 29.8% in 2010 to 77.3% in 2021 (CCR)

Comment MCC: This shows the dominance of China in polysilicon production, and explains the dependence of countries such as the US on this source.

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Jun 29, 2022: A CCR paper on "The Development Trend of Silicon Industry from the Perspective of Silicon Energy" by Wang Yuwu and Liang Yating, China Chemical New Materials Research Institute, Sino Alliance of Green Development of Silicon Industry (SAGSI) starts with the sentence "Silicon has similar properties to carbon but is more stable, which endows its better performance."

Comment MCC: I find this dumbing down by (presumably) knowledgeable scientists appalling. Of course, both silicon and carbon are stable elements, so one cannot be less stable than the other. And given the very limited amount of elemental silicon in the environment compared to the larger amounts of elemental carbon, this statement does not make much sense anyway. What they presumably mean is that silicon compounds are more stable than carbon compounds - and even that is highly debatable.

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Jun 28, 2022: The producer price index of the Chinese chemical industry is up by 13.6% YoY compared to 6.4% for manufactured goods.

Comment MCC: Of course, being more tightly linked to oil prices, this is not particularly surprising but could still be an issue if these price increases cannot be passed on to downstream buyers.

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Jun 27, 2022: In 2021, Sinopec Corp. had a substantial increase in the proportion of Sinopec executives quitting or being fired, with the total number reaching 1280 leaders, as many of these employees were "not suitable to perform their duties in their original positions"

Comment MCC: The background was a target of increasing labor productivity by 26% over the previous year - a rather ambitious goal.

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Jun 26, 2022: Lianhong Xinke started three major projects - a 100 kta lithium battery material-carbonate project, a 20 kta UHMWPE/ 90 kt vinyl acetate project and a 200 kta EVA project.

Comment MCC: I do not know which specific capabilities Lianhong has, but it seems the projects started are based more on hot markets and government-supported areas than on these capabilities. This may make it difficult for Lianhong to be successful.

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Jun 25, 2022: In June, national standards came into force for biodegradable plastics and for biodegradable drinking straws.

Comment MCC: By providing criteria for the authenticity of biodegradable plastics, the use of such materials should be facilitated and promoted.

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Jun 24, 2022: The Tongkun Qinzhou Green Chemical Base Phase I Chemical New Material Project not only has a rather long name but is also a project with a planned capacity of 3 million tons PTA, 600 kt PDH, 400 kt PP, etc.

Comment MCC: It seems it is obligatory these days to add "Green chemical" to the name of such projects even though the chemistry does not have to have any obvious green aspect.

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Jun 23, 2022: At present, 70% of China's Photovoltaic grade EVA demand is satisfied by imports. However, from Jan to May 2022, Silbon in Lianyungang produced 115,000 tons of photovoltaic-grade EVA, an increase of 18.6% year on year. According to the company, the product quality has greatly improved.

Comment MCC: Chinese players struggle to succeed in this market, with obstacles including the long period of 4-5 years required for capacity expansion and the high product quality requirements for this type of EVA. However, local companies like Silbon show improvements in quality and may eventually match the quality of imports.

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Jun 22, 2022: According to a plan of Liaoning province, by 2025 the proportion of refined oil production in Liaoning Province in crude oil processing will drop to 40%, the operating income of the fine chemical industry will reach 200 billion yuan, and the chemical refinement rate will reach 50%. Other goals are a ratio of R&D investment in the petrochemical industry of 1.5% of operating income, R&D investment in fine chemical enterprises reaching 5% of operating income, and the output value of chemical parks reaching 70% of the industry.

Comment MCC: None of these goals is particularly surprising as they are basically just deduced from central government objectives.

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Jun 21, 2022: The Guangzhou Intellectual Property Court ruled in favor of Solvay in a patent infringement case against Zhejiang Fonolin Chemical New Materials Co., Ltd., which involved a PVDF material reported to be the most advanced material for adhesive or separator/separator assemblies for high-end lithium batteries.

Comment MCC: Another example of improving IP protection in China. Foreign companies tend to win their IP cases as the system improves and Chinese companies themselves own more IP which they themselves want to see protected.

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Jun 20, 2022: BASF Shanshan Battery Materials, a JV between BASF and Shanshan, will expand its battery material production capacity in Ningxia. The expansion will increase annual production capacity of cathode active materials to 100,000 tons.

Comment MCC: Presumably, this is primarily to meet local demand for the electric vehicle market.

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Jun 19, 2022: On June 16, an explosion occurred at a chemical company in Lanzhou City, Gansu Province, causing 8 injuries and likely 6 deaths. The enterprise is mainly engaged in the production and operation of pesticide intermediates and pesticide products. A day later, one person died at a fire at a Sinopec Shanghai Petrochemical Co. plant in Jinshan

Comment MCC: It seems that the frequency of such accidents is still higher than in the Western world despite some improvements.

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June 18, 2022: Fujian Fuhua Gulei Petrochemical Co. has plans for a 200 kt hexamethylenediamine, 300 kt adipic acid and 400 kt of PA66 plant.

Comment MCC: Indeed, PA66 - at the lower end of engineering plastics - is an area in which domestic players gradually take over.

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Jun 17, 2022: From 2017 to 2021, the CAGR of China's ABS production capacity was 5.9%, and the CAGR of apparent consumption was 3.7%. The supply in the domestic market was tight, and the five-year average operating load was as high as 96.1% (CCR)

Comment MCC: However, in the next five years, it is expected that 5.785 million t/a of ABS production capacity will be added on the market, more than doubling current capacity and potentially leading to excess capacity as the production capacity increase CAGR of almost 20% in this period is unlikely to be matched by demand growth.

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Jun 16, 2022: A government safety inspection of the Shengli Refinery of Sinopec Qilu Branch found more than 160 hidden dangers. The inspectors plan to punish 11 illegal acts.

Comment MCC: It is interesting that even well-connected SOEs such as Sinopec are now the targets of such inspections, and that the negative findings are publicized rather than quietly remedied.

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Jun 15, 2022: PetroChina has adjusted the company's business scope to include new energy segments such as heat, electricity, hydrogen, carbon emission reduction, and low-carbon technology, as well as synthetic materials, bio-based materials, graphene materials, electronic special materials.

Comment MCC: Of course, the big state-owned oil companies need to find ways to stay relevant even after the energy transition. However, having both "old" and new energy in the same company may not be the best way to achieve a speedy and efficient transition. Of course, Western oil companies have similar issues.

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Jun 14, 2022: Analysts have downgraded their projections for China's economic growth this year in response to lockdowns imposed on Shanghai and other cities under the government's zero-COVID policy (Nikkei), and now range between 2% and 4.4%

Comment MCC: This is substantially lower than the government target of 5.5%

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Jun 13, 2022: All 31 chemical plants within 1 km of Changzhou's Yangtze River coastline were dismantled

Comment MCC: Another example of the implementation of tighter environmental regulation as outlined in the 5-Year Plans.

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Jun 12, 2022: Brand Finance, a brand consulting company, released their assessment of the 2022 Top 25 Most Valuable Chemical Brands in the World. Four Chinese chemical brands entered the top 25: Rongsheng Petrochemical ranked 8th, Hengli Petrochemical ranked 14th, Hengyi Petrochemical ranked 22nd, and Wanhua Chemical ranked 23rd.

Comment MCC: Frankly, I am a bit mystified by this ranking. My assumption is that what is measured here is brand value - basically the value of the branded company compared to a no-name company with identical business. However, it is a bit hard to see how particularly the first three Chinese chemical companies have a particularly strong brand - in fact, most people will not even know them. Wanhua is a bit different as it has a history of innovation and is a clear global market leader, which indeed helps its brand. What adds to my confusion is that the report states that the brand value of BASF, the most highly valued company in the list, increased by 15% mainly due to improved revenue and a reduction in the company's weighted average cost of capital. Now, these are nice things, but how are they related to brand value? Could it be that all this is just a press release to get a consulting company in the news?

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Jun 11, 2022: Zhongtai Chemical plans to invest in the construction of a BDO (1,4-butanediol) project with an annual output of 300,000 tons, stating that this is to "extend the industrial chain of circular economy".

Comment MCC: While it is true that BDO is a main raw material for the production of biodegradable plastics, this does not make it part of the circular economy. Anything that is coal-based (a finite fossil resource) is almost by definition not really part of the circular economy. It seems Chinese chemical companies have learned a lot about PR from some of their more ruthless Western competitors. And of course, if a company assumes that people are essentially dumb, it is easy to think they will equate "biodegradable" with "circular economy" which indicates sustainability.

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Jun 10, 2022: Most listed Chinese chemical companies increased their operating income in the first quarter of 2022 compared to the same quarter in 2021. Examples: Rongsheng Petrochemical +98%, Hengli Petrochemical +0.3%, Wanhua +33%, Hengyi Petrochemical +8%, Sinochem International +8%, Oriental Shenghong +24%, Yuntianhua +13%, Tongkun +17%. For Hengli Petrochemical, the increase was very low (+0.3%) while Zhongtai Chemical had a decrease of 33%

Comment MCC: So far, so good, but the second quarter will probably be more interesting as April and May were heavily affected by lockdowns.

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Jun 09, 2022: Ningbo Wanglong, a Chinese producer of downstream derivatives of acetic acid, has a number of open positions, with salary ranges indicated for each position.

Comment MCC: Somewhat surprisingly (or maybe not, given the recent high unemployment in China), some of the salaries strike me as quite low. For example, a full-time position described as Production Management Reserve - Computer Inspection Post (machine translation - please do not ask exactly what this means) pays 6000-8000 yuan per month. I would prefer not to live on this salary in a large Chinese city, much less try to buy an apartment. So, at least for some of these lower-end positions, salaries are still much lower than in the West.

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Jun 08, 2022: Forbes released the list of the world's top 2000 companies. The number of companies in China (including Hong Kong, Macao, and Taiwan) reached 399 this year. Wanhua Chemical ranked 392, up 141 places from the previous year, while Hengli Petrochemical, Rongsheng Petrochemical, and Hengyi Petrochemical are also on the list, ranking 455th, 642nd, and 1670th.

Comment MCC: The strong position of Hengli Petrochemical was also indicated by its recent inclusion into the Shanghai Stock Exchange 50 Index

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Jun 07, 2022: According to CEO Mr. Brudermüller, Basf has "never seen a theft of technology" since it started production in China in the late 1960s.

Comment MCC: A recent article on BASF activities in China highlights Brudermüller's positive attitude towards China - the article claims that he admires the country's pragmatic authorities and dedicated workers while contrasting China with the higher energy costs and stricter environmental regulations in Europe. This attitude explains BASFs recent high investments in China.

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Jun 06, 2022: Merck plans to build a new semiconductor integrated base in Zhangjiagang, including a semiconductor material production base, warehouse, and operation center, with an initial investment of 550 million yuan.

Comment MCC: Merck states that they want to provide comprehensive material solutions for local customers in China with a fast response speed.

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Jun 05, 2022: Kingfa started a major petrochemical project in Yangpu including a 600 kta ABS unit, 600 kta PDH unit, 260 kta acrylonitrile unit, and a 100 kta tons methyl methacrylate unit.

Comment MCC: In some ways, the current projects of major Chinese chemical players are reminiscent of much earlier activities of Western players - the extension of value chains independent of companies' original capabilities or (seemingly) the economics of individual segments. This is very different from the current approach of Western chemical companies, which are focusing on non-commodity segments in well-defined focus areas.

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Jun 04, 2022: Evonik is planning to sell its C4 Verbund unit worth over 10% of the group's sales. It manufactures performance intermediates and plasticizers for a wide range of industries, including automotive, tire, and construction.

Comment MCC: Companies such as Evonik stick to their strategy of trying to outrun commoditization (largely driven by Chinese chemical companies) via the sale of maturing businesses.

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Jun 03, 2022: On June 1, nine ministries and commissions jointly issued the "14th Five-Year" renewable energy plan containing carbon peaking, carbon neutrality, and 2035 long-term goals.

Comment MCC: How many ministries does it take to change a lightbulb in China? Apparently 9. To me, the fact that somehow responsibilities for this important topic are so muddled is not encouraging (the alternative that some of these measures will be very unpopular or hard to implement and thus need to be pushed through by many ministries is not much more positive either). Also, on the same day of this announcement, there came the announcement of a 50 billion RMB coal chemical project in Hami, Xinjiang, sending a decidedly mixed message about the country's carbon emission reduction policy.

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Jun 02, 2022: The supply of domestic EVA is still dominated by imports , of which imports of photovoltaic grade EVA account for more than 60%, while only a few domestic companies such as Lianhong Xinke, Dongfang Shenghong, and Rongsheng Petrochemical can produce photovoltaic grade EVA (CCR)

Comment MCC: EVA accounts for about 12% of the cost of photovoltaic modules. EVA production capacity is gradually increasing as a consequence of high and growing demand, but it will take some time before the market will be more balanced.

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Jun 01, 2022: Today, Shanghai will fully reopen. Some of the chemical companies have already started producing again - for example, the production capacity of BASF in Shanghai supposedly already has returned to 70% of the old level.

Comment MCC: However, it will presumably take quite some time until things fully normalize, and it remains to be seen to what extent the maintenance of anti-Covid measures such as testing requirements affects both chemical production and chemical logistics.

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May 31, 2022: From 2017 to 2021, 439 chemical companies in Hubei province along the Yangtze River have been closed or relocated. For example, in Yichang, 130 companies saw substantial changes

Comment MCC: This has been accompanied by a shift in the portfolio - in the case of Yichang, the proportion of fine chemicals in the city's chemical industry increased from 18.6% to more than 36%.

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May 30, 2022: Zhejiang province plans 100 new renewable energy pilot projects over the next three years, becoming the first region in the country to release a roadmap to kick off its green energy transition (Caixin)

Comment MCC: This initiative could make the province an interesting market for producers of chemical materials that are needed for renewable energy projects such as solar, hydrogen and wind.

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May 29, 2022: The market demand for high-end polyolefins (mPE, EVA, POE) in China exceeds RMB100 billion with an apparent consumption of close to 13 million tons. However, China's self-sufficiency rate for these materials is only about 45%.

Comment MCC: The main reason is technical barriers, e.g. polymerization technology, catalysts, process technology, etc. This particularly applies to POE, for which so far there is no domestic supplier yet, though Wanhua is doing research in this area.

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May 28, 2022: Shandong Longhua Polymer Materials started a 1.08 million tons/year PA66 project at Gaoqing County Chemical Industrial Park.

Comment MCC: In reality, the start will be a more modest 160 kt followed by 320 kt and then 600 kt. Still, such investments are a major reason for polyamide becoming unattractive for Western chemical companies.

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May 27, 2022: Wanhua has started a 300 kta MDI separation project in Ningxia

Comment MCC: This will provide a local supply of the separated MDI varieties, with the raw MDI coming from Wanhua's Yantai plant. Wanhua has also announced to increase the MDI capacity of the Ningbo plant and add capacity for HDMI there. This news reflects both Wanhua's intention to remain the global market leader for MDI and strengthening of MDI demand in non-coastal China

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May 26, 2022: China has an MTBE capacity of about 23.7 million t/a while output was only about 13.0 million t/a in 2021, a capacity utilization of only about 55%.

Comment MCC: While this low utilization is not even that unusual in China for commodity chemicals with low entry barriers and undifferentiated products, the emergence of electric vehicles may worsen the situation as these vehicles are not a market for MTBE as a gasoline additive.

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May 25, 2022: Sumitomo Chemical will exit the dye business next year, the third traditional chemical business exited by the company within a year after ethylene-propylene rubber and caprolactam.

Comment MCC: The Japanese chemical companies with their comparatively high costs and the smallish domestic market will find it harder and harder to compete in those chemical segments that by now in terms of technology can be done equally well by Chinese players.

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May 24, 2022: The average salary of a chairman in the Chinese petroleum and petrochemical industry is 1,312,200 yuan while the average salary of employees is 239,500 yuan.

Comment MCC: While I cannot vouch for these figures, they would indicate a relatively low compensation of top management and a relatively small difference between management compensation and employee compensation compared to Western chemical companies.

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May 23, 2022: According to John Richardson in his ICIS blog, China's global capacity share for 9 common polymers ranges from 25 to 74% while China's share of global growth for these polymers from 2021 to 2022 ranges from 34-84%.

Comment MCC: You should not be too surprised for a consultant whose work depends on the well-being of China's chemical industry to occasionally highlight the importance of this industry.

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May 22, 2022: Goldman Sachs cut its 2022 economic growth forecast for China to 4% from 4.5%

Comment MCC: This is substantially below the government target of 5.5%. Also, the reduction in growth should be comparatively larger for those industries relying on the distribution of physical goods - e.g., the chemical industry.

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May 21, 2022: A chemical engineer has been sentenced to 14 years in prison for trying to steal secrets about BPA-free internal coatings of beverage cans while working at Coca-Cola and Eastman Chemical Company in the USA.

Comment MCC: According to the prosecution, the engineer stole the trade secrets to establish a BPA-free coating company in China, and the Chinese partner received millions of dollars in Chinese government grants to back the new company

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May 20, 2022: 6 government departments have issued benchmark levels for the clean and efficient utilization of coal, covering sectors including coal-to-synthesis ammonia, coal-to-coke, coal-to-methanol, coal-to-olefins, and coal-to-ethylene glycol.

Comment MCC: For new projects, the benchmark levels are binding while for existing projects, a three-year period for upgrading is given.

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May 19, 2022: According to Reuters, China is considering extending costly subsidies for electric vehicles (EV) that were set to expire in 2022.

Comment MCC: This is presumably more to help the economy - that is suffering from the anti-Covid lockdown - in general than specifically this industry, though of course, chemical producers of materials for EV could be among the main beneficiaries.

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May 18, 2022: China's April factory production fell 2.9% from a year earlier

Comment MCC: Of course, this is due to the disruptions caused by the anti-Covid measures. Needless to mention that this affects the chemical industry at least to the same degree.

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May 17, 2022: As PP capacity in China is increasing, Chinese producers aim to move into specialty varieties such as ultra-low ash PP with ash content less than 0.005, which is mainly used in electronic and electrical applications (CCR)

Comment MCC: Currently, 95% of ultra-low ash polypropylene products are covered by imports, mainly from KPIC, Borouge and TPC

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May 16, 2022: According to government information, container throughput of the Shanghai port has recovered and reached 82.4% of the volume of April 2021.

Comment MCC: It seems surprising to me how a reduction by more than 17% can be sold as a recovery by the government. Chemical companies suffering a corresponding loss of 17% in sales or delivery of raw materials will likely disagree. In addition, there are also massive problems getting the containers to and from the port due to the lack of truck drivers - so, in reality, the problem is even more serious than indicated by the 17% figure.

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May 15, 2022: In recent years, China's production capacity for PS has increased substantially and now accounts for 38% of global capacity, which will continue to increase. Domestic production growth has been rapid, too, reaching 15% from 2019 to 2020 and 23% from 2020 to 2021.

Comment MCC: As a consequence, imports are expected to drop to only about 10% of China's consumption in 2022. As in many commodity polymers, overseas producers of PS relying on exports to China will face increasingly difficult times as domestic production increases.

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May 14, 2022: In a survey by the EV Observer, about 90% of EV producing companies in China stated that their deliveries are delayed due to pandemic control restrictions. For almost 30% of companies, the delay exceeds one month.

Comment MCC: Logistics issues are being mentioned as the biggest business disruptor (Caixin).

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May 13, 2022: China's photovoltaic installed capacity increased by 21% in 2021, and is expected to increase by another 26% in 2022

Comment MCC: Based on this domestic demand increase and photovoltaic modules produced for export, it is estimated that China's photovoltaic-grade EVA consumption will increase by 23% in 2022.

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May 12, 2022: China's auto sales plunged 47.6% year-on-year in April (Reuters)

Comment MCC: The negative economic effects of the strict anti-covid policy will probably extend at least into May, and will not only affect car sales but also car production - for example, Tesla currently has issues in getting some of the required parts.

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May 11, 2022: In Shanghai, spray disinfection is widely utilized in the fight against covid.

Comment MCC: This is despite the WHO and even some city officials regarding such measures as essentially ineffective and causing health hazards. However, according to HK university professor Nicholas Thomas, "The robots and street-spraying are performative acts designed to bolster public trust in government actions"

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May 10, 2022: China has extended the deadline to submit certain data under its cosmetics regulation from 1 May until 31 December (Chemical Watch)

Comment MCC: This is a consequence of the covid-related restrictions in many cities including Shanghai.

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May 09, 2022: FMC Corporation announced the Hangzhou Intermediate People's Court granted FMC a permanent injunction against Hangzhou Udragon Chemical and Zhejiang Udragon Bioscience. They infringed on FMC's patent for a key intermediate chemical used in the manufacturing of chlorantraniliprole.

Comment MCC: IP protection in China is improving - the court also ordered the Chinese companies to compensate FMC for related damages.

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May 08, 2022: Firmenich increased its equity stake in strategic partner ArtSci Biology Technologies moving to majority ownership

Comment MCC: That seems like a staggered acquisition approach (Firmenich had a minority stake before), and it seems to have been successful, as the company states that "ArtSci will continue to operate as normal, with its management team remaining in place"

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May 07, 2022: The sales volume of specialty rubber chemicals producer China Sunsine Chemical declined by 11.3% in Q1.

Comment MCC: The rationale given by the company reflects the effect of Covid: "Trucks are not allowed to exit the highway, which has delayed the transportation of raw materials to factories and finished goods to customers. The tire-makers also experienced lower production utilization rate and lower profits due to these control measures"

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May 06, 2022: According to Mr. Wuttke, president of the EU chamber of commerce, freight transportation volume in the greater Shanghai area contracted by 81% in the first three weeks of April 2022 compared to the same period in 2021.

Comment MCC: A data point illustrating the massive impact of the Shanghai lockdowns on the local economy.

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May 05, 2022: DOMO Chemicals is expanding the production capacity of polyamide at their Jiaxing site, with total capacity reaching 14 kt of PA6 from April 2022

Comment MCC: In addition, DOMO plans a new plant in Haiyan which will eventually have a capacity of 50 kt - an investment of 14 million EUR.

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May 04, 2022: Sinopec and BASF laid the foundation stone for the expansion project of the integrated production base in Nanjing. The expansion project includes a new set of tert-butyl acrylate (TBA) plants and the expansion of several downstream chemical plants.

Comment MCC: This seems to be an example of a JV going reasonably well - though, of course, the existence of this JV is due to governmental requirements, not due to a strong desire for one on the side of BASF. However, BASF has faired well as the JV is focusing on the lower-margin upstream products and leaves the more knowledge-intensive, more profitable products to BASF.

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May 03, 2022: China's factory activity in April shrank at the fastest in 26 months to the lowest since the early months of the pandemic

Comment MCC: An obvious challenge to the chemical industry as well.

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May 02, 2022: Sinopec subsidiary Hubei Petroleum has closed its 8 oil depots and 17 terminals along the Yangtze River in Hubei.

Comment MCC: A positive development that will hopefully help restore the Yangtze river.

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May 01, 2022: Several Japanese chemical companies have announced the exit from specific organic chemicals and/or plant closures, e.g., Idemitsu (acrylic acid), Mitsui (PTA), Sumitomo (caprolactam), Mitsubishi (petrochemicals in general).

Comment MCC: While the individual rationale differs, a key aspect is growing and more modern production in China.

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Apr 30, 2022: According to an analysis from ING bank, a shutdown of Shanghai lasting a whole month will subtract 2% from China's annual economic growth.

Comment MCC: Given that the lockdown is still more or less complete - despite media reports suggesting otherwise - China's economy and thus its chemical industry will indeed suffer substantially.

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Apr 29, 2022: According to CNCIC, China's PEEK market demand has developed rapidly from 2015's 250 tons to 2019's 1 400 tons.

Comment MCC: CNCIC further predicts annual growth of 20% between 2020 and 2024, and demand reaching 3050 tons in 2024.

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Apr 28, 2022: China's existing ABS production capacity of 4.1 million t/a is dwarfed by the approximately 10 million t/a of planned and proposed capacity (CCR)

Comment MCC: This is most likely going to lead to intense competition and lower prices for ABS.

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Apr 27, 2022: 68 enterprises accounted for 87.6% of China's total calcium carbide production while the top 10 accounted for 42.8%, an increase of 3.5 compared to 2020.

Comment MCC: As for many basic chemicals, China's producer landscape is highly fragmented, and consolidation - while happening - is relatively slow.

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Apr 26, 2022: Retail sales of passenger cars in China were down by 4.5% yoy in the period of January to March 2022 while new energy passenger cars increased by 145% and accounted for about 24% of the total.

Comment MCC: This presumably reflects both the current relatively weak Chinese economy - partly affected by covid - and the ongoing shift towards electric vehicles.

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Apr 25, 2022: Yunnan Tian'An Chemical is a partner in an Algerian stock company which will be active in the field of phosphate mining and fertilizer production in Algeria.

Comment MCC: The project is a large investment of about 7 billion USD, indicating the importance of securing the supply of phosphate fertilizer for China.

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Apr 24, 2022: Industrial output in Shanghai dropped by 7.5% year-on-year in March.

Comment MCC: Given the extension and continuation of lockdowns in April, the drop for the current month is likely to be even bigger.

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Apr 23, 2022: In 2021, Sinochem International achieved an operating income of 80.648 billion yuan, a year-on-year increase of 48.90%; net profit of 2.175 billion yuan, a year-on-year increase of 608.90 %.

Comment MCC: Another indicator for the bumper year the Chinese chemical industry had in 2021.

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Apr 22, 2022: Investment in the chemical sector was up 15.7% YoY in 2021 after decreasing by 1.2% YoY in 2020.

Comment MCC: The high profitability of chemical companies obviously made the segment an attractive target.

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Apr 21, 2022: The Shanghai Municipal Information Commission issued the "Guidelines for the Prevention and Control of the Epidemic in Shanghai Industrial Enterprises Resuming Work and Production", allowing 666 key enterprises in key industries to resume work and production, including several multinational chemical companies.

Comment MCC: While hinting at how desperate the government is to prevent an economic collapse, these measures will still only dampen the highly negative effect of the lockdown. Even in these selected companies, production will be severely reduced due to a lack of workers, lack of raw materials, and lack of local logistics (e.g., truck drivers).

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Apr 20, 2022: Semiconductor output in China declined by 5.1% in March from a year earlier (SCMP)

Comment MCC: The SCMP also quotes Mr. Wang, a consultant on semiconductor manufacturing: "The latest lockdown in Shanghai has further aggravated the situation by disrupting logistics and clogging up supply chains, which has affected many small and medium-sized enterprises".

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Apr 19, 2022: Operating rates for Chinese DMC producers increased from about 52% in 2020 to about 60% in 2021.

Comment MCC: Still, as there are many additional projects under construction, there may be continued overcapacity despite fast demand growth.

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Apr 18, 2022: The apparent Chinese consumption of DMC increased by more than 50% in the first half of 2021, registering a year-on-year increase of more than 50% in the first half of the year

Comment MCC: Key drivers include the use of DMC as solvent in lithium batteries and as raw material for PC, both booming applications.

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Apr 17, 2022: Asymchem, a China-based contract development and manufacturing organization will acquire Snapdragon Chemistry, a US drug services firm for $58 million.

Comment MCC: The basic idea seems to be to utilize Snapdragon's customer network (including Johnson Matthey and Amgen), and to
transition small volume production from Snapdragon customers to its larger facilities in China.

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Apr 16, 2022: Deliveries of VW products in China fell by almost 24% in the three months to the end of March. VW has been affected by covid outbreaks and subsequent lockdowns in Changchun and Shanghai, the locations of its joint ventures in China, while a fifth of its dealerships in the country were forced to close in March because of the virus.

Comment MCC: As the automotive industry is a major customer of the chemical industry, this will hurt the latter even in the unlikely event that chemical companies are not directly affected by lockdowns. The aftermarket should also be affected - I have not been able to move my car in the last 31 days and thus have not used any such services or required any materials.

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Apr 15, 2022: According to Bloomberg, the solar power sector is also affected by China's recent Covid-related restrictions, with manufacturers lowering production levels thanks to shipment delays and staffing issues. Wafer production has been suspended in some factories in the coastal region close to Shanghai while domestic shipping of polysilicon has also faced delays due to outbreaks in the major sourcing region of Xinjiang.

Comment MCC: It seems that one of the two big promises of China's government - zero covid and economic growth - will have to be broken soon.

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Apr 14, 2022: Nomura estimates that as many as 45 cities in China are now implementing either full or partial lockdowns, making up 26.4% of the country's population and 40.3% of its GDP (Reuters)

Comment MCC: With these lockdowns, it will be very hard to achieve China's GDP growth goals for 2022. And the chemical industry will probably be affected disproportionally, as - in contrast to services - the use of chemical materials can hardly be done working remotely.

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Apr 13, 2022: Six ministries issued the "Guiding Opinions on Promoting the High-quality Development of the Petrochemical and Chemical Industry during the 14th Five-Year Plan". Key goals for 2025 include reaching an R&D investment of at least 1.5% of sales, capacity utilization for bulk chemicals of above 80%, and a self-sufficiency rate for new chemicals of at least 75%.

Comment MCC: Some of these objectives seem underwhelming (e.g., the R&D spending) while others (capacity utilization) will be very hard to achieve.

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Apr 12, 2022: In 2022, all chemical segments except the coal chemical segment were profitable.

Comment MCC: This will add economic pressure to stop coal chemicals projects to the pressure based on climate change concerns.

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Apr 11, 2022: The lockdowns in Shanghai and other parts of China are affecting supply chains. Nomura estimated that 23 Chinese cities have implemented either full or partial lockdowns. The cities collectively are home to an estimated 193 million people and contribute 22% of China's GDP. According to ING Chief Economist for Greater China Iris Pang, if Shanghai's lockdown continues throughout April the city will suffer a 6% loss in GDP, amounting to a 2% GDP loss for China as a whole.

Comment MCC: However, so far, any comments or articles mentioning the trade-off between the strict corona measures and the losses not only of GDP but also of human lives seem to get deleted quickly.

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Apr 10, 2022: Chinese import volume of organic chemicals was down 13.7% YoY, while export volume was up 30.1% YoY, decreasing net imports by 26.4% YoY to 42.01 million tons. Net imports of synthetic materials declined 39.1% YoY to 28.21 million tons, given a reduction of 18% YoY in import volume and a soaring of 68.1% YoY in export volume (CCR).

Comment MCC: In the long run, the trend is toward China no longer being a net importer of chemicals, something that will be highly appreciated by the Chinese government.

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Apr 09, 2022: Six ministries issued the "Guiding Opinions on Promoting the High-quality Development of the Petrochemical and Chemical Industry during the 14th Five-Year Plan". The Guiding Ideology is described as follows (machine translation from Chinese): Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th National Congress of the Communist Party of China and the 19th Plenary Sessions, base on the new development stage, fully, accurately and comprehensively implement the new development concept, build a new development pattern, and promote high-quality Development as the theme, with deepening the supply-side structural reform as the main line, to meet the people's needs for a better life as the fundamental purpose, with reform and innovation as the fundamental driving force, to coordinate development and safety, to accelerate the transformation and upgrading of traditional industries, and to vigorously develop new chemical materials and fine Chemicals, accelerate the digital transformation of the industry, improve the level of intrinsic safety and clean production, accelerate the quality change, efficiency change and power change of the petrochemical and chemical industry, and promote my country's progress from a big petrochemical and chemical country to a strong country.

Comment MCC: Nothing to add to this.

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Apr 08, 2022: Annual operating revenue of the chemical sector was up 31.1% YoY in 2021, reaching RMB8.7 trillion, while profits rose by 85% YoY.

Comment MCC: While profits of the chemical industry increased again in the first two months of 2022, the covid lockdowns will make it very hard to keep this momentum. For example, Shenyang Chemical announced that the company will temporarily suspend production from now on in request to the government's pandemic prevention and control requirements

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Apr 07, 2022: While early plants for production of either n-butanol or 2-ethylhexanol were not switchable once started up, newer facilities allow switching.

Comment MCC: This offers producers one pathway to reduce volatility of demand by shifting capacity towards the product with higher profitability.

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Apr 06, 2022: Maanshan Wansheng Chemical was ordered by the emergency management department to suspend production and business for rectification, and received a fine of 120,000 yuan as a N-methyl aniline construction project with an annual output of 15,000 tons was not constructed according to the construction blueprint

Comment MCC: This fine still seems low compared to the costs of such projects and to the potential financial gains when skimping on security measures.

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Apr 05, 2022: A total of 524 chemical parks have passed the accreditation.

Comment MCC: This is still substantially lower than the pre-accreditation number of 667 parks, though additional parks may still get accredited.

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Apr 04, 2022: Despite having about 40% of the global capacity of 2-EH (2-Ethylhexanol), China is a net importer of the chemical.

Comment MCC: Such figures for individual chemicals indicate that the estimated overall China share of more than 45% of the global market is a realistic figure.

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Apr 03, 2022: China's epoxy resin segment suffers from what the CCR calls structural contradictions, i.e. surplus of low-end products and shortage of high-end goods like high-grade composite materials used in large aircraft, high-grade epoxy materials used in roads and bridges, etc.

Comment MCC: Of course, this applies to many other chemical segments, and changing this situation is one of the major government objectives for the chemical industry. The mismatch in quality is a major reason for China's self-sufficiency rate for these resins to only reach about 82% in 2020.

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Apr 02, 2022: Volkswagen partially shuttered its factory in the Chinese city on Thursday, citing supply shortages. Its factory in the northeastern city of Changchun has been closed for several weeks.

Comment MCC: These are of course consequences of the various covid-related lockdowns in China, which will have an increasingly larger effect on the chemical industry both directly and indirectly, threatening China's economic growth in 2022.

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Apr 01, 2022: The first phase of the acrylonitrile plant of Tianchen Qixiang nylon new material project in Zibo, Shandong was successfully started.

Comment MCC: Another chemical segment - nylon - in which localization is progressing rapidly.

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Mar 31, 2022: Zhejiang suspended the implementation of chemical, chemical fiber, printing, and dyeing industry production capacity before the national chemical, chemical fiber, printing, and dyeing industry capacity replacement policy is issued.

Comment MCC: This sounds like a no-brainer: Wait with the implementation of a provincial policy until the national policy is clear. However, this is not always the case in China.

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Mar 30, 2022: About half of Shanghai is under lockdown at the moment for a period of 4 days, with the other half being locked down for 4 days afterward.

Comment MCC: Obviously, this will affect the chemical industry, its customers, and its supply chains. In addition, the effective length of these lockdowns is much longer. For example, the compound I am living in has been locked down for 15 days now, and the lockdown will continue for at least another week. Also, it is not clear whether the lockdown currently affecting Pudong, which is supposed to be lifted on April 1, will indeed be lifted, as the case numbers there are very high. So, the overall damage to the chemical industry could be much bigger than implied by a 4-day lockdown.

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Mar 29, 2022: BASF and Zhejiang Lifu Sign a Strategic Cooperation Agreement to develop recycled material formulations for the automotive, packaging, and consumer goods industries. Under the agreement, BASF will provide its recently launched IrgaCycle^TM additive solution and provide technical advice and support for the formulation of recycled polymers.

Comment MCC: My guess is that in any other chemical segment, this would not be the subject of a press release, as it seems just like normal technical support given to clients. But of course, both companies like to see their recycling engagement highlighted.

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Mar 28, 2022: Based on the annual reports already released for Chinese companies for 2021, the chemical industry is currently the fastest growing industry. Among the top 10 companies, 5 are in this segment.

Comment MCC: According to Bai Wenxi, an economist with IPG, the reasons include rapid recovery of domestic supply chains, strong external demand, production restrictions due to environmental and energy consumption issues and the resulting increase in prices.

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Mar 27, 2022: In 2021, the average annual increase of 94 commodities in the chemical sector was 49.08%. 10 products had a negative year-on-year increase while 84 products had a positive year-on-year increase.

Comment MCC: The top 3 products with the highest increase were lithium carbonate (432.00%), lithium hydroxide (316.67%), and ammonium sulfate (214.29%), highlighting the booming EV market.

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Mar 26, 2022: Saudi Aramco will participate in the development of a major integrated refinery and petrochemical complex in Northeast China. Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group, will develop the liquids-to-chemicals complex.

Comment MCC: Another example for the close cooperation between Saudi Arabia and China, presumably both with the objective of isolating themselves from Western supply chains and business practices.

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Mar 25, 2022: BASF will almost double the production capacity for its synthetic ester base stocks at its site in Jinshan, China. According to the company, "The new production capacity for synthetic ester base stocks will bring additional security of supply for our customers, particularly in the Asia Pacific region. Building on our backward integration into key raw materials we will be leveraging the full strength of BASF as a leading and reliable component provider to the lubricant industry."

Comment MCC: The company rationale clearly reflects growing customer concerns about supply chain security, which are increased via localization of production capacity and upstream integration.

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Mar 24, 2022: In a recent speech, Fu Xiangsheng of the CPCIF highlighted the three types of chemical products that will no longer be encouraged or even be permitted in China - the three "do not starts". These are projects not in line with general restrictions (e.g., outside of chemical parks or far away from raw materials), projects in areas that already have access capacity, and projects with high energy consumption and/or emission.

Comment MCC: While certainly relevant for MNCs, these restrictions will affect commodity chemicals more strongly than specialties - an area in which MNCs are less present in China.

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Mar 23, 2022: Wanhua Chemical increased its total operating income in 2021 to 145.538 billion yuan, a year-on-year increase of 98.19% while the net profit attributable to the parent showed a year-on-year increase of 145.47%.

Comment MCC: According to the company, main drivers of the improved performance include greater production volume of MDI and ethylene as well as price rises for key products.

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Mar 22, 2022: DuPont suspended production and operations at its factories and warehouses in Shenzhen, China from March 14 to March 20.

Comment MCC: This is one of many examples of current covid prevention measures affecting the chemical industry. About half of China's chemical companies are in areas currently under some kind of covid control measure.

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Mar 21, 2022: Hubei Yihua, a producer of phosphorus chemicals, will spend 3.565 billion yuan to build a 550,000-ton/year ammonia alcohol project in the Tianjiahe area of Yaojiagang Chemical Park, Yichang.

Comment MCC: Basically, this is the replacement of a plant with the same capacity that has to be relocated due to the government policy of protecting the area closest to the Yangtze River. The company's diammonium phosphate and hydrosulfite plant will also have to be relocated by the end of 2025. It is probably an indication for the current rude health of the chemical industry that these investments are possible.

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Mar 20, 2022: Luxi Chemical is advancing the second phase of a propionic acid project as scheduled. If the project is completed, Luxi Chemical will have an annual production capacity of 200 kt of propionic acid

Comment MCC: This will make Luxi the clear global market leader with about 32% of the total global capacity of about 630 kt, followed by BASF with about 17%.

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Mar 19, 2022: Sinopec signed a memorandum of understanding with Saudi Aramco covering Sinopec's existing refining and chemical projects and future expansion projects

Comment MCC: Such cooperation makes sense for both parties as both countries try to reduce their dependency on the West and in combination now have the resources - mainly raw materials, capital, technology, and markets - to be successful without input from the West.

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Mar 18, 2022: Sinochem recently established a Central Research Institute, the Academia Sinica. As a matrix management mechanism to coordinate Sinochem's key business areas, R&D directions, and R&D resources, the Academia Sinica has established 21 professional research centers around Sinochem's core industrial chain and key common technologies.

Comment MCC: This is reminiscent of the Central Research Departments prominent in large Western chemical companies such as BASF before the trend shifted towards mostly business-specific R&D organizations.

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Mar 17, 2022: Chinese polysiloxane capacity was 1 573 kt/a in 2020, with output at 1 338 kt (85% capacity utilization). In 2021, capacity reached 1 973 kt/a and output 1 500 kt (76%).

Comment MCC: Several projects are under way, which may add 750 kt in 2022 and 770 kt in 2024, indicating a high probability for access capacity in the future. The usual story, in a way.

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Mar 16, 2022: Lihua Yiweiyuan Chemical signed a 20,000 tons/year high-purity dimethyl carbonate technology license agreement with Japan's Ube Industries

Comment MCC: As high purity DMC is mainly used in lithium battery electrolyte, this is another example of chemical companies investing in the EV market.

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Mar 15, 2022: China's polyethylene decrease of 21.3% in 2021 compared to 2020, the first decline in China's polyethylene imports in more than a decade

Comment MCC: The self-sufficiency increased from 54% to 62%, with further capacity to be added in 2022.

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Mar 14, 2022: China announced a growth target of 5.5% for 2022, the lowest in thirty years

Comment MCC: Given that the strict covid measures currently undertaken are likely to have a measurable impact on the economy, even this sounds optimistic to me.

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Mar 13, 2022: Baowu Carbon Technology Co. will establish a JV, Zhejiang Baowan, with Wanhua Chemical Group. Co. The JV will produce polyacrylonitrile (PAN)-based carbon fibers

Comment MCC: Another step in Wanhua's move towards high-end materials.

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Mar 12, 2022: According to the South China Morning Post, the Chinese EV sector is experiencing delays in car delivery due to a shortage of batteries

Comment MCC: This further indicates the strong growth in the EV market and is leading to delivery delays for several carmakers including Tesla and Xpeng Motors.

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Mar 11, 2022: EV battery maker CATL signed a deal with Fujian Provincial Expressway to form a JV operating battery-swapping stations along the expressways in Fujian.

Comment MCC: It seems as if the EV landscape is more driven by collaborations than that of traditional cars. This also applies to the participating chemical companies.

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Mar 10, 2022: Phosphorus chemical producer Sichuan Development Lomon plans to invest 12 billion yuan in Mianyang, Sichuan to build a lithium battery new energy material project with products such as iron phosphate and lithium iron phosphate.

Comment MCC: Another example of the irresistible attraction of the lithium battery market for Chinese chemical players, even though some of them may not be particularly well-positioned in this segment.

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Mar 09, 2022: Chongqing city plans for an average annual growth rate of about 9.3% for the chemical industry between 2021 and 2025. In particular, the growth will be focused on chemical enterprises with R&D institutions: the number of companies with such R&D is to have an average annual growth rate of 12%

Comment MCC: Such growth targets - if achieved - may indeed suggest an inland shift of the Chinese chemical industry. On the other hand, the focus areas mentioned by Chongqing city sound like they have just been copied from central government documents: "New chemical materials in the direction of performance resins, high-performance coatings, special chemicals, functional membrane materials, high-performance fibers, etc.".

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Mar 08, 2022: The sales of new energy vehicles in China reached 2.99 million units from January to November 2021, an increase of 1.7 times year on year, and the market penetration hit 12.7%. In November, the sales of new energy vehicles were up by 1.2 times from a year ago. The market penetration of new energy passenger vehicles in this month reached 19.5%

Comment MCC: In addition, it is predicted that the production and sales of China's new energy vehicles will exceed 5 million units in 2022, with an annual growth rate of about 50%

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Mar 07, 2022: China's dye production is concentrated in Zhejiang (63%) and Jiangsu (16%)

Comment MCC: This matches with the output of printed and dyed cloth in the same year, 2021: 58% for Zhejiang and 13% for Jiangsu. Fujian is a bit of an outlier with 12% of cloth output but no substantial dye production.

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Mar 06, 2022: While China's dye output is expected to be up by 3.24% year on year in 2021, this reflects a decline of 12.8% compared to 2017.

Comment MCC: Capacity utilization - at 65.3% in 2021 - is not substantially lower than in 2017 (66.9%), indicating that quite a few plants have shut down. This is not surprising given the fragmented nature of the segment, the tightened environmental regulation and the gradual shift of the textile industry away from China.

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Mar 05, 2022: In 2021, the revenue margin of the Chinese chemical industry reached 8.0%, the highest level since 2010, a year-on-year increase of 3.4%

Comment MCC: Another sign of the robust health of China's chemical industry

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Mar 04, 2022: According to He Xiangming, Director/Researcher of Institute of Nuclear and New Energy Technology and Research Office of New Energy and Materials Chemistry, Tsinghua University, lithium battery and its raw material industry will keep a high compound annual growth rate of 30-50% in quite a long period of time

Comment MCC: Such forecasts explain the strong interest of chemical companies in this segment.

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Mar 03, 2022: According to the National Bureau of Statistics, chemical product manufacturing was the second-most profitable industry sector in China in 2021, with only electronics/telecom manufacturers achieving higher profits.

Comment MCC: This is an improvement on 2020, when chemicals ranked no. 4.

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Mar 02, 2022: The Trade Commission of the Ministry of Industry, Trade and Energy of South Korea said on February 27 that it will conduct anti-dumping investigations on imported polyamide films originating in China, Thailand and Indonesia, as well as aluminum hydroxide products originating in China and Australia.

Comment MCC: It remains beyond me how such antidumping duties can be in the spirit of free trade (which supposedly everybody approves of) - but I guess as long as every country imposes some, nobody can really complain.

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Mar 01, 2022: Ashland will expand capacity for hydroxyethylcellulose, a biobased thickener, at its plant in Hopewell, Virginia, instead of in Nanjing, China, as previously announced (C&EN)

Comment MCC: In the explanation given by the company, any notion that this is due to US-China frictions or supply chain worries is carefully avoided: "The investment in the Hopewell site will delay the expansion of the company's site in Nanjing, China, which was previously announced. This change in timing is due to the immediate industry need for HEC." Of course, this does not mean such concerns did not play a role in the relocation of the investment.

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Feb 28, 2022: Yuntianhua, a leading Chinese phosphorus chemical company, will enter the lithium battery segment via a JV with several other Chinese companies

Comment MCC: While the details are hazy, it seems this JV will target the complete value chain from mining to production of batteries. Accordingly, the quoted investment in the first two phases is high - 52 billion RMB.

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Feb 27, 2022: The number of chemical enterprises above designated size is increasing. By the end of 2021, there were 26,947 companies, an increase of 908 over the end of 2020

Comment MCC: Another sign of the robust health of China's chemical industry as it benefits from government support for new materials and specialty chemicals

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Feb 26, 2022: China is planning to revise and integrate the current seven national mandatory standards on limits of harmful substances of coatings into three by 2025.

Comment MCC: Hopefully, this will make compliance with these standards more straightforward and easier to control.

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Feb 25, 2022: According to government plans, by 2025, the number of pesticide production enterprises will be reduced from 1,705 in 2020 to 1,600 while the total production output will slightly decrease.

Comment MCC: Pesticide overuse is an environmental problem in China, and government plans have long propagated a zero-growth approach. The reduction in the number of producing companies is still minor - in the long run, further consolidation will be necessary.

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Feb 24, 2022: Arkema plans to acquire the engineering adhesives producer Shanghai Zhiguan Polymer Materials (PMP), specialized in hot-melt adhesives for the consumer electronics market.

Comment MCC: The announcement states that the target "generates over €1 million in annual sales", which is actually very small for a foreign company to bother with an acquisition process in China. Apparently, Arkema seems to see huge potential for growth in this market, which is plausible given that the key applications are growth areas such as the bonding of mobile phones, tablets, and laptops.

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Feb 23, 2022: In 2021, there were 122 chemical accidents and 150 deaths across the country, a year-on-year decrease of 15.3% and 15.7%

Comment MCC: While these numbers are still high compared to Western countries, clearly the focus on safety is having a positive effect.

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Feb 22, 2022: A list of 22 leading universities for chemistry was published. It includes Nankai University, Tianjin University, Jilin University, Northeast Normal University, Fudan University, Shanghai Jiaotong University, East China University of Science and Technology, Nanjing University, Zhejiang University, University of Science and Technology of China, Xiamen University, Fuzhou University , Shandong University, Zhengzhou University, Wuhan University, Hunan University, Sun Yat-sen University, South China University of Technology, Sichuan University, Lanzhou University, Xinjiang University, University of Chinese Academy of Sciences.

Comment MCC: With my German background, it never mattered too much where in Germany I studied chemistry - but the situation is different in the US and in China, where this matters much more. Chemists from the above universities may thus on average more qualified than those from other universities - or at least had a harder time getting into these universities.

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Feb 21, 2022: Hualu Hengsheng plans to invest 46 billion yuan to build the Hualu Hengsheng Jingzhou modern coal chemical base. Annual production will include one million tons of acetic acid, 700,000 tons of urea, and 150,000 tons of DMF, to which later fine chemicals are to be added.

Comment MCC: To me, the government policy towards coal chemicals seems not very consistent at the moment, with some projects being canceled while others progressing.

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Feb 20, 2022: According to new government guidelines, for eight chemical segments (paraxylene, modern coal chemical industry, synthetic ammonia, calcium carbide, caustic soda, soda ash, yellow phosphorus, and coking), any production capacity below certain energy efficiency benchmarks will be eliminated by 2025

Comment MCC: This sounds like a decent plan to reduce energy consumption for these segments, and to eliminate outdated capacity.

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Feb 19, 2022: A note issued by Henan province states that in the production of chemicals from coal, the coal used as raw material will not be included in the assessment of total coal consumption

Comment MCC: This could be a lifeline to coal chemicals but also will create further complexity as it requires a separation of coal used as energy in chemical processes from that used as raw materials.

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Feb 18, 2022: A list of key projects released by the Yantai Municipal Government includes 36 chemical projects, 14 of which are by Wanhua.

Comment MCC: The scope and investment scale of these 14 projects further emphasizes Wanhua's ambition to become a chemical leader not only on a national but on an international scale, reaching from petrochemicals to specialty chemicals.

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Feb 17, 2022: 18 of the top 20 Chinese A-share listed companies in chemical raw materials have released performance forecasts for 2021. 17 have recorded a year-on-year increase in net profit, and 14 have increased their net profit by more than 100%.

Comment MCC: As stated before, 2021 was a good year for the chemical industry in China.

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Feb 16, 2022: Shares in the Hong Kong-listed fragrances and tobacco flavorings company Huabao have lost more than two-thirds of their value since the probe into "suspected disciplinary violations" by chairwoman Chu Lam Yiu was announced

Comment MCC: According to the Financial Times, taxes on cigarettes account for more than 5% of the revenue of the central government, which presumably has protected the industry for some time even though very likely the combined health damages from smoking far exceed the government revenue.

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Feb 15, 2022: Shandong Province is phasing out outdated refining capacity and forcing the development of new materials and fine chemicals industries. More than half of the major chemical projects announced for 2022 are new material type of chemical projects while 24% of chemical projects are bulk chemical projects, 12% of major chemical projects are pharmaceutical and intermediate projects, and 12% of chemical projects are fine chemicals projects.

Comment MCC: If indeed less than one-quarter of chemical projects is related to bulk chemicals, this is a substantial shift of emphasis, though the number of projects alone (without an indicator of size) is an insufficient measure.

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Feb 14, 2022: Wanhua Chemical (Fujian) has broken ground for a 400 t MDI, 250 kt TDI, and 800 kt PVC project.

Comment MCC: The inclusion of PVC production as an outlet for the chlorine created during the isocyanate production shows that at least, in this case, Wanhua regards the full integration of value chains as more important than a focus on particularly attractive or technologically demanding products. This is somewhat different from the approach taken by the leading Western companies, including BASF, which is often regarded as a model for Wanhua.

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Feb 13, 2022: During the "14th Five-Year Plan" period, Hebei Province will optimize and strengthen the petrochemical industry, vigorously develop high-end fine chemicals, actively expand synthetic materials, accelerate the construction of petrochemical parks, carry out the identification of chemical parks, and promote the transfer of industries to the coast and the agglomeration of chemical parks.

Comment MCC: While the separate planning of the individual provinces provides room for experimentation, it also means that some provincial statements just seem to be copied and pasted from those of other provinces or the central government.

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Feb 12, 2022: Shenghong's Inner Mongolia Sierbang Energy and Chemical Technology Co., Ltd.'s green new material circular economy industrial park project has been approved for pre-examination. The first phase covers the production of methanol and downstream acetic acid, formaldehyde, acrylic acid, 1.8 million tons/year of olefins, degradable materials, superabsorbent resins and other high-end new materials. and fine chemical products; the second-phase investment covers methanol, methanol-to-olefins and new downstream chemical materials

Comment MCC: It almost seems as if the projects have not changed much except for having added the adjective "green" to their names. Is this progress?

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Feb 11, 2022: According to C&EN, policies to control investment in products that require a lot of energy to make-including many basic chemicals-should benefit existing chemical companies by capping new supplies.

Comment MCC: While this is true, it will also put pressure on the less energy-efficient players to improve their processes and catch up with the industry leaders.

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Feb 10, 2022: The ten major Chinese producers of pivaloyl chloride have a combined capacity utilization of 54%

Comment MCC: Given the low expected market growth of only 3.6%, it seems that these overcapacities will persist, and margins will be depressed.

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Feb 09, 2022: Shanxi Coking Coal Group Feihong Chemical Co. canceled a 600,000-ton/year olefin and coke oven gas-to-methanol integration project

Comment MCC: The rationale given is that "Under the background of China's establishment of carbon peaking and carbon neutrality goals, continuing to promote coal-to-olefin projects will face greater market risks"

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Feb 08, 2022: The total profit of the chemical raw materials and chemical products industry in 2021 was 801.94 billion yuan, an increase of 87.8%

Comment MCC: As stated before, 2021 was a good year for China's chemical industry.

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Feb 07, 2022: Hengyi Petrochemical, via its subsidiary Guangxi Hengyi New Materials Co., Ltd. plans to invest in a caprolactam-polyamide project with an annual output of 1.2 million tons. Fujian Fuhua Gulei Petrochemical received environmental approval for a 400 kt nylon 66 project.

Comment MCC: Not surprisingly, these activities coincide with the likely exit of several Western chemical companies from these markets, indicating that they are afraid of the lower price level and commoditization from the entry of more Chinese competitors.

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Feb 06, 2022: In the Hurun list of the top 500 non-state-owned enterprises in China, 38 are chemical companies

Comment MCC: Perhaps more interestingly, the chemical industry as a whole rose from sixth to third place compared to 2020, indicating the increasing importance of the industry.

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Feb 05, 2022: According to ICIS, China per capita consumption of HDPE ranges from 6 kg g per year and person in Gansu province to 28 kg in Beijing.

Comment MCC: This is a good illustration of the diversified state of China's chemical market, making a one-size-fits-all approach to the country problematic.

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Feb 04, 2022: Wanhua Chemical will start a lithium iron phosphate lithium battery cathode material project with an annual production of 50 kt

Comment MCC: Another project establishing Wanhua's credentials as a broad-based chemicals producer.

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Feb 03, 2022: BASF will partner with China BlueChemical and Wuhuan Engineering to develop new technology for use of CO2 rich marine gas. Specifically, BASF will develop and supply innovative catalyst solutions that enable CO2 direct utilization via reforming and synthesis gas to chemicals - this will allow the utilization of Marine gas with a high CO2 content

Comment MCC: It is encouraging to see such cooperation - an indication that IP issues seem manageable from the perspective of BASF.

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Feb 02, 2022: In 2015, exports accounted for 25% of China's GDP while in 2020 this was down to 19% (ICIS/Richardson, Globaleconomy.com)

Comment MCC: Consequently, most recent foreign chemical investments target the local market, not exports from China.

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Feb 01, 2022: According to John Richardson of ICIS, in 2000, China's HDPE per capita demand was 37% more than the developing world, but in 2020 there was a difference of more than 300%.

Comment MCC: Of course, there are many ways to illustrate China's remarkable economic growth in the last 2 decades - this is one of them

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Jan 31, 2022: The profit of Chinese chemical companies increased by 116% in the first 10 months of 2021 compared to only 42% for the overall industry (C&EN)

Comment MCC: Strong export demand is one important contributor to this increase.

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Jan 30, 2022: About 100 new firms, many focused on high-end specialties, entered the ranking of the top 500 Chinese chemical companies, mostly replacing basic chemical producers (C&EN).

Comment MCC: According to the China Chemical Industry News, the rise of these firms is due primarily to their investment in products necessary for low-carbon development

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Jan 29, 2022: The Jiangsu Provincial Emergency Management Department terminated the license for production of hazardous chemicals of 112 enterprises

Comment MCC: Recently, Jiangsu seems to be at the forefront of regulating and restricting chemicals, despite this being an important sector for the province. Apparently, Jiangsu - with its proximity to Shanghai and its well-developed economy - has more alternatives to chemical production than most other provinces, and thus can afford to restrict the industry more tightly.

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Jan 28, 2022: Though capacity utilization for carbon black in China is below 70%, producers keep expanding capacity.

Comment MCC: This is a situation typical for China's chemical industry - but still puzzling for Western observers.

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Jan 27, 2022: China has imposed antidumping duties on monoalkyl ethers of ethylene glycol and propylene glycol originating in the United States.

Comment MCC: It is still beyond me how such antidumping duties can be in the spirit of free trade - but I guess as long as every country imposes some, nobody can really complain.

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Jan 26, 2022: Among the three major state-owned oil companies, Sinopec is the most active one in the hydrogen energy industry and has formulated the goal of becoming China's largest hydrogen energy company

Comment MCC: In military terms, this could be described as mission creep. More helpful in this case is system theory - an organization, once established, develops its own will to survive, whether or not the new objectives are a good fit with the original organization.

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Jan 25, 2022: Five of the top 7 biggest private companies in Inner Mongolia are chemical companies covering, e.g., calcium carbide, methanol, coal-to-natural gas, chlor-alkali industries, polysilicon industries and other key chemical industries.

Comment MCC: This shows the importance of chemicals for Inner Mongolia and makes it a bit doubtful to what extent stricter environmental regulations will be fully implemented in the province.

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Jan 24, 2022: According to the Work Safety Committee of the State Council, there are still 60 chemical parks that have not completed the assessment and classification, and individual provinces have not even identified and announced chemical parks as required.

Comment MCC: This is surprising given the amount of attention this topic has received recently - if I was a chemicals producer in one of these 60 parks, I would certainly be rather worried now.

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Jan 23, 2022: Sinopec Zhijin is running a 500 kta PGA (polyglycolic acid) project consisting of coal gasification, cryogenic separation and hydrogen production, coupling hydrogenation and polyglycolic acid production.

Comment MCC: According to the official statements, "traditional coal resources will be converted into easily degradable polyglycolic acid, which will be used by enterprises to produce high-end green products." This sounds a lot like greenwashing to me.

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Jan 22, 2022: The number of new chemical materials enterprises in China increased until 2019, when it reached a peak of 475 companies. This number declined by almost 10% to 433 in 2020.

Comment MCC: This is despite further substantial growth of the market, indicating consolidation as the market matures.

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Jan 21, 2022: The profit of Hebang Bio, a Chinese manufacturer of chemical products, is expected to increase by more than 70 times year-on-year, from 41 million RMB in 2020 to more than 3 billion RMB in 2021.

Comment MCC: The company profits from increased sales prices of its main products including glyphosate, soda ash, ammonium chloride, and glass. In turn, these price increases are due to the increase in environmental protection requirements and the elimination of outdated production capacity, which limited capacity expansions while downstream demand increased.

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Jan 20, 2022: While best-in-class natural gas to ammonia synthesis requires a minimum energy consumption of 27 GJ/ton, the domestic minimum consumption is about 30 GJ/ton.

Comment MCC: This is an example for opportunities for China to improve energy consumption just by adopting more modern technology. Indeed, a number of Chinese companies including CNOOC and Yuntianhua are working on improving this process.

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Jan 19, 2022: In 2021, the price of chemical raw materials and chemical products manufacturing industry increased by 19.1%, the first time in the past three years that the price increase of chemical raw materials and chemical products manufacturing industry has achieved positive growth (2020 was -5.9%, 2019 was -3.9% %).

Comment MCC: This was a good year for China's chemical industry - at least for those bigger ones that have survived the tightening of environmental regulation.

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Jan 18, 2022: Pharmaron, a Beijing-based drug services firm, has acquired the Cramlington, England, site of Aesica Pharmaceuticals from Recipharm (C&EN)

Comment MCC: An interesting move as there could be obvious benefits for Chinese API producers in having a production basis in Europe in times of increasing efforts to shorten supply chains.

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Jan 17, 2022: China's chemical companies account for 4% of the country's total carbon emissions.

Comment MCC: While this is a relatively low share, the carbon intensity (the amount of carbon dioxide per unit of value created) of the chemical industry is high. That in turn means that the chemical industry will be one of the focus industries for reducing carbon dioxide emissions, and thus will be strongly affected.

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Jan 16, 2022: The coal-to-ethylene glycol project of Xilingol Sunite Alkali Industry Co., Ltd., a wholly-owned subsidiary of Henan Zhongyuan Chemical Co., Ltd., will be terminated.

Comment MCC: To me - though not necessarily to all industry participants - it is clear that the short period of modern coal chemicals is already drawing to an end despite the progress China has made in this area. According to the information published, the approval of energy consumption indicators has become the biggest bottleneck for the continued construction of the project

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Jan 15, 2022: Arkema will double its Sartomer photocure resins capacity at its Nansha plant in China.

Comment MCC: The company states that this is due to the rising demand in Asia "for innovative solutions in electronics and renewable energies".

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Jan 14, 2022: Ascend Performance Materials will construct a new hexamethylene diamine and specialty chemicals plant in Lianyungang, China

Comment MCC: This is the largest investment of the company outside of the US, highlighting the importance of the Chinese market for engineering plastics.

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Jan 13, 2022: Chinese consumption of carbon fiber consumption is growing at a rate of over 20% annually. Industrial fields, especially wind power and photovoltaic will become big users of carbon fiber (CCR)

Comment MCC: While China's carbon fiber production capacity is substantially below demand, there is also a mismatch between lower-grade domestic material and demand for higher-end grades which is mainly satisfied by imports

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Jan 12, 2022: From now until the end of March, Shanxi Provincial Emergency Management Department will carry out a "Hazardous Chemical Enterprises Safety Production Risk Inspection and Remediation", a large-scale investigation and rectification of the safety production risks of hazardous chemical enterprises.

Comment MCC: The announcement specifically mentions that small-scale chemical production and chemical production in rental sites will be a focus area. While such production is indeed more likely to incur safety risks, this also points to industry consolidation as a desirable secondary objective of the campaign.

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Jan 11, 2022: China aims to raise water reuse rates of industrial enterprises above designated size to around 94% by 2025, when water consumption per RMB10 000 of industrial added value will be down 16% from 2020.

Comment MCC: Affected industries include petrochemicals and chemicals, potentially forcing relevant companies to reduce their water usage or invest in water recycling technologies.

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Jan 10, 2022: In the first 11 months of 2021, foreign investment in China was up 15.9% YoY to RMB1.04 trillion (around US$157.2 billion, up 21.4% YoY), excluding banking, securities, and insurance areas.

Comment MCC: China continues to be an interesting investment location for foreign companies, including chemical ones.

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Jan 09, 2022: The Ministry of Industry and Information Technology published the list of energy efficiency "leaders" in key energy-using industries in 2021 including a total of 29 chemical companies. The selected industries include crude oil processing, ethylene, synthetic ammonia, methanol, caustic soda, soda ash, p-xylene, calcium carbide, and coking industries.

Comment MCC: Assuming energy efficiency will become even more of an issue in the future, these benchmarks could in the long run well be applied to all companies, or at least to new projects.

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Jan 08, 2022: The Chinese Ministry of Ecology and Environment (MEE) has barred companies from expanding HFC production capacity from January 1, according to the CGTN website.

Comment MCC: This is a necessary but not sufficient step in strengthening control of HFCs.

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Jan 07, 2022: Wanhua established a subsidiary, Wanhua Chemical (Yantai) Fine Chemical Co., Ltd. with a registered capital of 50 million yuan.

Comment MCC: The business scope includes new catalytic materials and additives, feed additives, and bio-based materials, indicating that Wanhua will in the long run also be active in specialty chemicals

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Jan 06, 2022: India has imposed antidumping duties on some Chinese chemicals, for five years to guard local manufacturers from cheap imports from China. The chemicals are sodium hydrosulphite (used in dye industry); silicone sealant (used in manufacturing of solar photovoltaic modules, and thermal power applications); hydrofluorocarbon (HFC) component R-32; and hydrofluorocarbon blends (both have uses in refrigeration industry) (Indiatimes)

Comment MCC: It is still beyond me how such antidumping duties can be in the spirit of free trade - but I guess as long as every country imposes some, nobody can really complain.

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Jan 05, 2022: Clariant will construct its first Chinese production facility for Exolit OP flame retardants at its existing site in Daya Bay, Huizhou, Guangdong Province, an investment of about CHF 60 million.

Comment MCC: The rationale given is to increase the speed of providing products to Chinese customers, particularly in E&E applications.

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Jan 04, 2022: In the latest list of China's top 500 listed companies by market value, there are 9 chemical companies among the top 100: PetroChina ranks 11th, Sinopec ranks 20th, China Shenhua ranks 28th, Wanhua Chemical ranks 50th, China National Offshore Oil ranks 52nd, Enjie ranks 75th, Ganfeng Lithium ranks 86th, Salt Lake Co., Ltd. ranks 93rd, and Rongsheng Petrochemical ranks 99th.

Comment MCC: While this is an impressive number of chemical entries compared to Western markets, it also shows that the higher ranks are still dominated by commodity producers rather than specialty chemical players.

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Jan 03, 2022: 39 listed chemical companies were recently identified to have environmental risks, mainly in Beijing, Guangdong, Jiangsu, and Zhejiang. 17 are state-owned enterprises, and 7 are enterprises with a market value of 100 billion yuan.

Comment MCC: The large share of state-owned enterprises among them suggests that these are not protected from environmental examinations. However, the fines handed out - for example, Xinjiang Zhongtai was fined 600,000 RMB for burying hazardous waste under a lawn - are still relatively low compared to the value and revenue of these companies.

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Jan 02, 2022: Satellite Chemistry will invest in what they describe as new green chemicals in Lianyungang Xuxu New District New material industrial park project. The total investment is about 15 billion yuan. Planned annual output includes 200 kt of ethanolamine and 800 kta of polystyrene.

Comment MCC: So far, so unremarkable - however, it is not clear to me why an investment in chemicals such as PS is now regarded as an activity in "new green chemicals".

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Jan 01, 2022: In 2020, the top 100 private chemical enterprises accounted for 27.1% of the industry's operating income and 28.7% of the industry's total profit.

Comment MCC: This indicates the substantial (and increasing) importance of major private chemical companies in China. Somewhat to my surprise, their profitability is only slightly above the industry average though, probably partly reflecting the fact that the largest private companies are more likely to be active in commodity and semi-commodity chemicals than in specialties.This section contains information and comments on China´s chemical industry, as posted from January 2022 onwards. Entries are not revised later. For older entries, see separate sections. For daily updates, please join the LinkedIn group "News and Trends in China´s Chemical Industry".

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Jan 03, 2024: An analysis of snowpack collected in Harbin revealed the presence of different pollutants depending on the collection site. Specifically, "coal combustion, industrial emissions, and traffic-related activities lead to the enrichment of heavy metals in the snowpacks of urban and suburban areas, while coal combustion and biomass burning contribute to pollution in rural areas."

Comment MCC: An interesting approach to analyse pollution.

https://www.sciencedirect.com/science/article/abs/pii/S0045653523031569

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Jan 02, 2024: The market share of the top 5 Chinese maleic anhydride producers reached 64% in 2023, up almost 10% from 2022 and double the share in 2013.

Comment MCC: Underlying causes are the shift to larger scale plants, shifts in production technology, and value chain integration.

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Jan 01, 2024: A recent paper analyzes the origin, evolution, and current status of Chemical Industrial Parks in China.

Comment MCC: Perhaps even more important, the paper also analyzes the characteristics and causes of 90 chemical accidents in detail.

https://www.sciencedirect.com/science/article/abs/pii/S0950423023002632

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Dec 31, 2023: In 2022, China's refining capacity reached 920 million t/a while crude oil processing volume was 676 million t/a

Comment MCC: Thus, the utilization rate of the capacity was 73.5%, significantly lower than the world average operating rate of 81% and the rate of developed countries at 86% (CCR)

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Dec 30, 2023: Sika has significantly expanded its research and development capacities in the Asia/Pacific region, opening a new technology center in Suzhou, China.

Comment MCC: The center will focus on activities in construction and environmentally friendly mobility, both chemical segments for which China is of high importance.

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Dec 29, 2023: Law enforcement agencies in northern China have shut down plants manufacturing of counterfeit Viton^TM FreeFlow^TM fluoroelastomer (BUSINESS WIRE)

Comment MCC: According to the report, the plant even purchased genuine fluoroelastomer from local subsidiaries to mask their counterfeiting operations

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Dec 28, 2023: Evonik and Fuhua Tongda Chemicals Company (Fuhua) have signed a license agreement for Fuhua to build a new hydrogen peroxide plant in Sichuan using Evonik's know-how. The two partners will also consider cooperating in joint production and marketing of specialty grades of hydrogen peroxide, e.g., for solar panel production or aseptic food packaging.

Comment MCC: This is one of several cooperations of Evonik with local chemical producers this year, indicating a preference of Evonik for this type of participation in the Chinese market.

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Dec 27, 2023: In September 2023, China was by far the biggest importer of chemical products from Saudi Arabia, accounting for 19.6% of total export value followed by India (13.9%) and the US (8.9%).

Comment MCC: In addition, Saudi Arabia also has massively increased its chemical investment in China along with these large exports to China.

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Dec 26, 2023: China will impose tariffs on some chemicals including paraxylene, propylene and orthoxylene imported from Taiwan

Comment MCC: Both sides state that the other side violated an existing Economic Cooperation Framework - and given the political tensions between them, my guess is that both sides are right.

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Dec 25, 2023: Fitch expects market conditions for chemicals in APAC to improve slightly in 2024 after demand weakened substantially in 2023. For China, the ratings agency forecasts a potential but modest restocking-driven recovery but continuing headwinds from weak the property market.

Comment MCC: The outlook for agrochemicals is more positive as Fitch expects "demand for agrochemicals in APAC to be more resilient than other chemical products in the current downturn"

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Dec 24, 2023: BASF has appointed Markus Kamieth to take over as CEO

Comment MCC: In some ways, this confirms BASF's focus on China, as Kamieth currently leads BASF's China operations. This is despite growing criticism of this focus as some are worried about growing dependency on China.

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Dec 23, 2023: According to the China Chemical Reporter, in 2022 there were more than 6000 coatings manufacturers in China, primarily in architectural coatings

Comment MCC: Other indicators are the small market share of the top 10 companies (17% compared to 28% globally) and the top 100 companies (42% compared to 70-90%). Foreign companies are still among the leaders, accounting for 6 of the top 10 players.

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Dec 22, 2023: According to the US Alliance for Chemical Distribution, the implementation of tariffs on Chinese chemical imports could result in an additional $26 million dollars paid in duties by U.S. chemical distributors.

Comment MCC: The increasing protectionism of the US is indeed a concern, and it seems that US business interests such as those expressed here are currently being trumped by nationalism and populism supported by both major US parties.

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Dec 21, 2023: According to a study carried out for the European Commission by Centexbel, the Belgian Centre for Textiles and Plastics, one garment in six coming from China contains chemicals that contain carcinogenic substances such as bisphenol, nickel, or chromium-6.

Comment MCC: Interesting information, but it is difficult to judge how meaningful this is without a similar test conducted on garments originating from outside of China.

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Dec 20, 2023: China's aromatics capacity had a CAGR of 22% between 2019 and 2023

Comment MCC: However, this high growth rate is expected to slow to a CAGR of about 4.4% between 2024 and 2027 as substantial capacity has already been established. For some materials such as toluene, the self-sufficiency rate is already above 100%.

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Dec 19, 2023: The US is the largest importer into the EU with a 21% share, bigger than China (18%). It is also the most important export destination with 27% compared to 7% for China (Eurostat data)

Comment MCC: Surprisingly, China is only the fourth biggest export destination - both the UK and Switzerland are also bigger at 10% and 9%. Thus, purely in terms of exports, a trade bifurcation may not have as drastic consequences as feared. The reason for the lowish share is probably that many German chemical companies already produce a large share of their China sales in China.

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Dec 18, 2023: According to an article in TNN, Gujarat's chemical industry is struggling due to China's cheaper raw material supply. Apparently, finished products from China are sold at the same price as raw materials.

Comment MCC: This has led to a 17 billion USD trade deficit for India's chemical industry.

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Dec 17, 2023: China is now the world's largest market for e-buses, making up more than 95% of global stock. At the end of 2022, 77% or 542,600) of all urban buses in the country were "new energy vehicles" while around 84% of the new energy bus fleet was pure electric (BBC)

Comment MCC: The transition was fast - in 2015, 78% of Chinese urban buses still used diesel or gas. Probably as a consequence, China is now also home to some of the world's biggest electric bus manufacturers.

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Dec 16, 2023: A recent scientific paper examines how deploying green hydrogen can be utilized to decarbonize China's coal chemical sector

Comment MCC: The paper includes some interesting assumptions and estimates, for example, the assumed 9% contribution of China's coal chemical production to national carbon dioxide emissions, a very high value. The authors estimate that about 50% of these emissions can be avoided by using green hydrogen.

https://www.nature.com/articles/s41467-023-43540-4

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Dec 15, 2023: China has agreed to reduce the flow of precursor materials for the production of the fentanyl into the U.S.

Comment MCC: Of course, these materials can also come from other countries - China in this case seems to be just a convenient scapegoat for what is essentially a domestic problem

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Dec 14, 2023: Covestro will introduce low-carbon footprint polyurethane dispersions into the Asia Pacific market starting in Q1 2024. These materials have a content of up to 80 percent alternative raw materials based on solids.

Comment MCC: Most likely, the customers will be global companies rather than local ones, as they have more to gain in reputation with a statement that their materials are sustainable.

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Dec 13, 2023: Umicore will build the world's largest proton exchange membrane catalyst production facility in China

Comment MCC: China thus wisely pursues several ways to decarbonize transportation, not only lithium batteries.

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Dec 12, 2023: According to CCR, by 2025, China's self-sufficiency rate for ethylene, propylene and PX will reach 90%, 116% and 118% respectively.

Comment MCC: Particularly for the latter two products, this will have a massive negative impact on those foreign producers currently importing these materials to China.

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Dec 11, 2023: A recently published paper is titled "Investigation of Plant-Level Volatile Organic Compound Emissions from Chemical Industry Highlights the Importance of Differentiated Control in China"

Comment MCC: The assessment covered 3461 plants, 127 products, and 50 volatile organic compounds. One key finding is that there is a particular risk from plants in Eastern China (due to their proximity to highly populated areas) and plants producing chemical fibers (due to their release of ozone and secondary organic aerosol).

https://pubmed.ncbi.nlm.nih.gov/38064660/

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Dec 10, 2023: According to ChemAnalyst, in the week ending on November 3, 2023, China's paraxylene production capacity utilization increased substantially, reaching 80%.

Comment MCC: The report attributes the high utilization to both a healthy economy and efforts of key producers to improve their performance. Politically, a high domestic capacity utilization is also desirable as China still depends on imports.

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Dec 10, 2023: A former Chinese University of South Florida chemistry Ph.D. student who was arrested after trying to poison his neighbor with opiods was deported to China.

Comment MCC: Readers are advised that this is not the right way to apply chemical knowledge.

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Dec 09, 2023: Sinopec signed a 27-year LNG supply and purchase agreement with QatarEnergy

Comment MCC: This is the third long-term supply deal between Sinopec and Qatar Energy, the world's biggest LNG supplier

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Dec 09, 2023: At the Third Belt and Road Initiative Conference, China and Nigeria announced a methanol plant in Nigeria, with the methanol produced exported to China.

Comment MCC: Chinese companies such as CNOOC have made investments in Nigeria in the past.

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Dec 09, 2023: According to The Economist, "China is winning Africa's ‘white-gold' rush for lithium

Comment MCC: The Economist sees China's grip on clean-energy minerals as a challenge for the West.

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Dec 09, 2023: Covestro has forged a global partnership with Chinese automotive trim company Xinquan Automotive

Comment MCC: Such partnerships are promising for German chemical companies with substantial sales to Chinese customers in China as these Chinese companies expand internationally and thus may require chemical products in Europe, North America and elsewhere.

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Dec 09, 2023: The profit of large-scale Chinese chemical companies dropped by 47% in the period from Jan-Sep 2023 compared to the previous year.

Comment MCC: This is much more than the 9% drop for all industries.

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Dec 09, 2023: Huafon Group and Covestro aim to cooperate on the development of bio-based MDI.

Comment MCC: Apparently, the collaboration will focus on MDI produced by Covestro based on a mass balance approach, which results in a lower carbon footprint due to the use of alternative raw materials containing plant waste.

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Dec 08, 2023: UNCTAD published a paper titled "China's Policy Strategies for Green Low-Carbon Development: Perspective from South-South Cooperation"

Comment MCC: As this paper has a length of 95 pages, I cannot provide a meaningful summary here, particularly as the paper unfortunately lacks a summary or conclusion. So, check it out yourself if the topic is relevant to you.

https://unctad.org/system/files/official-document/gds2023d6_en.pdf

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Dec 07, 2023: BASF has been criticized in the German business press for their plant in Xinjiang run in a JV with Chinese company Markor.

Comment MCC: This puts BASF in a difficult position - on the one hand, China is a very important market and the site of massive BASF investments, on the other hand, any association of BASF with claimed human rights violations in Xinjiang may hurt the company outside of China.

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Dec 06, 2023: China accounts for more than 80% of the global solar cell exports, more than 50% of lithium-ion batteries, and more than 20% of electric vehicles (China Dialogue)

Comment MCC: Reasons behind China's strong position include government support, a huge home market, and well-established manufacturing capabilities. As a consequence, combined exports of EVs, lithium-ion batteries, and solar cells increased by 67% year-on-year in the period from January to March, and a 62% increase for 1H 2023. EVs have the strongest growth of the three categories while the more mature solar cells have the lowest.

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Dec 05, 2023: Wanhua Chemical plans to acquire part of Tongling Chemical, and retain the chemical business while spinning off the non-chemical business.

Comment MCC: Presumably Wanhua is primarily interested in Tonglings upstream resources in phosphate and sulfur, which can be utilized as raw materials for the battery business.

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Dec 04, 2023: The American Chemical Society published a paper titled "Advancing ‘Carbon Peak' and ‘Carbon Neutrality' in China: A Comprehensive Review of Current Global Research on Carbon Capture, Utilization, and Storage Technology and Its Implications"

Comment MCC: Worth checking out for those interested in the topic. https://pubs.acs.org/doi/full/10.1021/acsomega.3c06422#

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Dec 03, 2023: China plans to improve methane emissions control from now through 2025 and significantly improve from 2026-2030, according to the plan (Argus)

Comment MCC: China is the largest emitter of methane from fossil fuels, and methane is the second largest contributor to global warming, thus these controls - if implemented properly - will make a difference.

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Dec 02, 2023: According to Plasteurope, China aims to substitute plastics with bamboo as a way to reduce pollution.

Comment MCC: While the plan - outlined in an article by China Daily - lacks details, it includes the establishment of 10 application centers looking at replacing plastics with bamboo.

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Dec 01, 2023: BASF signed a 40 billion RMB bank term loan facility with a maturity of 15 years for its Verbund site in Zhanjiang.

Comment MCC: Interestingly, the financing is primarily done with local funds, allowing BASF to benefit from the low-interest rates in China and possibly also to reduce risks from a bifurcation of the market - an application of the "In China for China" strategy that extends to funding. Local banks thus will have a strong interest in the site to be profitable, which may also mean strong local support for BASF.

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Nov 30, 2023: A report by Wood Mackenzie is somewhat positive regarding the carbon footprint of the newer overseas Chinese BRI projects.

Comment MCC: While China has not completely stopped financing, almost 90% of the more recent proposed coal-fired projects have already been canceled due to policy changes and increased opposition to coal since 2021. This is a major shift from the initial strong focus on coal projects.

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Nov 29, 2023: China has announced a USD 2.79 billion investment in lithium mining operations in Zimbabwe (Geopolitical Monitor)

Comment MCC: China will also start lithium processing in the country - a step that may potentially be beneficial for Zimbabwe's population - or only for the ruling elites.

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Nov 28, 2023: De Nora opened a new electrode production line at its Suzhou plant. As a result of the expansion, the site's total production capacity has tripled.

Comment MCC: Key products are equipment for chlor-alkali plants, for which China now has 45% of the global market, and electrodes for the production of copper foil used in the manufacture of lithium-ion batteries for electric cars and as a raw material for printed circuit boards.

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Nov 27, 2023: A German website by GTAI highlights the relatively weak situation of China's chemical industry, quoting contributing factors such as lower profits, lower demand from downstream customers as well as other trends such as the one to more sustainable products and the ongoing focus on safety in the chemical industry.

Comment MCC: Overall, the paper is skeptical about the prospects of China's chemical industry.

https://www.gtai.de/de/trade/china/branchen/chinas-chemiebranche-bekommt...

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Nov 26, 2023: RadiciGroup launched a new industrial facility in Suzhou, China, raising the manufacturing capacity of technopolymers by 100%.

Comment MCC: So far, like Radici, most Western chemical companies do not seem to reduce their investment, though they may focus more strongly on the domestic market ("in China for China") than before.

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Nov 25, 2023: In a recent earnings call, Peter Huntsman, CEO of Huntsman, stated that Huntsmans "focus is not on the export segment of the Chinese economy rather the domestic consumption and building side of the Chinese economy."

Comment MCC: This focus is widely shared among foreign chemical companies active in China and may limit the effect of a bifurcation of the global economy on these companies.

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Nov 24, 2023: Sinopec has put China's first LNG storage tank of 270,000 cubic meters into service on November 2 at its Qingdao LNG Receiving Terminal.

Comment MCC: As usual these days, this is also the world's largest LNG storage tank.

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Nov 23, 2023: From 2022 to 2027, China's PE capacity will increase by 57%, which will increase China's self-sufficiency rate and decrease imports.

Comment MCC: However, according to CCR, 26% of PE imports are specialties - and these will be hard to replace with domestically produced material.

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Nov 22, 2023: According to Nikkei Asia, in an analysis of the net incomes of about 13,000 Western companies, the chemical industry showed the largest year-on-year decline for Q3 2023 (43%).

Comment MCC: This is compared to a 3% increase for the total set of companies, indicating that the chemical industry indeed faces industry-specific issues.

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Nov 21, 2023: McGill University published a very interesting paper titled "No, Traditional Chinese Medicine Has Not Been Vindicated by Science". In it, they look at a new study claiming to prove the scientific foundation of traditional Chinese medicine.

Comment MCC: Basically, the McGill paper remains highly skeptical about both the study analyzed and the validity of TCM, highlighting "the implausibility of TCM: its herbs are variable mixtures of chemicals and its practices are incongruous and were repackaged by Mao Zedong in the middle of the 20th century to provide some kind of healthcare in the countryside even though he did not personally believe in their validity"

https://www.mcgill.ca/oss/article/medical-critical-thinking-health-and-n...

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Nov 20, 2023: The Hubei Provincial Government announced the "Implementation Plan for the Transformation and Upgrading of the Chemical Industry in Hubei Province (2023-2025)", which proposed that by 2025, the chemical industry will strive to achieve operating income of more than one trillion yuan.

Comment MCC: In line with the resources available in the province, a particular focus will be on phosphorus-based chemicals.

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Nov 19, 2023: The magazine Fortune India has a long article comparing the Chinese and the Indian chemical industry and forecasting a substantial strengthening of India's position from its current 4% of the global chemical market to 10-12% in 2040 (though this is still low compared to China's current 45%).

Comment MCC: Too long to summarize here - better read it yourself if you are interested. Some of the statements in the article are obviously wrong - for example, China's strength in chemicals is not primarily based on coal gasification - but worth reading.

https://www.fortuneindia.com/long-reads/indian-chemical-firms-take-fight...

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Nov 18, 2023: According to Asia Financial, China plans to increase its focus on the strategic rare earths industry, aiming to coordinate their exploration, development, utilization, and management.

Comment MCC: Of course, this has to be seen in the context of the trade war with the US. In rare earths, China has leverage as it produces about 70% of global supplies.

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Nov 17, 2023: Evonik entered a strategic cooperation with Baolijia, a Chinese leading emulsion manufacturer, to build a bio-based joint technology platform, especially in the field of coating applications for methacrylic acid bio-based monomers and emulsion products.

Comment MCC: Apparently, Evonik will provide Baolijia with application and technical support for VISIOMER® bio-based methacrylate monomer products produced by Evonik.

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Nov 16, 2023: China dominates the global iron oxide market with a total production capacity of about 800 kt in 2022 compared to 900-1000 kt global capacity (CCR)

Comment MCC: As domestic market demand is only around 300-350 kt, a large share of China's capacity is utilized to satisfy export demand.

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Nov 15, 2023: The share of coal-based PE in China is forecast to increase from 18.2% in 2022 to 20.5% in 2027

Comment MCC: This seems to contradict China's stated policy of aiming to reduce the emission of greenhouse gases such as carbon dioxide.

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Nov 14, 2023: After investing over US$130 billion into the solar industry in 2023, China will have more than 80% of the world's polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026 ( Wood Mackenzie)

Comment MCC: Given the scale of China's production, it is hard for foreign companies to compete even with local subsidies aiming to reduce the dependency on Chinese imports.
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Nov 13, 2023: Wanhua plans to expand its SAP capacity at its Wanhua site, adding another 30 kt of capacity.

Comment MCC: Currently, Wanhua is a small player as the global capacity is more than 4000 kt. However, Wanhua has plans to add more production bases for the material and to eventually reach a capacity of 500 kt, which would put the company in a similar league as the five global producers currently dominating the market.

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Nov 12, 2023: According to Reuters three Chinese companies (CNOOC, Eversun Holdings, and Wanhua Chemical) are evaluating Shell's Singapore assets that have been put up for sale, and are considering non-binding bids.

Comment MCC: The Shell assets include a 237,000 barrels per day refinery and a one million metric ton per year ethylene cracker.

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Nov 11, 2023: According to Statista, China produced 72% of the global chemical fiber in 2022.

Comment MCC: This is of course a much larger share than the second biggest producer India (8%) and the USA (3%).

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Nov 10, 2023: An NPR article describes the struggle of U.S. makers of medical gloves as they cannot compete with low-priced Chinese imports.

Comment MCC: While US producers got funding during the pandemic in order to create domestic production capacity, they now struggle to get the funds to complete the investments.

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Nov 09, 2023: According to an article in Nature, factories in Eastern China continue to release rising amounts of a powerful greenhouse gas, HFC-23, which is commonly produced as a by-product of refrigerant manufacture

Comment MCC: This is alarming as China has agreed to reduce its emissions - and with the tightened control of the chemical industry in China it becomes harder to believe that these emissions are not known to the government.

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Nov 08, 2023: While BASF will cut its investment budget, the company stated growth areas such as China were not likely to be affected.

Comment MCC: BASF's CEO also commented positively on demand from China, stating that although prices were still low in China, there had in recent weeks been a considerable recovery in demand for chemical products (Financial Times).

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Nov 07, 2023: Arkema has begun the production of specialty UV/LED curing resins at its expanded facility in Nansha, China

Comment MCC: According to the company, target industries include electronics, 5G technology, and renewable energy

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Nov 06, 2023: DuPont lowered its revenue and EPS guidance for the full year on slowing demand from China.

Comment MCC: The information on the development of the Chinese economy is conflicting - positive news tends to alternate with information on weaker demand.

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Nov 05, 2023: Croda has broken ground for a multi-purpose plant in Guangzhou, tripling its production capacity in China

Comment MCC: Croda entered China via the acquisition of Iberchem in 2020.

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Nov 04, 2023: Sabic reported a loss for the third quarter.

Comment MCC: One of the reasons given is the decline in global demand for chemical products, particularly from China.

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Nov 03, 2023: A subsidiary of China National Chemical Corporation (Donghua Engineering Science and Technology Co.) signed an EPC contract with a South African company for an 80 kt sulfuric acid process titanium dioxide project.

Comment MCC: Apparently, this will be the first titanium dioxide plant in Africa. It also indicates the rising level of process knowledge among Chinese companies.

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Nov 02, 2023: Evonik China and Shandong Vland Biotech Co. will establish a 55:45 JV in gut health solutions products for farm animals globally.

Comment MCC: While the main contributions from Vland are market access, regulatory capabilities in China and fast innovation, Evonik will contribute its global sales force and market access, R&D and global regulatory capabilities.

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Nov 01, 2023: China will require export permits for some graphite products from December.

Comment MCC: Graphite is used in the batteries for electric vehicles, and China provides 67% of global supplies of the natural form as well as more than 90% of the refined graphite used in EV battery anodes. The Chinese action likely is a retaliation for restrictions on Chinese companies.

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Oct 31, 2023: Wanhua will open an innovation center in Catalonia, Spain.

Comment MCC: This will be the third presence of Wanhua in Europe after Hungary and the Czech Republic, indicating further ambitions for global growth.

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Oct 30, 2023: According to the MIIT, there are more than 20,000 new materials companies in China, and the total output value in the first nine months of 2023 exceeded 5 trillion yuan.

Comment MCC: While somewhat undefined, the industry is regarded as strategic by the government, helping it to achieve a claimed double-digit growth. It supports or enables many relevant areas of new technology, particularly in new energy. And so far, China's strategy of heavily supporting new technologies in order to establish itself as a global leader seems to be quite successful.

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Oct 29, 2023: Arkansas officials took steps to force a Chinese government-owned agricultural company to divest itself of 160 acres of Craighead County farmland and pay a $280,000 fine for failing to file timely disclosures to the state.

Comment MCC: The land is ultimately owned by ChemChina via a subsidiary of Syngenta, and used for seed research. However, the claim of the Arkansas governor that "Seeds are technology. China's state-owned corporations filter that technology back to their homeland, stealing American research and telling our enemies how to target American farms. That is a clear threat to our national security and to our great farmers." sounds more like propaganda than reality at a time when China-bashing is popular in the US.

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Oct 28, 2023: Wacker China contributes about 30 percent of the group's sales

Comment MCC: This makes it the German chemical company with the biggest reliance on China among the larger ones - a fact that is reflected in recent massive investments in dispersions and dispersible polymer powders as well as functional silicone products. The latter benefit from China's shift toward EVs.

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Oct 27, 2023: Trina Solar, a Chinese producer of solar panels, plans to build a large-scale photovoltaic manufacturing base in the United Arab Emirates. The planned capacity includes 50,000 tons of high-purity polysilicon, 30 gigawatts of crystalline silicon wafers, and 5 gigawatts of photovoltaic (PV) modules, to be built in three phases.

Comment MCC: Given the conditions in the UAE, the location should be well-suited for the generation of solar power - and Trina has the expertise to set up local production.

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Oct 26, 2023: According to the BASF website, by 2030, Asia Pacific will represent around 70 percent of the global chemical market with more than half of the global chemical industry sales and about three quarters of global chemical production growth coming from China alone.

Comment MCC: Of course, BASF needs to justify its heavy (and occasionally criticized) investment in China - still, the prediction seems credible.

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Oct 25, 2023: Clariant will open a new production facility for halogen-free flame retardants in Daya Bay, Huizhou.

Comment MCC: The reasons for the establishment of local production are the usual ones given by foreign chemical companies - easier customization and shorter lead times: "Local production means we can improve cooperation and design tailored solutions to their developing needs as well as significantly reduce delivery lead times."

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Oct 24, 2023: Akzo Nobel International Paint will add production capacity for 8,000 tons of high-performance wind turbine blade coatings per year in China.

Comment MCC: China is already the country with the largest installed wind power capacity in the world, and supportive government policies suggest further growth. That makes it an attractive market for these coatings.

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Oct 23, 2023: China's output of coatings fell by 8.5% in 2022 (CCR)

Comment MCC: Factors likely to have caused this decline are Covid and the depressed state of the real estate sector. For example, Shanghai's coatings output was 26% lower than in the previous year. The longer-term growth prospects are also somewhat limited and are estimated to be between 1.4 to 2% annually.

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Oct 22, 2023: Domestic output of titanium dioxide grew 3.27% YoY in 2022

Comment MCC: This is an indicator that the past high growth rates for commodity chemicals in China are probably a thing of the past.

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Oct 21, 2023: China's Petroleum and Chemical Industry Prosperity Index rose to 96.38 in July 2023, up by 1.63 percentage points month on month. It is thus back in what is considered the normal range.

Comment MCC: However, it is still below the value of 100 which is the neutral one.

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Oct 20, 2023: The locations of new maleic anhydride plants tend to be in Southern coastal areas such as Fujian rather than in the traditional North China locations such as Hebei and Shanxi.

Comment MCC: A major factor is the shift from using coal as raw material (which is easily available in the Northern provinces) to LNG (which can be imported directly to Southern port locations). In addition, consumers of maleic anhydride are also more likely to be located in the South.

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Oct 19, 2023: In 2022, the domestic apparent consumption of styrene was about 14.1 million tons, a year-onyear increase of 3.8%.

Comment MCC: This comes after annual growth rates between 6.3% and 8.9% for the previous four years, suggesting that the fast growth of the past is finally coming to an end. Realistically speaking, styrene production should in the future grow below GDP (which presumably will be in the 5% area) as services should have higher growth than goods, and specialty chemicals higher growth than commodities such as styrene.

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Oct 18, 2023: Hengyi Group will build the country's largest nylon production base in Qinzhou with a total investment of 12 billion yuan and an annual output of 800,000 tons.

Comment MCC: This is indeed a huge production capacity given that global caprolactam production capacity is about 9 million metric tons per year.

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Oct 17, 2023: LG Chem will partner with Huayou Cobalt to establish a joint venture for the construction of an electric vehicle battery material factory in Morocco, which is to produce 50 kt of lithium iron phosphate cathode materials annually.

Comment MCC: Huayou Cobalt is a listed Chinese company with a focus on new energy Li-ion battery materials and advanced cobalt materials.

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Oct 16, 2023: LG Chem will sell its polariser business division to Shanjin Optoelectronics and its polariser material business to Hefei Xinmei Materials Technology, with a combined transaction of about 800 million USD.

Comment MCC: The rationale given by LG Chem is the alignment of the business with LG Chem's growth strategy - which of course does not explain very much.

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Oct 15, 2023: The list of the top 500 Chinese companies in 2023 includes more than 60 petroleum and chemical companies, with high-ranking chemical companies on positions 2, 3, and 9 (National Petroleum Corporation, China Petrochemical Corporation, Sinochem Holdings)

Comment MCC: With 12% of all companies in the list, this highlights the high importance of the chemical industry for China's overall economy.

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Oct 14, 2023: The Yushen Coal Yushuwan Coal Mine of Yulin City, Shaanxi Province and Caojiatan Coal Mine of Shaanxi Coal Caojiatan Mining Co., Ltd. have received approval to increase their production capacity

Comment MCC: Of course, it is hard to align these approvals with China's stated commitment to reduce carbon dioxide emissions. Maybe nobody will notice.

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Oct 13, 2023: China National Chemical Engineering Corporation and Russia's Baltic Methanol Co. agreed on a contract for the construction of a natural gas-to-methanol unit with an annual output of 5 million tons.

Comment MCC: This is claimed to be the world's largest methanol project. It seems to offer substantial advantages to both sides, allowing the Russian company to turn natural gas which in the current political situation is hard to sell to Western buyers into the more valuable methanol while allowing the Chinese company to utilize its engineering know-how.

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Oct 12, 2023: Shanxi province, a major coal producing province is aiming to expand its biomaterials industry in the face of economic and environmental pressure.

Comment MCC: Areas regarded as important in the relevant government plans include biomaterials, bio-agriculture, bio-energy, and bio-medicine. Specifically, this includes the development of bio-based nylon, the development of high-performance biodegradable materials such as dibasic acid glycol copolymers, development of specialty human collagen, development of biodegradable polymer materials, and the use of biotechnology to promote clean utilization of coal

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Oct 11, 2023: China's styrene production increased from 10.1 million tons in 2020 to 13.9 million tons in 2022, a CAGR of 17%.

Comment MCC: As a consequence, China's self-sufficiency reached 96% in 2022, and China is likely to become a net exporter as early as 2024 or 2025 - as it already is for more and more chemicals.

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Oct 10, 2023: The US Justice Department released eight indictments China-based companies and their employees with crimes relating to fentanyl and methamphetamine production, distribution of synthetic opioids, and sales resulting from precursor chemicals.

Comment MCC: According to press reports, the Chinese companies "often attempt to evade law enforcement by using re-shippers in the United States, false return labels, false invoices, fraudulent postage, and packaging that conceals the true contents of the parcels and the identity of the distributors. In addition, these companies tend to use cryptocurrency transactions to conceal their identities and the location and movement of their funds."

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Oct 09, 2023: A start-up meeting was held for a,000 tons/year pilot test project of Shaanxi Coal Group Yulin Chemical Company. It is the initial phase of a larger 4 million tons/year CCS demonstration project.

Comment MCC: While it is hard to imagine that such projects can be commercially viable in China under current conditions, it will help China gain expertise should the economic rationale change.

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Oct 08, 2023: The Chinese Ministry of Science and Technology published the "National Green and Low-Carbon Advanced Technology Achievements Catalog". It lists 85 technological achievements related to energy conservation, emission reduction, and other environmental advances in areas such as water pollution control, air pollution control, solid waste treatment, soil restoration, and environmental monitoring.

Comment MCC: Many of these achievements are applicable to the chemical industry, and some of them are likely to become mandatory sooner or later - a good reason for chemical companies to examine the catalog in detail.

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Oct 07, 2023: Sinopec plans to maintain steady refinery output during the second half of 2023. In a statement, Sinopec said "The Chinese economy is seen extending its recovery. Domestic refined fuel demand is looking up and natural gas demand will maintain growth and that of chemical products will rebound gradually"

Comment MCC: The statement about a recovery of the Chinese economy is in contrast to many voices in Western media stating that the recovery is lackluster - though it may not be possible for an SOE to echo such a statement. In any case, a steady output of refinery products seems to be a better indicator of economic stagnation than of a recovery.

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Oct 06, 2023: The All-China Federation of Industry and Commerce released the list of the top 500 Chinese private enterprises in 2023. After JD.com Group and Alibaba, Hengli Group is ranked at number 3.

Comment MCC: Further indication - if still needed - of the importance of chemical companies for China's overall economy.

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Oct 05, 2023: Huafeng has put its 1.15 million ton adipic acid project into production. It is the world's largest such plant.

Comment MCC: Indeed, the capacity of this plant theoretically is sufficient to supply about 25% of global adipic acid demand, which for 2023 is estimated at about 4.6 million tons. In 2020, Huafeng's production capacity was given as about 17% of the global total capacity - after the start of this project, this share likely has risen further. Companies and projects like this explain the growing dominance of China in the global market for commodity chemicals.

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Oct 04, 2023: The chemical raw materials and chemical products manufacturing industry grew by 14.8% year on year in August 2023.

Comment MCC: To quote from the original source, this underscores"its significance in driving overall industrial growth"

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Oct 03, 2023: China's toluene capacity has increased at a CAGR of 9.2% between 2018 and 2022.

Comment MCC: The main driver and application is the production of PX via disproportionation.

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Oct 02, 2023: According to ICIS, China currently accounts for 45% of global chemical production capacity and anticipates achieving 62% market share by 2035.

Comment MCC: This may indeed be achievable as recently, Chinese chemical companies have expanded their lead in commodity chemicals into some innovative areas such as battery materials. One driver of this move into innovative segments is overcapacity in commodities.

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Oct 01, 2023: A paper by Joseph Zenick and Keith B. Belton of the American Chemistry Council indicates that China's portfolio of chemicals exported has become more complex and high-end between 2000 and 2021.

Comment MCC: The authors conclude that China's capabilities in chemical manufacturing have greatly increased during this period.

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Sep 30, 2023: Solvay expanded its R&D center in Shanghai. The company has now invested a total of about 500 million Euro in its Chinese R&D hub since 2005, indicating a substantial commitment.

Comment MCC: Statements by Solvays CEO also underline the continued importance of China for the company despite geopolitical tensions: "The Chinese market is strategically important in our global strategy, and we are willing to increase our investments to address the demands here ... With a stronger research force in China, we will accelerate innovations that drive circular economy solutions and a sustainable future in response to the global megatrends and the ever-changing local needs."

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Sep 29, 2023: A paper titled "Textual quantitative analysis on China's local hydrogen energy development policies" analyses local Chinese hydrogen policies released between 2017 and 2022.

Comment MCC: While the analysis showed that the local hydrogen policy in China presents a high consistency to the national development goals, it also identified a lack of synergies between the individual locations - not a very surprising finding given China's issues in other areas.

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Sep 28, 2023: The annual N2O emissions from adipic acid production facilities in China is estimated to be about 134 million tons (Mt) of CO2eq/yr for 2021 while the rest of the world is estimated to contribute just 8.5 Mt CO2eq/yr. China thus accounts for 94% of global annual N2O emissions from adipic acid production (source link).

Comment MCC: This is something that can be remedied relatively easily, and should be. It is one of these markers that will indicate whether China's ostensible efforts to limit global warming are for real or not.

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Sep 27, 2023: Wanhua plans to expand its TDI capacity at its Fujian site by 330 kt/a.

Comment MCC: This reverses a recent rend of declining Chinese production of TDI after two TDI sites were phased out.

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Sep 26, 2023: China's PBAT production capacity is 63.4% of global capacity while for PLA it is is 15.3%.

Comment MCC: PBAT is also by far the most important degradable polymer produced in China, accounting for about 65% of total output followed by 29% for PLA. However, about half of China's PBAT production is exported as the domestic market is still relatively small. This may be a problem in the future - according to the CCR, in 2026, China's production capacity of biodegradable polymers may be up to 7 million t/a while the output may only reach 1.6 million.

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Sep 25, 2023: SK Enpulse, a chip material division of Korean SKC, will sell a 75% stake in its wet chemical subsidiary SKC-ENF Electronic Materials Ltd. to Jiangsu Yoke Semiconductor Materials for USD 37.6 million and a 90% stake in its chip materials cleaning affiliate SKC Solmics Hong Kong Ltd. to Shenyang Yichuang Precision Technology for USD 28.4 million.

Comment MCC: While in principle, Chinese companies should be very eager to snap up assets in these areas, the low sales price seems to indicate that the SK subsidiaries sold do not have access to cutting-edge technology.

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Sep 24, 2023: Evonik relocated and expanded precious metal powder catalyst factory in Shanghai, China.

Comment MCC: As common these days, the rationale is to localize the production of higher-end products.

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Sep 23, 2023: China considers penalizing university students who earned a degree using AI tools to manipulate data or write their thesis (chemistryworld)

Comment MCC: While this is probably not yet applicable to many students right now, it may become much more widespread in the future, meriting a proactive approach by the Chinese legislature.

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Sep 22, 2023: Six foreign companies, namely PPG, BASF, Kansai, Nippon Paint, Axalta, and KCC, hold over 80% of the market share in the passenger car coating segment in China.

Comment MCC: This segment is very hard for newcomers including domestic players to penetrate due to the arduous requirements to be listed as a supplier.

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Sep 21, 2023: There were 12 organic silicon monomer producers in China at the end of 2022, indicating some expertise in the production of these materials.

Comment MCC: However, in 2022, the average price in China was only RMB 43 000/ton compared to the global average of RMB 68 000/ton, indicating an overall lower level of product sophistication.

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Sep 20, 2023: The Shandong Provincial Safety Committee issued the "Shandong Province Safety Production Undercover Inspection System". It states that undercover inspections are carried out on a regular and irregular basis, with the provincial departments organizing no less than 2 unannounced inspections each year and the lower-level departments organizing no less than 4 unannounced inspections per year.

Comment MCC: While I am a tiny bit confused by the idea of "regular undercover inspections", overall the installation shows that nowadays government officials are more worried about losing their jobs after a chemical accident than being criticized for achieving only limited growth in chemical production.

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Sep 19, 2023: According to Envirotech online, China may be moving towards stricter PFAS regulation after recent research shows that drinking water in various cities across China has dangerously high levels of perfluoroalkyl and polyfluoroalkyl substances.

Comment MCC: In the past, China has been reluctant to phase PFAS out despite global efforts to ban hazardous substances, asking for exemptions to a U.N. agreement banning them.

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Sep 18, 2023: In an interview with China Daily, the chairman of SABIC stated that China's massive market is expected to provide substantial opportunities for major chemical corporations.

Comment MCC: Consequently, SABIC aims to expand its China investment in areas including renewable energy and petrochemical plants, for example by expanding its its investment in Fujian province with Fujian Energy Petrochemical Group to build and operate a world-class mega petrochemical complex.

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Sep 17, 2023: Sinopec will increase investment in refinery and petrochemical assets overseas in a bid to leverage its expertise and resources.

Comment MCC: This is as Sinopec's domestic growth potential is limited due to slower demand growth and restrictions on building new refineries.

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Sep 16, 2023: Qixiang Tengda started up a 300 kt/a hydrogen peroxide to propylene oxide (HPPO) complex in Zibo. It is under license from Evonik and thyssenkrupp Uhde.

Comment MCC: The process is described as sustainable as there are no byproducts generated - such processes may become more and more widespread as environmental regulation tightens and frequently the government even sets targets regarding resource utilization and efficiency for individual chemical processes.

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Sep 15, 2023: Wanhua Chemical (Fujian) plans to expand the capacity of 400 kt/a MDI plant to 800 kt/a

Comment MCC: Obviously, Wanhua does not have the slightest intention to lose market share in the MDI market which is the original basis for its success.

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Sep 14, 2023: Fitch Ratings has revised the Rating Outlook of China-based specialty-chemical manufacturer Wanhua Chemical Group Co., Ltd to Negative from Stable.

Comment MCC: This is a bit surprising given the generally rather good image of Wanhua in the Western world. Reasons cited by Fitch are a negative free cash flow in 2023-2024 due to high capex as well as refinancing risks related to Wanhua's short-term oriented funding structure.

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Sep 13, 2023: The "Work Plan for Steady Growth of the Petrochemical and Chemical Industry " issued by various ministries aims for an annual growth of the industry of 5% from 2023 to 2024.

Comment MCC: While not overly ambitious, this target may still be difficult to achieve given that some of the drivers of chemical demand - such as the construction sector - are experiencing difficulties.

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Sep 12, 2023: Ningbo Ronbay New Energy Technology will invest about CNY 2.6 billion in the construction of two battery materials factories in South Korea.

Comment MCC: As a relatively new segment, battery materials offer a chance for Chinese companies to become not only local but global leaders - this investment emphasizes the ambitions of Chinese companies in that regard.

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Sep 11, 2023: Zhejiang announced a fourth list of chemical parks that passed certification, bringing the total number in the province to 44.

Comment MCC: This is a fairly high share of China's about 600 parks, indicating that in contrast to neighboring Jiangsu province and Shanghai, Zhejiang still seems to have a high interest in hosting chemical companies.

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Sep 10, 2023: In the S&P list of largest global chemical companies, in the top 20, China leads the list with 5 mainland and one Taiwanese company compared to 4 US companies, 2 German ones, and 2 UK ones (though the UK list includes Linde, which though headquartered in the UK may still to some extent regarded as a German company).

Comment MCC: It is not surprising that the large Chinese share of the chemical market (about 45%) is also reflected in its high (30%) share of the top 20 companies.

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Sep 09, 2023: In May 2023, the operating rates of domestic PP plants decreased to a nearly five-year low (below 78%).

Comment MCC: Indeed, the market is weak and of course not helped by the somewhat depressed state of the Chinese economy. And the situation may well get worse - according to one source, there are currently 47 PP-related projects going on in China.

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Sep 08, 2023: In August, a groundbreaking ceremony was held in Zhoushan - the largest acetic acid production plant in the world of Zhejiang Petrochemical, with a capacity of 1 million tons per year.

Comment MCC: The fact that this is the largest in the world indicates the high and increasing share of China in the global acetic acid market. On a lighter note, the press release reads slightly comical and reminds me of the voiceover of an old newsreel (machine translation from Chinese): "At the ceremony, colorful flags were displayed, mechanical arrays, whistles and cheers continued, demonstrating the confidence and determination of Sinochem Liujian to do a good job in the acetic acid plant, showing the fighting attitude that the beginning is a decisive battle and the start is about to sprint."

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Sep 07, 2023: Mexico raised the import tariffs on various products including chemicals from China.

Comment MCC: This may be a reaction to the recent realization by the US that the restrictions on direct imports from China mainly just lead to these chemicals (or resulting end products) being imported via third countries such as Mexico.

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Sep 06, 2023: The 260 kt/a PC project of SINOPEC SABIC (Tianjin) Petrochemical has passed its environmental assessment.

Comment MCC: Once started, this will put further pressure on the PC market. In addition, as the plant uses a non-phosgene process, the acceptance of plants working with phosgene (such as those of Wanhua and Covestro in China) may decline.

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Sep 05, 2023: From 2018 to 2022, Chinese PVC imports shrank from 0.9 million tons to 0.5 million tons while exports increased from 0.8 million tons to 2.4 million tons.

Comment MCC: Thus China turned from a net importer to a major exporter of PVC. One issue remains - the average price of the imports (at 1387 USD/ton in 2022) is still higher than that of the exports (1310 USD/ton), indicating that the average quality of the Chinese product is at the lower end of the market. A look at the main import sources (TW, USA, JP) compared to the main export destinations (India, Vietnam, Russia) confirms this analysis.

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Sep 04, 2023: Wanhua Chemical will add a 30,000-ton/year superabsorbent (SAP) resin production line.

Comment MCC: While market demand for SAP is expected to increase as a result of an aging population, another likely driver for Wanhua's investment is to utilize existing overcapacities for acrylic acid - and of course, Wanhua has always favored highly integrated value chains. If the quality of the newly produced SAP is good, it could reduce China's import dependency, which still exists at the higher end of the SAP market due to the low quality of domestically produced material.

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Sep 03, 2023: China currently (2022) accounts for about 22% of the global ethylene production capacity, making it the largest global producer.

Comment MCC: Furthermore, as China's production capacity is forecast to expand by another 20 mt/a by 2025, its capacity share will increase further and reach about 26% by then.

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Sep 02, 2023: Baling Petrochemical has relocated its 150 kt/a polyamide plant. The relocation is a consequence of the old plant being too close to the Yangtze River - the new plant is 2 km behind the old site.

Comment MCC: While of course requiring substantial investment, the relocation also offers opportunities by doubling production capacity and - through process improvements - energy and material consumption. Having new plants may thus help companies such as Baling compete on better terms with foreign players producing in older plants.

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Sep 01, 2023: The Yantai Municipal Bureau of Ecology and Environment accepted the environmental impact assessment documents for a 10 kt/a lithium hexafluorophosphate project of Wanhua Chemical Group

Comment MCC: This illustrates the continuing move of some Chinese chemical companies away from commodities and into high end / high growth chemicals.

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Aug 31, 2023: In recent editions, The Economist frequently contrasts India's high growth with the somewhat sluggish growth in China.

Comment MCC: While this is undoubtedly true, there sometimes seems to be a bit of a loss of perspective involved. Based on 2021 nominal GDP, China's economy is more than five times as big as India's, meaning that for each percent of GDP in China, India would have to grow by more than 5% in order to achieve the same absolute growth. And that is for the general economy - for the chemical industry, the numbers will be even more different given that China's chemical industry is 16.6 times larger than India's (based on 2021 figures of the chemical market as published by CEFIC). Thus, China is still a much more important growth driver than India even if GDP growth should end up just reaching 3-4%.

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Aug 30, 2023: An interesting paper titled "Why do major chemical accidents still happen in China: Analysis from a process safety management perspective" was recently published.

Comment MCC: While the study finds that the number of chemical accidents has decreased, it also highlights the reasons for those accidents still occurring. In particular, inferior process safety culture, intentional violation (rule-breaking) of procedure, inadequate safety training, and illegal operations were the most frequent causes of the accidents examined.

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Aug 29, 2023: Lotte Chemical Corp. has sold all shares in its Chinese joint venture Lotte Sanjiang Chemical to its Chinese partner Sanjiang Chemical after the JV lost money in the last two years.

Comment MCC: The JV produces ethylene oxide, the price of which declined due to capacity expansions by Chinese competitors, leading to the losses. Lotte has also divested some assets in other countries including Pakistan and Poland.

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Aug 28, 2023: China has banned the production, use, import and export of five POP chemicals, effective in June 2023.

Comment MCC: The chemicals are Decabromodiphenyl ether, Hexachlorobutadiene, Pentachlorophenol (and salts and esters), Polychlorinated naphthalenes (including dichloro-, trichloro-, tetrachloro-, pentachloro-, hexachloro-, heptachloro- and octachloronaphthalenes) and selected short-chain chlorinated paraffins

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Aug 27, 2023: Honeywell and Tianjin Bohai Chemical Group will jointly establish a plastics recycling factory in Tianjin. The plant will use Honeywell technology to convert mixed waste plastics into recycled polymer feedstock, potentially increasing the amount of global plastic waste that can be recycled to 90 percent.

Comment MCC: While I doubt that this will be commercially viable at present, it certainly allows Honeywell to locally showcase its technology, and both companies to display their environmental credentials - and the pressure to recycle will certainly grow with time.

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Aug 26, 2023: According to Nikkei, China is leading global research on perovskite solar cells, an alternative to the current technology that could make renewable energy more widespread. Since 2019, China has accounted for about 30% of all academic papers on perovskite, far exceeding the share of the USA (slightly below 20%) and South Korea (somewhat below 10%).

Comment MCC: This trend of China leading the research in certain areas of new materials can of course also be seen in other areas such as the materials used in electric vehicles, particularly batteries.

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Aug 25, 2023: Both Hengli Petrochemical and Hengyi Petrochemical released 1H results. Operating income declined by 8% and 19%, respectively, while net profit declined by 62% and 96%.

Comment MCC: This illustrates two things - the relatively weak state of China's economy, particularly the real estate sector, and the volatility of profits in chemical commodity businesses.

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Aug 24, 2023: China has announced a plan to establish a recycling system for retired solar PV panels (pv-tech.org)

Comment MCC: The objective is to have a full recycling system for solar PV plants in place by 2030, and to make such recycling mandatory.

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Aug 23, 2023: A recent paper examines the chemical composition of Chinese wines from different origins based on the phenolic metabolites present in the wines.

Comment MCC: While I prefer beer, maybe this study is interesting for readers who prefer wine.

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Aug 22, 2023: BASF and Huntsman and their Chinese partner companies Shanghai Huayi, Sinopec Shanghai Gaoqiao Petrochemical, and Shanghai Chlor-Alkali Chemical plan to separate their joint MDI production in Shanghai, with each company operating one of the two MDI plants at the Caojing site independently.

Comment MCC: Like Hollywood marriage, most JVs including this one eventually end up in divorce as the interests of the two partners diverge.

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Aug 21, 2023: Hubei Yihua Chemical will invest 5.2 billion RMB in the relocation of a 200 kt/a refined phosphoric acid and 650 kt/a ammonium phosphate plant.

Comment MCC: This relocation is a consequence of the national policy of shifting chemical production away from the immediate vicinity of the Yangtze River - one of the more convincing parts of Chinese environmental policy.

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Aug 20, 2023: Imports of active pharmaceutical ingredients from China to India have increased from a value share of 62% to 75% in the past 9 years.

Comment MCC: Interestingly, this is despite efforts by the Indian government to decrease the dependency on such imports and to build up domestic production capacity. It seems that the advantages China has in the form of economies of scale and a well-established infrastructure and supply chain trump political objectives.

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Aug 19, 2023: The Ministry of Commerce imposed anti-dumping duties on polycarbonate imported from Taiwan, finding that these imports hurt domestic companies.

Comment MCC: This indicates the quick expansion of domestic polycarbonate production - a few years ago, there would not have been too much domestic production that could have been hurt, except for that of a few foreign entities producing in China.

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Aug 18, 2023: Shandong province announced a policy in which chemical companies that have safety accidents - whether involving their own workforce or that of third parties - will be ordered to suspend business.

Comment MCC: This may be a good idea as it provides a major economic incentive to avoid accidents - in the past, fines imposed for noncompliance with safety regulations tended to be too low to have any impact on the behavior of companies.

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Aug 17, 2023: Evonik has expanded production at its Chinese rubber silanes plant, Evonik Lanxing (Rizhao) Chemical Industrial, a JV between Evonik and Rizhou Lanxing Chemical Industry

Comment MCC: This expands the portfolio of silanes produced by Evonik in China rather than just in Europe - the "in China for China" strategy that Western companies will likely continue to pursue in the face of political tensions between China and the West.

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Aug 16, 2023: US company Milliken will expand its cooperation with Chinese (Spartanburg, South Carolina; www.milliken.com) plans to expand its cooperation with Shaanxi Yanchang China Coal Yulin Energy Chemical in the production of polyolefin additives. The companies have established an R&D-focused JV named Shanghai Yumei New Materials.

Comment MCC: While politicians both in the US and in Europe promote de-risking, chemical companies so far mostly seem to continue investing in China and cooperating with Chinese companies.

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Aug 15, 2023: China's production of dimethyl carbonate (DMC), an important electrolyte in lithium ion batteries, grew at an average rate of 33.4% between 2018 to 2022.

Comment MCC: While only about 40% of DMC are used in the battery application, this is indeed the major growth driver. One example of a company profiting from this is Shandong Haicenxin Yuan Material Technology, which was recently listed on the ChiNext board of the Shenzhen Stock Exchange.

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Aug 14, 2023: The EU passed a law requiring producers of EV batteries to calculate the carbon footprint during the production cycle. Products not meeting the EU standards are banned from sale.

Comment MCC: This will pressure Chinese producers to comply with these standards or forego the export market to the EU.

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Aug 13, 2023: China's self-sufficiency rate for butadiene rubber has increased from 87% in 2018 to 96% in 2022.

Comment MCC: The longer-term decline in butadiene rubber imports may particularly hurt Russia, which in 2022 contributed by far the largest share (40%) of these imports.

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Aug 12, 2023: 20 out of 21 Chinese chemical companies reported a year-on-year decrease in net profit for the first half of 2023.

Comment MCC: Reasons given include higher costs and weaker demand. Somewhat alarmingly, most companies do not expect the situation to improve soon.

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Aug 11, 2023: China accounts for about 44% of the global styrene production capacity of about 43.5 million t/a.

Comment MCC: China's share is expected to rise further as local capacity increases - quite likely leading to overcapacity.

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Aug 10, 2023: According to the Commerce Ministry, China's chemical industry faces obstacles due to the politicization of global trade. In particular, this has resulted in production and orders being relocated away from China, hurting the industry.

Comment MCC: A potential remedy mentioned by the ministry is focusing on innovative areas such as electric vehicles, renewable energy, and high-tech materials - which already seems to be underway.

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Aug 09, 2023: According to a market study, the global capacity of Purified Terephthalic Acid (PTA) will likely increase from 104 million t/a in 2021 to 140 million t/a in 2026, a CAGR of 6.1%.

Comment MCC: With a capacity of 17 million t/a, Hengli is the largest global producer with a capacity share of about 16%.

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Aug 08, 2023: According to a plan by the Shandong government, the chemical revenue derived from high-end chemical businesses should account for more than 50% before the end of 2023.

Comment MCC: This seems to be a very tall order given Shandong's traditional focus on basic chemicals - or it may just require a generous definition of what counts as "high-end".

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Aug 07, 2023: The National Development and Reform Commission clarified the benchmark energy efficiency levels for oil refining, coal-to-coke, coal-to-methanol, coal-to-olefins, coal-to-ethylene glycol, caustic soda, soda ash, calcium carbide, ethylene, p-xylene, yellow phosphorus, synthetic ammonia, monoammonium phosphate, diammonium phosphate, and added ethylene glycol, urea, titanium dioxide, polyvinyl chloride, and others.

Comment MCC: The timeline for adoption of the benchmarks via technological transformation or closure of capacity is the end of 2025 and is thus relatively tight.

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Aug 06, 2023: In the 2023 "Fortune" list of China's top 500 listed companies, Sinopec and PetroChina ranked first and second respectively, Rongsheng Petrochemical ranked 46th, Wanhua Chemical ranked 86th, Dongfang Shenghong 211th, North Huajin 264th, Satellite Chemical 343rd, and Qixiang Tengda 422nd.

Comment MCC: With only 8 entries, or 1.6% of the total number in the list, the representation of the chemical industry is surprisingly small, though partly compensated by the leading position of the first two companies

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Aug 05, 2023: The 2023 version of the "Guiding Catalog for Industrial Structure Adjustment" promotes the development and production of a number of new materials related to the chemical industry.

Comment MCC: In particular, the catalogue covers new materials (including low-VOC adhesives, water treatment agents, catalysts, electronic chemicals), silicone materials, and fluorine materials - opportunities for chemical companies.

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Aug 04, 2023: Sinopec, Shell, Baosteel, and BASF agreed on a joint research project, a feasibility study for building first open 10 million-ton Carbon Capture and Storage (CCS) cluster project in East China

Comment MCC: One would not necessarily expect these four parties to share many common interests, but CCS is one of them - presumably as it shows a way to continue the current business of all of these companies rather than providing any individual one of them with a competitive advantage.

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Aug 03, 2023: According to Fu Xiangsheng, vice president of the Petrochemical Federation, China's chemical industry is shifting from east to west and south to north.

Comment MCC: Drivers of this shift include coal and natural gas resources in the west, energy prices and labor costs in the central and western regions, and increasingly strict regulation of the chemical industry in the eastern region. Segments affected include basic chemicals such as caustic soda, polyvinyl chloride, fertilizer, methanol, and coal chemicals as well as pesticides, pharmaceutical intermediates, and chemicals requiring processes such as nitrification, chlorination, or, hydrogenation.

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Aug 02, 2023: Several major Chinese chemical producers have started shifting some of their focus from basic chemicals to more advanced materials as there is a glut for the former and good demand and policy support for the latter.

Comment MCC: Examples include investments by Sinopec (in EVA, carbon fiber), Hengli (biodegradable plastics, battery materials including separators and electrolytes), and Wanhua (Lithium-ion battery materials). These activities will place the Chinese companies in greater competition with leading Western chemical companies, many of which have already left the production of basic chemicals.

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Aug 01, 2023: The C&EN list of the biggest global chemical companies includes 7 Chinese companies, putting the country in second position with Japan (also 7) but behind the US (10 companies) and ahead of Germany (4), UK (3) and South Korea (2).

Comment MCC: The 7 Chinese companies are Sinopec (rank 2), Taiwan's Formosa Plastics (7), China National Petroleum (10), Hengli Petrochemical (11), Syngenta (15), Rongsheng Petrochemical (16), and Wanhua Chemical (18). It is somewhat curious that there are no Chinese companies in the second half of this top 50 list.

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Jul 31, 2023: The Chinese government announced that it will control new coal-to-chemicals more strictly

Comment MCC: This seems to be less aimed at reducing carbon dioxide emissions and more at securing the supply for domestic coal-fired power plants (which incidentally also power most of the electric vehicles on China's roads). However, somewhat contradictory, it was also announced that a big coal chemicals project in Ordos resumed work.

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Jul 30, 2023: According to the Financial Times, BASF China executive Markus Kamieth is the favorite to Martin Brudermueller as CEO.

Comment MCC: This again highlights BASF's continuing commitment to China despite some criticism. In a related move, BASF also plans to expand its capacity for photovoltaic EVA by 300 kt/a in the existing plant of Yangzi Petrochemical and BASF.

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Jul 29, 2023: In 1H 2023, profits of the Chinese chemical industry decreased by 52.2% year-on-year (Chinese National Bureau of Statistics)

Comment MCC: This adds to the emerging picture of the chemical industry not doing very well at the moment.

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Jul 28, 2023: In 1H 2023, China's fixed-asset investment increased by 3.8% while the investment in the chemical raw materials and chemical products manufacturing industry increased by 13.9%.

Comment MCC: This indicates that investors regard the chemical industry as offering above-average opportunities for returns - somewhat surprising given the not-very-rosy state of the industry at the moment.

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Jul 27, 2023: According to CCR, relevant Chinese ministries will set more than 200 standards to achieve China's double carbon goals.

Comment MCC: At the same time, and incidentally on the same page of the CCR edition of June 06, it is reported that the April 2023 output of raw coal was up 4.5% yoy. Talk about inconsistent policies.

 

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Jul 26, 2023: The Ministry of Industry and Information Technology (MIIT) approved 586 industrial standards, including 32 chemical industry standards - e.g. Ethylenediamine Tetraacetic Acid for Industrial Use (HG/T 6142-2023)

Comment MCC: Some of the events happening in China's chemical industry are interesting to follow. This is not one of them.

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Jul 25, 2023: PPG opened its Electric Vehicles and Intelligent Mobility Innovation and Application Center in Tianjin, aiming to showcase PPG's innovative technologies, materials and system solutions in electric vehicle power batteries.

Comment MCC: Of course, with China being the leading global producer of EVs, it makes sense to locate the center in China despite offering services to the whole world. PPG also opened a digital color laboratory in cooperation with Chery Automotive, allowing Chery to improve color personalization in automotive.

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Jul 24, 2023: In 2022, about 26% each of China's vinyl acetate capacity was located in Inner Mongolia and Ningxia.

Comment MCC: This is due to the main production process in China being coal-based - in fact, about 57% of China's capacity are coal based, a figure almost matching that of the two provinces combined. Unfortunately for China, demand for ethylene-based vinyl acetate (24% of Chinese production) is much higher than for calcium carbide-based vinyl acetate, meaning China is not self-sufficient but produces only about 91% of its own demand.

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Jul 23, 2023: According to BASF, China is now the second biggest market of the company after the US, accounting for 14% of its sales.

Comment MCC: This explains BASF’s continuing engagement in China despite growing scepticism from some board members and the business press.

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Jul 22, 2023: The top 10 domestic MTBE producers account for 25% of China's total capacity. Despite some capacity growth (CAGR of 3.4% between 2018 and 2022), capacity utilization grew from a low of about 57% in 2020 to about 73% in 2022, partly driven from China being a net importer to a net exporter of MTBE.

Comment MCC: The low share of the top 10 players is a sign of the fragmentation of the industry.

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Jul 21, 2023: Four Chinese chemical companies eight Chinese nationals were charged by the US with trafficking chemicals used by Mexican drug cartels to manufacture fentanyl later sold in the United States, federal officials said on Friday.

Comment MCC: According to DEA, the Chinese companies "even disguised the chemicals at a molecular level, adding a molecule to mask the precursors so they would not be detected as banned substances during transport ... They taught their customers how to remove that molecule after they received the chemicals."

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Jul 20, 2023: Global chemical distributor Brenntag acquired Chinese chemical company Shanghai Saifu Chemical, a distributor of personal care ingredients, coatings, emulsion polymerization, and cleaning chemicals and provides related solution services.

Comment MCC: This continues a stream of acquisitions of Chinese specialty chemicals distributors by leading global players.

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Jul 19, 2023: Cepsa considers selling its 75% stake in a Shanghai plant producing phenol, acetone, and cumene.

Comment MCC: Possible reasons for this step are the company's shift towards a more sustainable portfolio or increasing competition in the market for these chemicals.

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Jul 18, 2023: Henkel has started building a new plant for manufacturing adhesives in Yantai, Shandong.

Comment MCC: Target industries include electronics, automotive, medical, equipment manufacturing, and aerospace.

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Jul 17, 2023: China extended subsidies for electric vehicles for another four years via an exemption from the purchase tax in 2024 and 2025 and a 50% reduction of the tax in 2026 and 2027

Comment MCC: This is an extension of the existing tax break that was to expire at the end of 2023. It has been very successful in commercial terms, helping China become the global leader in EVs, but arguably a disaster for the environment as a Tesla running on coal-powered electricity is worse regarding carbon dioxide emissions than an internal-combustion-driven car. And in 2022, coal accounted for 61% of China's electricity generation.

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Jul 16, 2023: A recent paper discusses smart chemical parks in China. It is titled "Smart chemical industry parks in China: Current status, challenges, and pathways for future sustainable development"

Comment MCC: According to the abstract, the paper "proposes a systematic methodology in order to conduct an integrated and in-depth review on the standardization construction status (framework with Chinese characteristics, key events, spatial features, and national pilots), future tasks, problems, and sustainable development pathways of China's SCIPs."

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Jul 15, 2023: China's pesticide production still suffers from fragmentation and low scale. There are almost 600 producers of technical pesticide, but fewer than 200 have a production capacity of at least 2000 t/a.

Comment MCC: In addition, many technicals are produced by dozens of companies, with very limited differentiation.

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Jul 14, 2023: The US Department of Homeland Security included Xinjiang Zhongtai Chemical in the entity list of the "Uyghur Forced Labor Prevention Law" and banned imports of the company to the US.

Comment MCC: As Xinjiang Zhongtai's exports account for less than 7% of its total sales, this should have limited impact on the company.

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Jul 13, 2023: According to Saudi Arabia's energy minister, Saudi Arabia is eager to collaborate with China in developing crude-to-chemicals projects.

Comment MCC: This is part of Saudi Arabia's strategy to focus more on higher-value chemical products rather than just exporting crude, both in order to extract more value and to maintain a level of demand once current key oil users such as transportation decline.

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Jul 12, 2023: Sichuan Tianhua terminated the construction of a 60 kt/a industrial demonstration project for PBAT.

Comment MCC: This is probably a reaction to the overcapacity and lack of demand for this material despite government support for such biodegradable materials.

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Jul 11, 2023: Pulcra, a German producer of specialty chemicals for the fiber, textile, and leather industries broke ground on a specialty chemicals plant in Shanghai

Comment MCC: China is a very important market for Pulcra's target industries, so the decision to localize some production seems sensible. However, I am a bit surprised that Pulcra got the go-ahead from the Shanghai government given that chemical companies have recently found it very hard to establish new production or even expand capacities in Shanghai.

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Jul 10, 2023: Chinese companies Xinfengming and Tongkun plan to launch a refining project in Indonesia wth a capacity of 16 million tons/year of oil refining, 5.2 million tons/year of p-xylene (PX) and 800,000 tons/year of ethylene.

Comment MCC: The plan is to not only supply these materials to Indonesia but also ship some back to China for further processing. Of course, this expands China's footprint in Southeast Asia.

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Jul 09, 2023: In an analysis report issued by consulting company World Brand Lab on the most valuable brands in China, a value of 44.5 billion RMB was reported for Three Trees (Sankeshu), a coatings manufacturer.

Comment MCC: I find this number difficult to understand as it would mean that the brand value of Sankeshu is higher than its market cap of about 33.5 billion RMB.

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Jul 08, 2023: A Chinese researcher at the Japanese National Institute of Advanced Industrial Science and Technology was arrested in Tokyo on 15 June for allegedly disclosing research data on fluorine compounds to a Chinese chemical manufacturer.

Comment MCC: I wonder what the motivation is for such deeds (assuming that the accusations are correct). I can understand if this is about money - if it is about doing something for China, it is very misguided as it will cast a shadow on countless Chinese researchers working abroad, and on China's image along with it.

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Jul 07, 2023: The China National Chemical Engineering Corporation has partnered with Aeon Corporation, led by Russian billionaire Roman Trotsenko, to construct a methanol plant in Volgograd

Comment MCC: Russia now lacks willing partners in Western countries while China has the expertise, capital, and markets for chemical products, making the two countries almost ideal partners in such projects

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Jul 06, 2023: According to Fu Xiangsheng. Vice Chairman, China Petroleum and Chemical Industry Federation, China's current total energy consumption intensity is 1.5 times the world average, 3 times that of the United States, 3.8 times the average of EU countries, and 7.2 times that of Japan

Comment MCC: This implies that there is a huge potential for energy conservation and emission reduction without reducing output.

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Jul 05, 2023: China will restrict the export of Gallium and Germanium, two metals used in the production of semiconductor components. Exporters will have to apply to the ministry for permits from the beginning of August.

Comment MCC: Depending on how restrictively permissions are granted, this may become a serious problem for some non-Chinese semiconductor producers as China produces about 80% of the world's Gallium and 60% of the world's Germanium (despite the curious fact that the latter element was named after Germany by a German chemist, Clemens Winkler.

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Jul 04, 2023: BASF undertook or completed a number of activities in China - the third phase of BASF Shanghai Innovation Park was completed, the company signed a strategic cooperation framework agreement with South China University of Technology, and BASF has broken ground on a polyethylene plant at its Verbund site in Zhanjiang, China.

Comment MCC: These are indications that BASF continues to bet on China despite some criticism inside the company's board and in the German business press.

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Jul 03, 2023: An explosion took place at a plant of Jiangxi QianTai New Materials on July 1st in Guixi, Jiangxi. Reportedly, the explosion occurred after silicon oil caught fire.

Comment MCC: Local authorities indicated that all factory staff and the people of the surrounding area were evacuated and no casualties were reported. However, other sources such as the news agency IranPress (possibly not the most reliable source, but also one not obviously intent on spreading bad news about China) stated that "many people were feared dead in the tragic incident".

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Jul 02, 2023: According to the Park Committee of the Petrochemical Federation, there are 643 petrochemical bases and chemical parks across the country, of which 593 have been certified by various provinces, autonomous regions, and municipalities

Comment MCC: This implies a decline of 5% in the total number - at the end of 2018, China had a total of 676 chemical parks. It is somewhat surprising that there are still 50 parks that have not been certified, and this raises the possibility that the final reduction will still increase.

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Jul 01, 2023: While China's oil processing capacity is now larger than that of the US, the volume actually processed in the US (more than 800 million tons) is substantially higher than in China (less than 700 million tons)

Comment MCC: This difference in capacity utilization (approximately 90% versus 70%) is not restricted to crude oil processing but applies to many other basic chemicals as well.

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Jun 30, 2023: From January to April, among China's 41 industrial categories, the total profit of 13 industries increased year on year, 1 industry was flat, and 27 industries decreased. The profit of the chemical raw materials and chemical products manufacturing industry was down by 57.3%.

Comment MCC: A rather bleak figure for the chemical industry.

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Jun 29, 2023: According to Benchmark, an intelligence provider, China will likely become the second-largest global lithium producer, overtaking Chile in the next five years.

Comment MCC: This is a consequence of China increasing local production, aiming at reducing the dependency on lithium from Australia.

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Jun 28, 2023: Chesir, a Chinese producer of pearlescent pigments, is among three of the remaining bidders for the pigment business of Merck which is for sale.

Comment MCC: According to the German business magazine Handelsblatt, Chesir has submitted the highest bid. It will be interesting to see whether Merck will select them as buyer given the current China-critical mood in Europe.

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Jun 27, 2023: Exports of South American gum rosin and gum turpentine to China have resumed after a virtual stop for 1.5 years.

Comment MCC: A key reason is the drop in freight rates - for example, gum turpentine freight rates for 20t isotanks from Brazil to China were down to $1,855 in March, compared with $4,450 in December 2021 while freight rates for 20ft containers from Brazil to China have fallen to $750-$1,000 this year from $2,000 in 2021. Other chemicals and raw materials will be similarly affected.

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Jun 26, 2023: According to Fu Xiangsheng. Vice Chairman, China Petroleum and Chemical Industry Federation, China's chemical industry suffers from a focus on bulk basic chemicals while having a lack of specialty chemicals.

Comment MCC: In detail, Fu stated that China has the largest global production capacity for high-emission bulk chemicals while depending on imports in higher-end areas such as functional chemicals, new chemical materials and their high-end composite materials, high-performance fibers, high-end membrane materials, and specialty chemicals. Indeed, these are the areas in which foreign chemical companies still can achieve good sales in China, whether via imports or local production.

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Jun 25, 2023: A paper in the magazine "The Parliament" worries about the designation of essential oils under EU regulation, which may end up having essential oils classified as dangerous chemicals: "The ECHA's decision will allow China to dominate the essential oils market with impunity."

Comment MCC: Given that we are talking about essential oils - which are somewhat less essential for most people - the following sentences seem rather over the top: "The Chinese state controls Xinjiang Province's lavender reserves. As such, the Chinese Communist Party could cut access to raw materials to make liberal democracies surrender."

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Jun 24, 2023: Wanhua Chemical plans to build a new 10 kt/a lithium hexafluorophosphate project in Yantai Industrial Park of Wanhua Chemical

Comment MCC: It will be interesting to see whether Wanhua's approach of essentially being active in almost any segment of the chemical industry will be successful in the long run. Of course, with lithium hexafluorophosphate being a key material for lithium battery electrolytes, the demand for this product is quite certain, but that does automatically mean Wanhua will be among the top players in this area despite successes in other areas.

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Jun 23, 2023: A Coface report on payment terms in China showed that 34% of respondents from the chemical sector stated that more than they had outstanding payments with ultra-long delays (ULDPs) that accounted for more than 10% of their turnover.

Comment MCC: This is a rather worrying number as many of these outstanding payments may never be paid (Coface states that according to their experience, 80 % of ULPDs are never paid) - and of course, at above 10% of annual turnover, writing off these payments would mean substantial losses. Furthermore, this number of 34% is massively up from 2021, when it was 8%, and higher than for all other segments.

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Jun 22, 2023: Goldman lowered its estimates for China's GDP growth this year to 5.4% from 6% previously

Comment MCC: The bank believes that stimulus measures related to property and infrastructure will probably be relatively limited due to China's shrinking population, high debt levels and previous measures to tame the property market. Not great prospects for China's chemical industry, of course.

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Jun 21, 2023: AstraZeneca has drawn up plans to break out its China business and list it separately in Hong Kong as a way to shelter the company against mounting geopolitical tensions ( Financial Times)

Comment MCC: Apparently, this is not the only company discussing such a step as the tensions between China and the US increase

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Jun 20, 2023: China is now the biggest contributor to the 82 high-quality research journals tracked by Nature.

Comment MCC: However, this may partly be the result of a focus on quantity over quality. Furthermore, fraudulent papers seem to be more common in China than elsewhere, partly issued by "paper mills", companies preparing papers on demand. For example, Elisabeth Bik, a microbiologist, has identified hundreds of Chinese papers that use images from the same source.

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Jun 19, 2023: According to a report by research firm Elliptic, China-based suppliers of fentanyl precursors have received 27 million USD in crypto payments.

Comment MCC: This is despite China's bans on such exports.

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Jun 18, 2023: China's import dependency for PE has decreased from 47% to 35% in the period from 2018 to 2022. According to the CCR, China's new PE capacity in the next five years may exceed 21 million t/a, adding to the existing 30 million t/a and thus potentially exceeding local consumption (which was 38 million tons in 2022).

Comment MCC: However, as usual for China, there is a lack of local production capacity for higher-end materials such as high-end PE packaging films and an oversupply of mid-and low-end products.

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Jun 17, 2023: A Coface report on payment terms in China showed that in the chemical segment, average payment delays rose from 80 to 84 days, making this one of only 3 (out of 13) segments with an increased length of payment delays.

Comment MCC: This is hardly a good sign for the state of the chemical industry in China.

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Jun 16, 2023: According to Benchmark, an intelligence provider, China will dominate lithium production in Africa, with more than 90% of supply coming from companies owned or partly owned by Chinese companies.

Comment MCC: This will further encourage Western countries to seek lithium sources elsewhere.

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Jun 15, 2023: Chemours has entered into an agreement with Zhejiang Juhua Group Co., Ltd. to produce HFO-1336mzzZ, the basis for sustainable foaming agents. The program is expected to start up by the end of 2025, followed by full production in early 2026.

Comment MCC: Interesting to see toll manufacturing by a Chinese company, but possibly a model that will become more common in the future.

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Jun 14, 2023: Chemical M&A acquirers in China in 2022 were almost exclusively strategic buyers rather than financial ones, according to Deloitte. 81% of transactions were in commodity chemicals followed by specialties (11%) and agrochemicals (7%).

Comment MCC: According to the Deloitte report, the main drivers for M&A in commodities are downstream expansion and expansion of products and technologies.

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Jun 13, 2023: On June 8, 2022, an ethylene delivery pump leaked and caught fire in the intermediate tank area of the aromatics workshop of the chemical branch of Maoming Branch of China Petrochemical Corporation, resulting in 2 deaths

Comment MCC: The initial findings on the cause of the accident include focus on efficiency rather than on safety, lack of identification of security risks, limited control of outsourcing companies, and violation of regulations by the personnel involved. In other words, the usual causes.

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Jun 12, 2023: A Coface report on payment terms in China showed the sharpest reduction in payment terms for the chemical segment - from 72 to 61 days.

Comment MCC: This is now the segment (among 13 segments analyzed) with the shortest payment terms - not exactly a vote of confidence by the creditors.

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Jun 11, 2023: BASF will transform two existing dispersion plants in Jiangsu and Guangdong in order to add Licity® and BasonalPower® based on modified styrene-butadiene copolymer emulsion (SBR) to the existing portfolio.

Comment MCC: These products are used in EVs and electricity storage, which strengthens BASF's position as a supplier of battery cell materials.

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Jun 10, 2023: According to Wanhua, the company will further increase its MDI production capacity and claims to be the only one doing this. After the expansion, the company will account for 47% of global production capacity.

Comment MCC: This is despite the current low price level of MDI - however, in the past, the continuous expansion of MDI capacity has paid off for Wanhua.

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Jun 09, 2023: Solvay has licensed its proprietary hydrogen peroxide process technology to Guangxi Chlor-Alkali Chemical. GHCAC will build a hydrogen peroxide megaplant at Qinzhou to support its 300 kilotons propylene oxide production.

Comment MCC: An interesting aspect of the deal is that Solvay will have a hydrogen peroxide offtake after the plant starts up, which is to support the growth of Solvay's hydrogen peroxide business particularly in Southern China.

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Jun 08, 2023: China's PA66 production capacity has increased strongly in the past 5 years, for example, by 20% in 2022. Import depencence has decreased from about 55% to 35%. Domestic capacity utilization is relatively low at around 60%.

Comment MCC: The reason for the combination of low capacity utilization and high imports is the usual one for China's chemical companies - a focus on low-end grades, which means high-end grades still need to be imported.

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Jun 07, 2023: Chinese domestic polycarbonate capacity increased by 154% between 2018 and 2022, a CAGR of more than 26%.

Comment MCC: This has obviously led to a reduction in imports and declining profits, and resulted in a low capacity utilization of typically around 60%.

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Jun 06, 2023: Sinopec has agreed to potentially partner with Kazakhstan's state-owned JSC NC KazMunayGas to develop a grassroots polyethylene plant planned in Kazakhstan's western Atyrau region.

Comment MCC: With Chinese companies now having huge experience in such projects and countries like Kazakhstan providing the raw materials, such projects are likely to become more frequent, bypassing Western countries completely. 

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Jun 05, 2023: China was the second biggest target country for chemical M&As in 2022, accounting for about 10% of transactions, far below the about 35% accounted for by the US but above the about 6% each for the UK and Germany (Deloitte)

Comment MCC: The number of China-related transactions dropped by 23% compared to 2021, a drop similar to the overall global drop (21%), and by 33% compared to the five-year pre-covid level.

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Jun 04, 2023: Zhongjing Petrochemical will build a 900 kt/a BDO plant in Fujian.

Comment MCC: As often these days for new plants in China, this will reportedly be the biggest such plant in the world.

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Jun 03, 2023: Three major projects were started in Shandong province, one for 400 kt/a PA6, one for 10 kt/a POM and one for 100 kt/a of epoxy resin.

Comment MCC: This indicates the shift of China's chemical industry from basic chemicals to more advanced materials such as engineering plastics.

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Jun 02, 2023: China is a net exporter of PVA with a degree of self-sufficiency of around 120% in the period from 2019 to 2022

Comment MCC: But there is the usual China catch - domestic PVA products are generally low-end and homogeneous, and therefore cannot compete with foreign-made PVA in some applications.

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Jun 01, 2023: According to the National Bureau of Statistics, the PMI subindexes for May showed factory output swung to contraction from an expansion. The chemical industry was among those 3 with significant decline in production and demand.

Comment MCC: In April, I did a number of interviews with chemical industry participants - they suggested that the industry is facing difficulties. At that point, this was not reflected in official data yet - now it is.

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May 31, 2023: According to a survey conducted by Deloitte among managers of European chemical companies, 71% of them plan to manage digital and physical assets located in China more independently from their other businesses.

Comment MCC: This is likely to be due to the tensions between the US and China and the resulting regulatory changes for example in the area of data protection.

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May 30, 2023: According to Agropages, more than 94 kt/a of glufosinate capacity is under construction or to be launched in China within the next 2 years. Agropages predicts that global consumption of glufosinate will increase from 45 kt/a in 2021 to about 100 kt/a by around 2027.

Comment MCC: If these predictions are true, it will mean substantial global overcapacity for glufosinate despite the high growth of the market, which will in turn depress profits for established players such as BASF.

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May 29, 2023: China National Coal Group Corp plans to build a modern coal chemical industry park in Ordos, Inner Mongolia.

Comment MCC: China Daily states that"The modern coal chemical industry is an effective way to improve the clean and efficient utilization of coal and transform coal from a single fuel to a fuel and raw material in a balanced way. It is of great significance for ensuring national energy security." Somehow, China Daily forgets to mention that modern coal chemistry is not aligned with the reduction of carbon dioxide emissions, which China also claims to pursue.

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May 28, 2023: An Iranian Petrochemical Special Economic Zone Organization and a Chinese company have signed a memorandum of understanding for the construction of a 30 kt/a sodium formate production plant in Mahshahr, Khuzestan Province, an investment of $4 million.

Comment MCC: Interestingly, the name of the Chinese company has not been revealed, possibly as the company is afraid of Western sanctions.

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May 27, 2023: The Zibo Municipal Bureau of Ecology and Environment approved a 280 kt/a propylene oxide and 600 kt/a of engineering materials green intelligent manufacturing project of Shandong Huifeng Petrochemical Group.

Comment MCC: Naturally, I was curious about the nature of the "green intelligent engineering materials" (machine translation from Chinese). It turns out this is PS and ABS - hardly at the cutting edge of green materials ...

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May 26, 2023: Tianqi Lithium, one of the world's biggest lithium producers, expects more consolidation in the lithium industry.

Comment MCC: While lithium demand is still expected to grow on a massive scale, prices have recently fallen, making it harder for companies to pursue expansion projects. M&As may help speed up such projects via the savings of merged entities.

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May 25, 2023: China's chemical raw materials production grew by 7.5% year-on-year in April 2023

Comment MCC: This is above the 5.6% increase for overall industrial production.

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May 24, 2023: According to Echemi, several domestic chemical companies lost hundreds of millions of yuan, including Bohai Chemical, Shanghai Petrochemical, Kangda New Materials and Shenyang Chemical.

Comment MCC: Despite the end of the covid lockdown, demand is sluggish and prices have declined, leading to these losses of chemical companies.

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May 23, 2023: China's Petroleum and Chemical Industry Prosperity Index continued its downtrend and fell further from the already low February value.

Comment MCC: According to the CCR, "Demand was weak amid the off-season, and the rubber, plastic, and other polymers manufacturing industry was still facing heavy destocking pressure"

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May 22, 2023: Options for ethylene glycol and styrene are now listed on the Dalian Commodity Exchange

Comment MCC: Futures for these two chemicals are already listed at this market - the addition of options expands the way companies can manage their risks.

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May 21, 2023: The number of employees at Sinopec decreased by about 11,000 between 2021 and 2022.

Comment MCC: However, the total number of employees at 375,000 still vastly exceeds that of the largest global chemical company, BASF (111,000 employees) - not surprising given that Sinopec is mainly an oil producer rather than a chemical company.

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May 20, 2023: From January to April 2023, China's fixed asset investment in chemical raw materials and chemical product manufacturing increased by 15.5% year on year.

Comment MCC: This is compared to an increase of 8.4% in the overall secondary industry, indicating investors currently favor the chemical industry. However, this could also mean more overcapacity in the future.

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May 19, 2023: The Ministry of Emergency Management started the supervision of the first special safety inspection in 2023 for enterprises with major hazards of hazardous chemicals.

Comment MCC: The stated aim is to achieve full coverage of nearly 7,000 enterprises with major hazards and more than 23,000 major hazards across the country.

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May 18, 2023: China's import dependence for PX has declined from 61% in 2018 to 30% in 2022, mainly to a huge increase in domestic output from about 10 million tons to almost 25 million tons.

Comment MCC: The CAGR for domestic output was 25% while apparent consumption CAGR was only about 8%, and imports actually declined every year.

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May 17, 2023: According to Reuters, Merck will continue investing in China with the objective of building up domestic supply chains and reducing imports of key raw materials amid rising political tensions.

Comment MCC: In some way, this is just a continuation of the ongoing "In China for China" policy that increasingly dominates the investment strategy of Western chemical companies. At a share of about 45% of the global chemical market - far above what China accounts for as a share of their global sales, which is 15% for Merck and generally around 10-15% for most Western chemical companies - this strategy still has a long way to go.

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May 16, 2023: Sika will invest about 100 million USD into a new production base at the Zhejiang Dushan Port Economic Development Zone, which will be Sika China's largest production base in China with advanced product lines and production technologies

Comment MCC: As of course also frequently remarked in The Economist, foreign chemical companies so far keep investing in China - no decoupling visible.

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May 15, 2023: Jiangsu Province proposed to approve 23 chemical parks and chemical concentration areas.

Comment MCC: While this is only the first batch, it is still an indication of the decreasing importance of the chemical industry in Jiangsu province how late this announcement comes and how few chemical parks are included in this first batch.

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May 14, 2023: Akzonobel and Porsche China have signed a cooperation agreement on repair paint products. Akzonobel China will provide Porsche China with a full range of waterborne paints, including primers, paints and varnishes, enabling Porsche to provide a full range of waterborne repair paint solutions required by its customers.

Comment MCC: The above phrase "required by its customers" is taken from the press release - in reality, this is more about Porsche having to meet its emission targets. Anyone who drives a car that has about 200% more horsepower (and associated fuel use) than strictly necessary for transportation purposes will probably not worry about the environment too much.

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May 13, 2023: Operating rates of Chinese plants producing sodium carbonate, BDO and titanium dioxide are low due to high new capacity.

Comment MCC: Overall, among 28 products monitored, 61% saw decreasing capacity utilization in 2022 while 32% saw increases, indicating an overall increase in overcapacity in the Chinese production of commodity chemicals.

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May 12, 2023: China's self-sufficiency rate for EVA is expected to increase from 49% in 2021 and 60% in 2022 to 80% in 2025.

Comment MCC: EVA is considered a strategic material due to its use in photovoltaics. However, the forecast shown in the CCR also indicates a relatively low capacity utilization for domestic production capacity in 2025, indicating that possibly certain qualities cannot be produced in China yet.

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May 11, 2023: Chinese chipmaking suppliers and state-backed funds plan to spend an estimated RMB 50 billion to strengthen the domestic supply chain as the US curbs tech exports (Nikkei Asia)

Comment MCC: However, this will still be difficult, particularly at the higher end of the market. For example, in 2022, 65% of Chinese semiconductor factories still used imported equipment, though this was down from 79% a year earlier.

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May 10, 2023: China National Petroleum Corporation and China National Offshore Oil Corporation issued warnings about illegal companies posing as subsidiaries of the group.

Comment MCC: In contrast, in Western countries examples of unrelated companies posing as BASF subsidiaries are rare.

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May 09, 2023: The first polyoxymethylene production line in Xinjiang with an initial capacity of 40 kt/a will be put into operation soon

Comment MCC: This is a project of Xinjiang Xinye Energy Chemical - it indicates the ambition of the province to not only produce low-end commodity chemicals and polymers.

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May 08, 2023: In 2022, China accounted for 18% of chemicals imports into the EU but for only 7% of exports.

Comment MCC: This trade balance between the EU and China has shifted dramatically in the past few years. A peak trade surplus for the EU was reached in 2019, almost maintained in 2020 but turned into a slight deficit in 2021 and then a massive one in 2022 as China's exports of chemicals grew massively (+77% in 2021 and +93% in 2022).

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May 07, 2023: A spokesperson for German Chancellor Olaf Scholz stated that Germany is not currently pursuing any export controls on chemicals used in the manufacturing of semiconductors

Comment MCC: This is in contrast to an earlier Bloomberg report suggesting that Germany is looking at controlling the export of such chemicals to China, which would affect China's chip producers.

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May 06, 2023: On May 01, 2023, an explosion at a hydrogen peroxide plant of Liaocheng Luxi Hydrogen Peroxide New Material Technology of Sinochem Group Luxi Chemical Group caused at least 9 deaths.

Comment MCC: Luxi was taken over by Sinochem only in 2020, indicating that such takeovers may come with a reputational risk in case of accidents such as this one.

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May 05, 2023: According to a report by Global Efficiency Intelligence, eleven adipic acid plants in China and one in the U.S. emit nitrous oxide, a potent greenhouse gas, despite low-cost pollution controls being available.

Comment MCC: Despite both countries' pretension to act decisively to prevent climate change, these two countries stand out in this regard as the measures to reduce the emission of this gas are widely used in similar plants in other countries.

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May 04, 2023: Sinopec will build a pipeline to transfer hydrogen from renewable energy projects in China's northwestern Inner Mongolia region to cities in its east (Xinhua). The pipeline will stretch 400km from Ulanqab in Inner Mongolia to Beijing and will have an initial capacity of 100,000 tons per year.

Comment MCC: As stated before, Sinopec aims to maintain its relevance as the Chinese economy gradually shifts away from petrochemicals.

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May 03, 2023: According to Caixin, major EV battery markers in China have been cutting their headcount as they are not receiving enough orders to fully utilize their fast-growing production capacity.

Comment MCC: Likely reasons are the slashing of EV subsidies and rising raw materials costs. As a consequence, some battery makers are shifting their focus to (non-vehicle) energy storage.

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May 02, 2023: AkzoNobel will acquire the decorative paint business of China Resources Paint from Sherwin Williams.

Comment MCC: Apparently, Sherwin Williams will focus on industrial coatings in China while most likely AkzoNobel will use the local brand to broaden its product range at the somewhat lower end of the market, thus not directly competing with its Dulux brand. A statement from AkzoNobel's CEO confirms this: "The acquisition of Sherwin-Williams China's decorative paint business will help AkzoNobel achieve its growth goal of expanding into third-tier to fifth-tier cities in China."

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May 01, 2023: On April 20, the Party Committee of the China Petroleum and Chemical Industry Federation held a mobilization and deployment meeting on the theme of learning and implementing Xi Jinping's new era of socialism with Chinese characteristics.

Comment MCC: I guess it is my Western upbringing, but I still find an announcement like this one somewhat cringeworthy.

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Apr 30, 2023: Evonik will double its global production capacity for VESTAMID®E polyether block amide (PEBA), partly by expanding its multi-user base (MUSC) facility in Shanghai.

Comment MCC: This material is used in the production of athletic shoes - though I sometimes wonder how many of the wearers of such shoes really do any sports at all.

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Apr 29, 2023: The chairman of Sinopec Group visited the joint venture refinery in Yanbu, Saudi Arabia, and other locations in Saudi Arabia.

Comment MCC: This is another sign of the growing cooperation between China and Saudi Arabia as both countries have an interest in bypassing the Western world.

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Apr 28, 2023: BASF's China sales accounted for 13% of the company's sales in 2022.

Comment MCC: While high compared to some other chemical companies, this share is still low compared to the 43% that China holds of the global chemical market. More encouragingly for BASF, by now 80% of the products sold in China are produced in the country.

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Apr 27, 2023: The US Treasury Department imposed sanctions on two Chinese companies that are accused of supplying precursor chemicals to drug cartels in Mexico for the production of fentanyl.

Comment MCC: China condemned these sanctions arguing that the responsibility for preventing the flow of ordinary chemicals into the drug production channel lies with the importing country

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Apr 26, 2023: Sichuan Golden Elephant won a long-lasting patent infringement case against Hua Lu Hengsheng and will receive a total compensation exceeding 200 million RMB. Hua Lu will also have to stop the infringement immediately.

Comment MCC: The case involved a production process for melamine and a former employee of Sichuan Golden Elephant. Such cases between domestic cases also are sending a positive signal to foreign companies fearing patent infringement.

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Apr 25, 2023: Chinese scientists have developed the first superionic hydride ion conductor at ambient conditions, according to the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences.

Comment MCC: These materials are reported to be enablers of advanced clean energy storage and electrochemical conversion technologies, technologies that will be important for future economic development and global leadership.

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Apr 24, 2023: BASF will establish compounding capacities for its certified compostable biopolymer ecovio® in Shanghai, China. It is used in film applications, including certified compostable shopping and organic waste bags, soil-biodegradable agricultural mulch films, and packaging.

Comment MCC: In the past, the demand for such products in the domestic Chinese market has been relatively low, but this may change depending on government regulation and possibly on changing mindsets.

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Apr 23, 2023: A subsidiary of Sinopec won a 30 billion RMB bid for a coal mine in Inner Mongolia

Comment MCC: While coal chemicals have been part of Sinopec's business in the past, this big investment seems to contradict Sinopec's activities in the hydrogen area - unless everything is just about earning money rather than also doing some good, as one might expect from an SOE.

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Apr 22, 2023: Tesla is opening a factory in Shanghai, capable of producing ten thousand Megapack energy products per year, to supplement the output of the Megapack factory in California (Xinhua)

Comment MCC: Reportedly, Tesla thus takes advantage of China's supply chain for this material to lower the costs of its batteries. Tesla also aims to export these batteries globally, another indicator of China's cost advantage in the segment.

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Apr 21, 2023: A paper titled "Applying Chemical and Statistical Analysis Methods to Evaluate Water and Stream Sediments around the Coal Mine Area in Dazhu, China" finds that "According to the Chinese standard and World Health Organization guidelines, the water in the coal mine area is of good quality in terms of its physical and chemical properties, except for the concentration of Mn and Fe".

Comment MCC: However, for these two elements, the limits are vastly exceeded. These limits for drinking water in China are 100 μg/L for Mn and 300 μg/L for Fe while the values found were 1925 μg/L and 12,873 μg/L, respectively. This makes the "good quality" phrase a bit suspect.

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Apr 20, 2023: Sinopec subsidiary Hainan Baling Chemical New Material Co. Ltd. has commissioned the world's largest plant for production of styrene-butadiene copolymer in Hainan. The 170 kta plant will produce 120 kta of SBC and 50 kta of SEBS based on feedstock from the Yangpu refinery.

Comment MCC: Another "world's largest" plant in China, with potential cost benefits related to economies of scale, threatening established players elsewhere.

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Apr 19, 2023: Mexico's president asked his Chinese counterpart for help Tuesday in halting chemicals from China used by Mexican drug dealers to illegally produce fentanyl, while also complaining of "rude" U.S. pressure to curb the drug trade (AP).

Comment MCC: While the US sees fentanyl imports from Mexico (partly produced with raw materials from China) as a major aspect of its fentanyl problem, Mexico and China emphasize that the root cause is in the US itself.

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Apr 18, 2023: China has launched a platform to identify sustainable textile products, in a move the Government says marks the industry's "significant steps" to practice the ‘dual carbon' strategy.

Comment MCC: Such an initiative is particularly relevant in China as it produces about 70% of the world's global fiber output.

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Apr 17, 2023: China's consumption of butadiene has grown at a CAGR of about 6.5% during 2017-2021 while self-sufficiency went up to 98% from 88% in 2017.

Comment MCC: The domestic butadiene supply may soon turn into overcapacity territory as some SOEs (Sinopec, CNPC) will add capacity. Kind of the usual story for commodity chemicals in China.

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Apr 16, 2023: A recent article in the CCR discusses China's synthetic resin industry. Some quotations and phrases from this paper: "The 14th Five-Year Plan period (2021-2025) is a critical period for the transformation and development of China's chemical industry"; "unprecedented challenges and tests", "the next five years are critical"; "it will be a matter of life and death for every enterprise whether a breakthrough can be achieved or not".

Comment MCC: Judging from this paper, it seems Armageddon is near - I wish authors could be a bit more restrictive in the use of hyperbole. Not every moment in history can be one that is unprecedented, in the same way that not every driver can be an above-average driver.

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Apr 15, 2023: An article in the CCR states that China's "petrochemical industry faces the problem of being large but not strong, with overcapacity at the low end and dependence on imports for high-end products".

Comment MCC: Examples given to illustrate this situation include the low self-sufficiency of China for metallocene PE (mPE) of only 22% in 2019, complete dependence on imports for polyolefin elastomers (no domestic industrialized production yet), and the similar complete reliance on metallocene co-catalyst MAO.

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Apr 14, 2023: The number of chemical companies above designated size in China is increasing further - from 26,039 at the end of 2020 to 26,947 at the end of 2021 and 28,760 at the end of 2022.

Comment MCC: This is an increase of 6.7% - not surprising given that the operating income of the industry increased by 14.4% to 16.56 trillion RMB (about 2.40 trillion USD compared to the about 0.53 trillion USD size of the US chemical industry in 2021).

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Apr 13, 2023: A recent (2023) Chinese paper on air pollution in China is summarized as follows: "Research on the sources of Chinese PM2.5 pollution has focused on the contributions of China's domestic emissions. However, the impact of foreign anthropogenic emissions has typically been simplified or neglected. Here we find that foreign anthropogenic emissions play an important role in Chinese PM2.5 pollution through chemical interactions between foreign-transported pollutants and China's local emissions. Thus, foreign emission reductions are essential for improving Chinese air quality."

Comment MCC: While this sounds reasonable, it also might be a bit of an excuse to blame pollution on non-domestic sources. The detailed results in the paper state that 8% of PM2.5 and 19 % of nitrate over eastern China in 2015 was contributed by foreign anthropogenic emissions yet that only 30 % of such foreign contributions were through direct atmospheric transport while majority (70 %) were instead through chemical interactions between foreign-transported aerosol precursors and China's domestic emissions of pollutants. So, it still is mainly a domestic problem.

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Apr 12, 2023: Despite a number of new polyester plants being built in China, PTA capacity grew much faster, leading to a decrease in capacity utilization to an annual average of 75% in 2022 from a peak of more than 83% in 2019. In addition, imports declined massively between 2019 (955 kt) and 2022 (37 kt).

Comment MCC: The situation is likely to get worse as if launched as scheduled, domestic PTA overall capacity will grow by an additional 27% in 2023, 15% in 2024, and 6 % in 2025. Chinese chemical companies are still very susceptible to strategic crowding.

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Apr 11, 2023: A paper by Xuejun Duan and coauthors in Hindawi states that "the chemical industry has gradually retreated from developed cities, such as Beijing and Shanghai, in the eastern region, and has become the inevitable choice for industrialization of less-developed cities, such as Xi'an, Chengdu, and Chongqing, in the western region."

Comment MCC: While this statement sounds a bit too general to me, it is certainly true that prosperous places like Shanghai - which have lots of alternatives to the perceived risky chemical industry - have abandoned a large share of their chemical production.

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Apr 10, 2023: Saudi Aramco will build a refining complex in Liaoning Province, an investment of 83.7 billion yuan. The shareholders are North Industries Group, Saudi Aramco, and Panjin Xincheng, with shareholding ratios of 51%, 30%, and 19% respectively.

Comment MCC: According to Aramco, this is part of Aramco's emphasis on the conversion of liquids into chemicals - in other words, a shift away from fuel and into chemicals, which are likely to have a longer life let than fuel in the ongoing decarbonization of the economy. Separately, Saudi Aramco, entered into a $3.6 billion deal to purchase a 10% stake in Rongsheng Petrochemical Co, one of China's oil refiners.

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Apr 09, 2023: China National Chemical Group Co., Ltd. issued a "Statement on Criminals Forging Documents and Registering Companies with the Name of China National Chemical Corporation" stating that the "company discovered that criminals falsely registered Sinochem Rongtian (Shanghai) Industrial Development Co., Ltd. in the name of China National Chemical Corporation."

Comment MCC: So, if you deal with self-claimed state-owned chemical companies, make sure they are the companies they claim to be.

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Apr 08, 2023: The Shaanxi Bureau of the State Mine Safety Supervision Bureau fined the Shendong Coal Branch of China Shenhua Energy Co., Ltd. Suspend business to the sum of 1.8 million yuan. Reasons cited for the fine include production activities without approval and 13 other illegal acts.

Comment MCC: It is hard to judge the severity of these acts but the fine seems very low given that the daily average net profit is about 188 million RMB. So, the fine is equal to about 1% of the profit of a single day - not much of a deterrent.

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Apr 07, 2023: Brenntag started full commercial operations at a new site in China, located Zhangjiagang, about 150 kilometers from Shanghai. Including the new site in Zhangjiagang, Brenntag now operates four sites providing services from North (in Cangzhou, Hebei Province) to East (in Zhangjiagang) to South (Dongguang, Guangdong Province) and Southwest China (Chongqing).

Comment MCC: According to the company, the new warehouse reduces the current complexity of moving products among several external warehouses. The new warehouse also is a response of Brenntag to increasingly complex local supply chains that include domestic manufacturing and R&D.

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Apr 06, 2023: The website China Dialogue has an interesting article on the emergency response related to chemical spills such as the recent Ohio train accident in the US. Mainly, it compares the response by the US agency (EPA) with that of Chinese authorities.

Comment MCC: The article tends to somewhat favor the US approach, which is interesting given that the author is apparently a Chinese national, Liu Yiman, Ph.D., a visiting researcher at Wuhan University's Institute of Environmental Law.

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Apr 05, 2023: India has initiated an anti-dumping investigation against polyether polyols from China and Thailand

Comment MCC: According to a paper by Ashwani Mahajan in the South Asia Economic Journal, China is the country against which by far the largest number of anti-dumping measures have been taken by WTO members. However, this may just reflect the fact that China's large-scale producers can produce at a lower cost than other companies. Regarding India, the largest number of anti-dumping duties within the period covered in the paper is chemicals, accounting for 39%. But again, this may be more a consequence of economies of scale than of active dumping - one Indian chemicals producer once told me that for some chemicals, there are 20 Chinese producers, each of which has a production capacity equal to the annual Indian demand. This makes it difficult for Indian producers to compete with Chinese imports even without dumping.

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Apr 04, 2023: Currently, there are 643 petrochemical bases and chemical parks in China, of which 593 have been certified by various provinces, autonomous regions, and municipalities. They account for over 50% of the industry's total revenue.

Comment MCC: While this is touted as a success, it still means that a major share of chemical production is outside of chemical parks. It is also surprising that there are still 50 chemical parks that have not been certified by any kind of authority.

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Apr 03, 2023: Fuzhou Customs seized 5 tons of falsely declared dangerous chemical "azodicarbonamide" in a shipment of goods exported in general trade. It was declared as 25% "azodicarbonamide" and 75% "sodium bicarbonate" while in reality, it turned out to be 100% azodicarbonamide.

Comment MCC: Not very surprising to me - I sometimes get emails from people offering to help me ship chemicals with false documentation, presumably due to the word "chemicals" in my company name ...

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Apr 02, 2023: This march, the Yanchang Petroleum Yushen 500,000-ton/year coal-based ethanol project with a total investment of 6.98 billion yuan delivered the first coal-based ethanol. It is cited to be the world's largest coal-based ethanol project.

Comment MCC: The project claims include the statement that the "project uses low-rank coal instead of grain to produce ethanol. Compared with biological ethanol, it can save 1.5 million tons of raw material grain every year, which is equivalent to 60% of Yulin City's annual grain output of 2.52 million tons in 2022. It is important for ensuring national energy security and Food security is of great strategic importance." It seems if there is a trade-off between food security and reducing carbon emissions, the first objective still dominates.

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Apr 01, 2023: In 2022, the capacity utilization rate of China's chemical industry was 76.7%, a year-on-year decrease of 1.4 percentage points, while the total production of major chemicals decreased by 0.4% year-on-year.

Comment MCC: The difference between the two declines is due to ongoing capacity increases in China's chemical industry - despite the (by Western standards) low starting capacity utilization.

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Mar 31, 2023: DOMO Chemicals started construction of its new plant in Haiyan, Jiaxing, Zhejiang, China. The new plant will produce TECHNYL polyamide-based grades and is expected to be in full operation by end Q1 2024.

Comment MCC: This investment may turn out to be somewhat risky as domestic polyamide producers in China get stronger.

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Mar 30, 2023: BASF announced plans to build a second production line at the BASF Huizhou Daya Bay site in Guangdong Province to expand its polymer dispersion capacity. Also, the new production complex of BASF Zhanjiang Integrated Base broke ground, including glacial acrylic acid (GAA) plant, butyl acrylate (BA) plant and 2-ethylhexyl acrylate (2-EHA) plant.

Comment MCC: BASF indeed continues to invest in China despite some criticism of this approach, e.g., in the German business press. Two quotes highlight this: "Not investing in a market with a large scale and strong growth like China will be the biggest risk for BASF", and "For BASF, continuing to increase investment in the Chinese market is the most important source of current and future growth."

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Mar 29, 2023: AkzoNobel received approval for a 2000 t/a waterborne paint project in Changzhou, Jiangsu.

Comment MCC: While this indicates the general trend towards environmentally friendly materials, it is also a relatively small investment of only about 5 million EUR.

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Mar 28, 2023: China's current PA66 capacity is about 700 kta, about 21% of the global capacity.

Comment MCC: This could reach more than 50% by 2027 as new PA66 capacity in China in the next 5 years is expected to exceed 3000 kta. Import dependency has already decreased from 75% in 2012 to 49% in 2022.

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Mar 27, 2023: The average transaction price on China's national carbon emissions trading market rose by 25% from 2021 to 2022.

Comment MCC: However, at a price of about 8 EUR per ton, it is still very low compared to the European price (which exceeded 100 EUR per ton in February 2023), limiting the incentive for companies to reduce carbon emissions.

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Mar 26, 2023: Sabic stated that the Chinese chemical market has yet to recover and that the ending of lockdowns in China has not led to a rapid rebound in consumption: "Things in China are still roughly the same as they were in 2021. So far, we have not seen the high demand that was expected. It seems to me that the second quarter or the second half may witness the return of the Chinese market."

Comment MCC: This is in contrast to reports of a quick recovery of the Chinese economy in other sources such as The Economist.

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Mar 25, 2023: Fragrance company Firmenich opened the Villa Harmony in China, a fragrance center of expertise that is a joint project between Firmenich and a Chinese perfume studio.

Comment MCC: While this may indeed offer some opportunities for creators of fragrances, it is not quite the equivalent of a moon landing that it is described as in the press statement by Firmenich: "The opening of Villa Harmony marks a momentous integration of Art, Technique, Ingredients, and Perfumery ... We are proud to combine our legacies at this center of perfumery culture to support the preservation and revitalization of Chinese perfumery ancestry. Customers in China will benefit from having a completely unparalleled, holistic experience where they can re-discover and replicate ancient Chinese fragrance ingredients, for use in modern-day creations."

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Mar 24, 2023: An expansion project of Wacker Chemical (Zhangjiagang) with an annual output of 100,100 tons of silicone emulsion and silicone oil products was approved by the Management Committee of Zhangjiagang Free Trade Zone of Jiangsu Province.

Comment MCC: This expansion project will be located in direct proximity to the existing Wacker facilities in the park.

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Mar 23, 2023: Hengli Petrochemical, a company with roots in polyester fiber production, is now engaged in various other fields including lithium battery separators, resin materials, degradable plastics and engineering plastics.

Comment MCC: It seems Hengli realizes the limited future growth potential in a traditional chemical area such as polyester - though of course, the new areas require different capabilities, in particular, a stronger focus on R&D. Success is thus far from guaranteed.

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Mar 22, 2023: In 2022, China's ethylene production capacity reached 46.75 million tons per year.

Comment MCC: This makes China the largest global ethylene producer, surpassing the United States. In addition, further capacity expansions are expected, with 2025 ethylene production forecast to exceed 70 million tons per year, covering domestic demand and possibly even reaching a surplus. Not a very comfortable situation for some countries (e.g., South Korea) now supplying China with ethylene-based products such as PE. 

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Mar 21, 2023: Iran and China are holding talks to build a carbon disulfide production plant in Iran's Ilam Province with an investment of $50 million by Shanghai Baijin Chemical Group Company

Comment MCC: Iran's choice of investment partners is severely limited due to its political isolation, making any engagement by a Chinese company particularly welcome.

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Mar 20, 2023: BASF will invest in a new citral plant at its integrated base in Zhanjiang, China, with production expected to start in 2026.

Comment MCC: This is both a global capacity expansion and a regional expansion in China, as production by MNCs in China shifts to products with a higher specialty character.

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Mar 19, 2023: Petro Vietnam Ca Mau Fertilizer signed a strategic partnership with Yunnan Yuntianhua Honglin Chemical Company, an affiliate of the Yuntianhua Group Company.

Comment MCC: Yuntianhua is a large producer of Diammonium Phosphate, of which it ships large amounts to Vietnam. The partnership may improve access to this fertilizer for Vietnamese farmers.

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Mar 18, 2023: China's output of lithium-ion batteries increased by more than 130% YoY to 750GWh in 2022, and the total output value of the lithium-ion battery industry grew to over RMB1.2 trillion.

Comment MCC: It seems that China's policy of strongly supporting the industry - e.g., by subsidizing electric vehicles - has been quite successful in establishing China as the global leader in this area.

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Mar 17, 2023: Sinopec started a project for the production of green hydrogen from wind and solar power in Inner Mongolia, for use in the green production of chemicals from coal. It is claimed to be the world's largest green hydrogen-coal chemical project.

Comment MCC: The state-owned Chinese petrochemical companies obviously stake their claims in non-oil areas in order not to get left behind in the energy transition.

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Mar 16, 2023: An evaluation by Hubei province of its 52 chemical parks concluded that 4 of the parks have a relatively high safety risk (graded B) while 48 have a somewhat lower safety risk (graded C).

Comment MCC: The province aims to reach grade D, low safety risk, for all its parks by 2025. In the meantime, the parks graded B face severe restrictions on chemical projects, giving these parks an incentive to clean up their act.

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Mar 15, 2023: Japan may restrict photoresist sales to China as a response to US export controls against China's semiconductor industry (SCMP)

Comment MCC: While these restrictions have not been confirmed, they have already led to Chinese investors buying into Chinese companies with the potential to replace Japanese photoresist imports.

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Mar 14, 2023: A recent paper by Baoxin Zhang, Leibniz-Institut für Katalyse in Rostock, Germany, and Armin Börner, formerly Universit of Rostock, examines similarities and differences between the chemical formula language and the Chinese written language

Comment MCC: They find that both the Chinese written language and the chemical formula language of formulas are narrative symbolic languages, and conclude that while the Chinese written language is not suitable for unlimited communication, the chemical formula language is infinitely expandable and universal.

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Mar 13, 2023: At the National Congress, representative Zheng Yueming made a case for increased support for the domestic electronic special gas industry.

Comment MCC: According to the representative, China can only produce about 20% of the types of electronic special gases used in integrated circuit production, and nearly 90% of the market is still occupied by foreign-funded companies. Of course, with such a high degree of dependence on imports, China's overall emphasis on self-reliance results in strong demand for domestic substitution.

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Mar 12, 2023: Lithium prices in China have declined by almost a third in the past three months after weaker demand in the world's largest market for electric vehicles

Comment MCC: One reason is the cancelation of subsidies for EVs, leading to a slowdown in demand.

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Mar 11, 2023: Among the 1,400 projects announced by Shandong Province, there are only 79 chemical-related projects, a year-on-year increase of 104 in 2022, a significant decrease of 32%. Also, the number of chemical parks in Shandong declined from 199 to 84, and more than 2,000 chemical enterprises were closed.

Comment MCC: Given Xi Jinping's stated emphasis on environmental protection and the risk of accidents from chemical plants (and the associated career risks for government officials), the chemical industry is gradually falling out of fashion in the richer provinces. Arguably, this is similar to what has been observed in rich Western countries decades earlier. Some of the industry is shifting towards poorer provinces that presumably cannot be too choosy given their weaker economic situation - reportedly, since 2019, there have been as more than 600 projects in which chemical plants were shifted from coastal provinces to the Midwest and Northeast.

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Mar 10, 2023: Recently, caprolactam prices have been declining, leading to losses among producers.

Comment MCC: As a consequence, many newly constructed projects have been suspended or delayed.

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Mar 09, 2023: As of February 2023, there are 17 new EVA proposed projects announced in China, with a total planned production capacity of about 4.34 million tons/year. Among them, there are 11 projects planned to be put into operation before 2025, with a total production capacity of about 3.14 million tons per year.

Comment MCC: If these projects are completed, China's EVA capacity will exceed 5 million tons by 2025. This is likely to be more than global demand in that year - a recipe for future overcapacity.

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Mar 08, 2023: Current global acrylic acid production capacity is close to 9 million tons. Between 2023 and 2027, a total of 1.655 million tons of acrylic acid products are expected to come onstream from seven new Chinese enterprises.

Comment MCC: This represents an increase of 18%, or a CAGR of slightly above 4%. This will likely be above global GDP growth during the same period (CAGR around 3%) and thus lead to overcapacity and/or intensification of competition.

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Mar 07, 2023: Lihua Yiweiyan plans to adjust its original 600 kta propane dehydrogenation and 400 kta high-performance polypropylene project to 600 kta propane dehydrogenation and 200 kta high-performance polypropylene.

Comment MCC: This hints at the increasing pressure on PP producers following continuous expansion in the past few years, and the decreasing amount of PP imported.

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Mar 06, 2023: Covestro will build its largest TPU production base in the world in Zhuhai with an annual capacity of 120 kt when finished in 2033.

Comment MCC: Notwithstanding the issues between China and the Western world, China remains the biggest market for chemicals - and that is reflected in the investments of Western chemical companies.

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Mar 05, 2023: An antidumping investigation by the Chinese Ministry of Commerce covering imports of phthalocyanine pigments from India concluded that indeed dumping had occurred. Anti-dumping duties will be imposed.

Comment MCC: I still do not think much of anti-dumping duties but of course, as long as all countries do it (and India certainly has done it in the past), no country can complain

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Mar 04, 2023: LyondellBasell opened its first olefins and polyolefins business technical center in Asia in Suzhou. The center will provide solutions and products for the polypropylene, polyethylene, PB-1, and Catalloy markets in China and the Asia-Pacific region.

Comment MCC: Given the importance of China and APAC for these products, the surprising thing about this opening is that it only happens now, not earlier.

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Mar 03, 2023: China accelerated its coal power plans in 2022, quadrupling the number of new permits and approving enough new capacity to supply all the UK's needs

Comment MCC: This makes some of the arguments against coal-to-chemicals projects somewhat spurious, as the central government obviously has no issue with increasing domestic coal consumption up to 2030. Most likely, economic reasons are the main reason for the cancelation of some coal chemical projects.

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Mar 02, 2023: The Public Security Traffic Management Bureau of the Beijing Municipal Public Security Bureau issued a notice prohibiting the transportation of dangerous chemicals in Beijing from March 2 to March 15 as this is the period of the "Two sessions" (exceptions are possible). The "Two Sessions" are the yearly plenary meetings of the National People's Congress and the Chinese People's Political Consultative Conference, China's top legislature and top political advisory body respectively.

Comment MCC: Personally, I do not think such a ban makes much sense as while any accident happening during this season might be an embarrassment for public officials, the real damage to people and the environment will be the same as in any other period of the year.

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Mar 01, 2023: ChemChina's China National Chemical Corporation Zhuzhou Rubber Research and Design Institute Co. issued a statement saying that it "is a company that operates in compliance with regulations and produces civil natural rubber latex weather balloons, not a military production company. The products we produce are used for daily weather forecasting by weather stations around the world, and have nothing to do with the so-called airships over the United States."

Comment MCC: Funny, I guess.

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Feb 28, 2023: In 2022, China's import-export balance in chemicals improved. The total export volume of organic chemicals was 80.7 billion US dollars, a year-on-year increase of 17%, and the trade surplus was 29 billion US dollars, a year-on-year increase of 216%. The total export volume of inorganic chemicals was 39.4 billion US dollars, a year-on-year increase of 68%. The trade surplus was US$13.5 billion, a year-on-year increase of 57%; the total export of synthetic resin was US$25 billion, a year-on-year increase of 4%, and the trade deficit was US$24.9 billion, a year-on-year decrease of 22%.

Comment MCC: Given the ever-increasing Chinese chemical production capacities and the shift towards higher-end chemicals produced locally, this was to be expected and will likely continue in the same direction.

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Feb 27, 2023: Eastman has acquired Accuride Technology (Dalian), a producer of paint protective films and window film products for the automotive and construction markets in Asia Pacific.

Comment MCC: While the press release states the acquisition demonstrates Eastman's commitment to driving growth in the performance film business and the paint protection and window film markets, more importantly, it demonstrates the importance of the Chinese market.

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Feb 26, 2023: According to statistics from the Logistics Association, the scale of China's chemical logistics in 2021 was 2.24 trillion yuan, a year-on-year increase of 9.3%.

Comment MCC: This growth - likely faster than that of the chemical market in the same period - is despite the trend towards establishing complete chemical value chains at individual locations.

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Feb 25, 2023: Qixiang Tengda, a producer of C4 chemicals, issued a performance forecast on the evening of January 20, warning of a year-on-year profit decrease of 65% to 75%

Comment MCC: Reasons cited include geopolitical conflicts, the high price of crude oil and other raw materials, low demand due to the epidemic and decreasing prices.

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Feb 24, 2023: From Jan. 1 to Jan. 27, Chinese retail sales of EV and hybrid passenger cars plunged 43% from the same period last month to 304,000 vehicles, down 1% from a year earlier, according to industry group CPCA.

Comment MCC: A major reason is the cancellation of a subsidy of up to 12,600 RMB that took effect in 2023.

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Feb 23, 2023: Wanhua will invest a total of 126 billion RMB in the Wanhua New Materials Low-Carbon Industrial Park project, to be implemented in three phases.

Comment MCC: This is again a massive investment by Wanhua, though the name of the industrial park is somewhat misleading as in reality only the phase 3 products truly fall into the low-carbon category.

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Feb 22, 2023: According to the China Automobile Association, in the first 11 months of 2022, 2789 hydrogen vehicles were sold.

Comment MCC: While this is a rapid increase from previous periods and is accompanied by an increase in the number of models, the overall sales are still very small compared to the total automotive market, limiting the relevance to the related chemical market.

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Feb 21, 2023: China's polysulfone production capacity is expanding as new plants by several companies are being commissioned. At the end of 2021, the domestic capacity was about 16 kt. Chinese demand CAGR is forecast to be about 10% between 2021 and 2025.

Comment MCC: Similar to other high-end materials, however, the performance of local materials is below that of those of BASF and Solvay. Thus for high-end applications, China still strongly relies on imports, which accounted for about 80% of domestic demand in 2020.

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Feb 20, 2023: Inner Mongolia Yitai Coal suspended the construction of Yitai Yili Energy Co.s 1 million tons/year coal-to-oil demonstration project.

Comment MCC: This is unlikely to be the only such project suspended or canceled. The reasons provided- high coal cost for coal chemical products, large fluctuations in international oil prices, and major uncertainties in tax and fee costs - apply to all other coal chemical projects as well. On the other hand, Inner Mongolia Zhuozheng Coal Chemical announced a coal chemical project with an annual output of 2.6 million tons starting with a first phase with an output of 1.1 million tons, so the situation may not be as straightforward as proclaimed by Yitai.

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Feb 19, 2023: Ford plans to build a $3.5 billion electric vehicle battery plant in Michigan with its Chinese partner CATL

Comment MCC: It is interesting to see that Ford - despite probably partly aiming at customers looking for vehicles made in the USA is doing this with a Chinese partner, highlighting the global leadership CATL has in EV batteries.

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Feb 18, 2023: On January 15, 2023, an explosion occurred in the alkylation unit of Liaoning Panjin Haoye Chemical during maintenance, resulting in 13 deaths and 35 injuries.

Comment MCC: Unsurprisingly, the preliminary investigation report reads similar to other ones after such accidents, indicating that overall supervision of production safety is still not achieved: "serious imbalances in the relationship between the efficiency and safety of accident-handling enterprises", "responsibility for safety production is suspended", "major loopholes in the safety management".

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Feb 17, 2023: According to the National Bureau of Statistics, in 2022, investment in chemical raw materials and chemical products manufacturing increased by 19% year-on-year.

Comment MCC: Chemicals at the moment continue to be a segment that is regarded as having good potential for growth and profit, and thus attracts investment.

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Feb 16, 2023: According to the National Bureau of Statistics, in 2022, the ex-factory price index of chemical raw materials and chemical products manufacturing increased by 7.7% year-on-year.

Comment MCC: Substantial price increases were reported for caustic soda, potassium chloride, and toluene while prices of sulfuric acid, hydrochloric acid, and MDI declined substantially

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Feb 15, 2023: According to the National Bureau of Statistics, in 2022, the capacity utilization rate of the chemical raw material and chemical product manufacturing industry was 76.7%, a year-on-year decrease of 1.4 percentage points.

Comment MCC: This is most likely due to covid-related factors, though of course increased production capacity will also have contributed.

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Feb 14, 2023: Yabang, a producer of dyes, pesticides, and intermediates, expects a loss of 684 million RMB for 2022, a larger loss than in 2021.

Comment MCC: Reasons cited include the epidemic, weak downstream demand, fluctuations in raw materials prices, increased production costs, and increased competition.

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Feb 13, 2023: In December 2022, PPG completed the acquisition of Huangshan Huajia Surface Technology, a powder coating manufacturer in Huangshan, Anhui Province, China.

Comment MCC: With this acquisition of one of the earliest powder coating manufacturers in China, PPGs market share in this segment is now among the top three in China.

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Feb 12, 2023: Six departments including the Ministry of Ecology and Environment and the Ministry of Industry and Information Technology jointly issued a "List of New Highly-controlled Pollutants (2023 Edition)" which will come into effect on March 1, which includes 14 kinds of new pollutants like PFOS, its salts, and perfluorooctane sulfonyl fluoride.

Comment MCC: Somehow I find it amusing that such lists are issued by multiple ministries - it gives me the impression that none of the ministries involved wants to shoulder all the blame for the potential - though justifiable - economic losses of such bans.

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Feb 11, 2023: The average annual growth rate for Chinese POE consumption is estimated to be about 17% from 2021 to 2025. Currently, all POE is imported.

Comment MCC: Obviously, the reliance on imports does not fit well with China's emphasis on self-reliance, particularly given that about 50% of POE is used in the area of photovoltaics (new energies including photovoltaic were listed in the Fourteenth Five Year Plan as one of top 8
emerging industries of strategic importance). It is therefore not surprising that currently 8 domestic POE projects are underway or planned.

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Feb 10, 2023: According to the CCR, Japan is the global leader in the number of lithium battery applications, with almost three times as many applications as the next country, China.

Comment MCC: However, China's number is more than double that of the US and slightly higher than that of Europe.

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Feb 09, 2023: China's PTA imports increased strongly from 2017 to 2019 but then declined rapidly in 2020 and again in 2021.

Comment MCC: This is another segment in which China's production capacity has increased rapidly, leading to self-sufficiency.

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Feb 08, 2023: Jingdezhen Black Cat High Performance Materials started the construction of a 5 000 tons carbon nanotube powder project, starting with a capacity of 2 500 t/a carbon nanotube to be put into operation by the end of 2024.

Comment MCC: It will be interesting to see how high the quality of the material is once it is available. In the past, many Chinese companies have entered high-end chemical segments such as PEEK, only to later be able to produce only low-quality material that cannot compete with that of the leading Western producers.

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Feb 07, 2023: Shanxi province aims to decrease the energy consumption per unit of GDP by 14.5% from 2020 to 2025, and to have non-fossil fuels account for 12% of total energy consumption by 2025.

Comment MCC: These targets seem rather unambitious - a per-unit reduction by 14.5% will certainly be compensated for by a higher GDP growth rate, meaning overall energy consumption will increase, and the 12% target for non-fossil fuels also seems low. Of course, Shanxi is China's major coal-producing region and has announced plans to increase its coal output.

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Feb 06, 2023: BYK completed the second phase of expansion of its integrated production base in Shanghai, BYK's second production base in China after the Tongling production base.

Comment MCC: This is part of a broader trend of moving even the production of chemicals with a higher specialty nature to China. The localized products include defoamers and additives used primarily in coatings.

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Feb 05, 2023: China's phenol production capacity has been increasing massively in the past few years, for example by 27% in 2020, 35% in 2022 and an expected 27% in 2023.

Comment MCC: Somewhat predictably, this has led to price declines, a reduction in imports and losses for phenol producers.

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Feb 04, 2023: India has initiated an anti-dumping probe into imported Vitamin A from China and the EU.

Comment MCC: Given the scale of China's vitamin production and market, China's vitamin producers very likely have an economic advantage over Indian producers even without resorting to any anti-competitive practices.

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Feb 03, 2023: China approved imports of eight genetically modified crops for the first time after a decade-long wait

Comment MCC: This could substantially increase the market for these crops and their associated chemicals, benefiting agrochemical companies such as Bayer.

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Feb 02, 2023: ASK Chemicals, a supplier of materials for the foundry industry, opened a new production plant in Zhenjiang, China.

Comment MCC: The plant will initially focus on an inorganic binder followed by the production of water-based coatings and feeders, thus highlighting the trend towards environmentally friendly products.

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Feb 01, 2023: The Journal of the Chinese Chemical Society retracted a paper titled "Adsorption of Pb(II) and Cd(II) by magnetic chitosan-salicylaldehyde Schiff base: Synthesis, characterization, thermal study and antibacterial activity" published in 2022

Comment MCC: The rather interesting rationale is as follows: "The retraction has been agreed following an investigation based on allegations raised by a third party regarding authorship for sale. During the publication process, the authors' list was systematically and substantially manipulated. Unambiguous evidence was found that the majority of contributors do not fulfill contributorship criteria for this manuscript."

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Jan 31, 2023: Sinopec published the "The Sinopec Green and Low-carbon Development White Paper 2022" (the "White Paper") on January 13

Comment MCC: This indicates a growing interest in this subject by the oil company. As a side note for bird watchers like me, the press release also features a photo of egrets breeding inside what seems to be a refinery (the photo is titled "Thousands of Migrating Egrets Visit and Breed in the Sinopec ZRCC Egret Nature Reserve Every Year")

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Jan 30, 2023: A recent discussion paper finds that Chinese authored chemical articles receive only half the citations from the US compared to articles from other countries. Even after controlling for the quality of Chinese research, Chinese articles receive 28% fewer citations from US researchers.

Comment MCC: This seems to be a wasted opportunity for US chemical researchers to build upon existing knowledge.

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Jan 29, 2023: Substantial amounts of chemicals that are potential precursors of fentanyl were seized in Arizona this month.

Comment MCC: The chemicals were imported from China, a major source of such chemicals.

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Jan 28, 2023: In 2022, the Chinese PVC capacity via the calcium carbide method is expected to increase by 850 000 t/a, decreasing from 78.72% in 2021 to 76.55%

Comment MCC: While the calcium carbide process has dominated China's PVC production in the past due to the country's coal resources, new projects are no longer approved due to environmental concerns, indicating a shift in the evaluation criteria.

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Jan 27, 2023: Topsoe has been chosen by Mintal Hydrogen Energy Technology as technology provider for a new green ammonia plant in Baotou, Inner Mongolia. The new plant will be the first dynamic green ammonia plant in China (Chemical Industry Digest).

Comment MCC: The process includes the production of hydrogen from wind turbines and thus avoids the emission of carbon dioxide associated with traditional ammonia production.

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Jan 26, 2023: US chemical engineer Feng Tao was sentenced to time served for failing to disclose ties to China on a university form.

Comment MCC: This is a mild sentence and indicates a rebuke of the US government's strict China Initiative aimed at preventing espionage.

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Jan 25, 2023: According to a paper in Science, a Chinese team of researchers became the first scientists to control chemical reactions at the atomic level

Comment MCC: This could eventually lead to more efficient production of chemicals and indicates the high level of Chinese chemical research in at least some areas.

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Jan 24, 2023: A report in the C&EN predicts that China's chemical industry will in 2023 benefit from the country's recent lifting of its zero-COVID-19 policies.

Comment MCC: Pharmaceuticals and agrochemicals are the sectors particularly highlighted in the report as having good growth prospects.

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Jan 23, 2022: A fire and explosion at Panjin Haoye Chemical, a refinery and petrochemicals complex in China has killed at least 12 people. The incident happened during maintenance work at an alkylation facility (Reuters).

Comment MCC: The cause of the accident is still under investigation by the State Security Commission.

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Jan 22, 2023: Many small and medium-sized Chinese glyphosate producers have been closed in recent years due to increased environmental protection and outdated capacity, leading to China's capacity getting reduced to 713 kt in 2021 from 1030 kt in 2009.

Comment MCC: The capacity is likely to remain low - small producers will not easily be allowed to resume production, and some producers may face capacity restrictions.

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Jan 21, 2023: In 2021, Chinese propylene oxide production capacity was 5.39 million tons while the output was 3.7 million tons.

Comment MCC: As capacity expansions are still continuing, with production capacity increasing to about 8 million tons by the end of 2023, overcapacity is likely.

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Jan 20, 2023: China's newly installed PV capacity is predicted to increase by 19.5% annually in the next few years. In specific areas of the segment, the Chinese market share is extremely high - for example, the market share of China's top four PV adhesive film producers accounting for nearly 90% of the global total in 2021 (CCR).

Comment MCC: This is the type of dependency that is a success for China but a worry for Western countries, particularly the USA.

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Jan 19, 2023: Chinese battery makers dominate the global market, reaching 50% of global supply. In particular, CATL extended its 2022 share to 37% from 32% in 2021.

Comment MCC: BYD also increased its market share to about 14% during that period.

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Jan 18, 2023: Shandong province states that the enrollment rate of the chemical industry into designated chemical parks has reached more than 45%.

Comment MCC: While this is claimed as a success, it seems low compared to the eventual goal to have essentially all chemical industry in China in chemical parks. My understanding this goal was to be achieved by 2025, a time not too far in the future.

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Jan 17, 2023: In 2022, China had 41 normally operating full-process titanium dioxide manufacturers. Production increased by 1.9% compared to the previous year. Rutile and chlorination products showed increases compared to the overall figures.

Comment MCC: A growth rate of 1.9% is a rate more familiar to Western chemical companies in their mature markets than to Chinese ones.

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Jan 16, 2023: Shanxi Province announced six typical cases of hazardous chemical violations.

Comment MCC: However, the fines imposed are quite low, ranging from 70,000 RMB to about 500,000 RMB. For example, Shanxi Datuhe Coking "failed to maintain emergency rescue equipment, operated in violation of safety management regulations, installed safety equipment that did not meet national standards, failed to maintain safety equipment, and locked the safety exit of the production site" and got a fine of only 94,000 RMB. That still seems remarkably low and seems to put a low value on the risk these violations impose on the lives of workers in the company.
Separately, Anhui province also posted a list of 60 chemical companies violating regulations - at least the publication of such findings indicates progress.

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Jan 15, 2023: While Western paint producers started marketing bio-based paints in China from 2017, more recently Chinese producers have also entered the field, and most recently some of their raw materials even come from Chinese producers such as Wanhua.

Comment MCC: Still, given the relatively low eco-consciousness of Chinese customers, the market share of these products will likely remain low as long as their price (as currently) is 15-20% higher than the alternatives.

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Jan 14, 2023: In 2021, China accounted for 61% of the global PBT capacity of 2.41 million t/a, with all 8 Chinese producers among the top 10 global producers. In addition, new capacity will also be mainly built in China and the Middle East.

Comment MCC: Given that Chinese output in 2021 was only 863 kt, capacity utilization is relatively low at 59%, and China is a net exporter, it seems China is basically the global producer for this material and will remain in this position for at least the next few years.

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Jan 13, 2023: A recent paper titled "Effect of Chemical Fertilizer Application on Maize Production in China over the Past 15 Years: A Meta-Analysis" states that "the maize production of China has improved significantly in terms of FUE and its carbon footprint in recent years. Because of improvements in maize cultivars and cultivation technologies, it is possible to decrease N, P, and K application rates and reduce per unit area carbon footprint of maize, without compromising yield".

Comment MCC: The resulting recommendation to reduce nitrogen fertilization by 10% from current levels should have a substantial impact on chemical fertilizer production if implemented.

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Jan 12, 2023: In the first 9 months of this year, China's cumulative export volume of styrene was 542 kt, a year-on-year increase of 190% while imports were 826 kt, down 35% year-on-year.

Comment MCC: This leaves China a net importer despite increased domestic production capacity and partly due to a decrease in utilization rate by almost 9%.

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Jan 11, 2023: According to a recent paper in the Journal "Environmental Science and Pollution Research", substituting chemical potassium fertilizer with crop straw residues in China could substantially reduce annual emissions of greenhouse gases, ammonia, nitrogen oxide, and fine particulate matter.

Comment MCC: It remains to be seen whether this research will be implemented, with potential losses for companies producing potassium fertilizer.

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Jan 10, 2023: According to the "Forecast Report on the Development of Oil and Gas Industry at Home and Abroad" by the China National Petroleum Corporation Economic and Technological Research Institute, as of January 2022, China's oil refining capacity is larger than that of the US, making China the largest oil-refining company.

Comment MCC: As the report points out, "this also means that China is more likely to become the largest producer of downstream products that rely on crude oil as raw materials, such as ethylene, propylene, refined oil and other chemicals."

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Jan 09, 2023: Pilbara Minerals, one of Australia's biggest lithium producers, plans to build a demonstration plant in Western Australia capable of refining the lithium ore into lithium salt rather than exporting the raw ore to China.

Comment MCC: Given the tensions between China and the US, this is an initiative to bypass China in supplying lithium required for EV batteries to Western markets.

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Jan 08, 2023: The Shandong Provincial Department of Industry and Information Technology and the Provincial Enterprise Confederation announced the list of top 100 enterprises, 8 of which are chemical companies.

Comment MCC: This highlights the importance of the chemical industry for this province.

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Jan 07, 2023: Based on currently announced projects, China's nylon 66 production capacity is likely to exceed 2.6 million tons by 2025.

Comment MCC: Given that current domestic consumption is only about 0.5 million tons, this means the industry will become a massive exporter or face substantial overcapacity.

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Jan 06, 2023: BSM, a Chinese producer of environmentally friendly pesticides, plans to pay ¥85 million in cash for a 20% stake in Generic, an international trader of pesticides.

Comment MCC: Up- and downstream integration is always popular with Chinese chemical companies, and in this case, does seem to make sense given the importance of export registration in the overseas registration of pesticides.

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Jan 05, 2023: The New Year Greetings of the China Petroleum and Chemical Industry Federation contain the sentence "In the new year, the petroleum and chemical industry should be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era".

Comment MCC: It is very hard to imagine a similar statement being issued in the Western world.

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Jan 04, 2023: China's chemical fiber industry grew by 6.8% yoy in the period of Jan-Oct 2022 while output increased by 0.4%.

Comment MCC: However, profit declined by 65.5%, indicating that raw materials price increases more than eliminated any changes in topline growth.

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Jan 03, 2023: PPG's Global Coatings Innovation Center in Tianjin has entered the commissioning stage and is expected to be put into use in 2023.

Comment MCC: The importance of the Chinese market for PPG is highlighted by the fact that this is the second largest global R&D center for PPG. Another potential trend indicator is that it will support not only China but the whole APAC region.

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Jan 02, 2023: Clariant will expand its Care Chemicals facility in Daya Bay, Huizhou, China, by investing CHF 80 million in capacity increases for existing products and introducing new products.

Comment MCC: According to the company, the site will also become a new global hub for Clariant's healthcare business support, speeding up the supply of high-quality ingredients for life-changing medicines. Increasingly, Chinese sites thus take up global roles in the network of multinational chemical companies.

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Jan 01, 2023: China is Saudi Arabia's largest buyer of chemicals (it consumes 25% of Saudi output) and oil (27% of total production).

Comment MCC: Indeed, trade between the two countries is almost exclusively in these goods - in 2021, oil, plastics, and other chemical goods accounted for 95 percent of the $87 billion in bilateral commerce

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Dec 31, 2022: Saudi Basic Industries Corp. has signed a memorandum of understanding with energy giant Saudi Aramco and Sinopec, to assess the economic and technical feasibility of developing an integrated petrochemical complex with an existing refinery in Yanbu.

Comment MCC: According to a Senior VP of Aramco, "These projects represent an opportunity to contribute to a modern, efficient and integrated downstream sector in both China and Saudi Arabia", something both countries should be highly interested in.

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Dec 30, 2022: An organization named "World Brand Lab" published a ranking of the 2022 top 500 world brands. The list includes PetroChina (rank 124), Sinopec (135), Sinochem (309), and Hengli Group (369)

Comment MCC: It seems to me that such lists are primarily issued to promote the companies preparing the lists. Otherwise, it is difficult to understand how another organization (Brandirectory) gets completely different results, with PetroChina at rank 55 and Sinopec at 70 while Sinochem and Hengli are not even among the top 500.

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Dec 29, 2022: The South Korean government has issued a ruling on the dumping of polyamide film from China, Thailand and Indonesia. India launched an anti-dumping review on aniline from China.

Comment MCC: While deplorable, as long as China uses similar measures, the country should not complain too loudly.

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Dec 28, 2022: An article in the SCMP by a Bejing-based lawyer states that manufacturing potential in the United States is derailed by the tariffs on imports from China. Specifically, the author writes that "A client looking into a billion-dollar chemical manufacturing investment in the US canceled the plan after the tariffs were imposed, because the cost of setting up the plant using construction components from China became prohibitive."

Comment MCC: The law of unintended consequences strikes.

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Dec 27, 2022: Hempel plans to invest 170 million USD in a coatings plant in Jiangsu with a capacity of 105 kta marine coatings, 75 kta industrial coatings and 20 kta of water-based coatings.

Comment MCC: While Jiangsu province has become substantially more restrictive for chemical investments in the past few years, larger investments in upmarket chemical products still seem to be possible.

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Dec 26, 2022: Sika will open a new plant in Chongqing to produce liquid film and mortar. According to the company, this will strengthen its "position in this booming market".

Comment MCC: Given the recent problems of China's property market and thus the construction industry, this view is remarkably optimistic.

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Dec 25, 2022: Shandong Haili Chemical was fined for 2 violations of environmental laws and regulations. One fine of RMB 512,000 was for starting construction without approval of the environmental impact report of the caprolactam waste liquid incinerator technical transformation. The other of RMB 465,625 was for failing to store hazardous waste in accordance with national environmental protection standards.

Comment MCC: The total fine of slightly below one million RMB still seems very low given that with more than 3000 employees, this still is well below 1/10,000 of the companies' annual revenue. Furthermore, it seems strange that the fine for starting construction without approval is higher than for properly storing hazardous waste. Finally, the fine does not seem to take into account that Haili is a repeat offender, having in the last two years been fined 887,500 yuan for emitting air pollutants by evading supervision, 775,000 yuan for failing to store hazardous waste in accordance with national environmental protection standards and 685,000 yuan for discharging air pollutants in excess of the air pollutant emission standards.

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Dec 24, 2022: Xinlianxin Chemical New Material Project plans to invest 10.36 billion yuan in the production of high-end fertilizers, high-end new materials organic amines, caprolactam, nylon 6, nylon 66, furan resin, phenolic resin, and electronic special gas, electronic grade ultra-pure ammonia, etc.

Comment MCC: This illustrates that Chinese chemical companies are still mainly interested in production synergies rather than in having a portfolio focused on specific products or industries.

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Dec 23, 2022: In the first 10 months of 2022, the profits of the chemical raw material and product manufacturing industry fell by 3.6%.

Comment MCC: This is similar to the drop for all industries (-3.0%).

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Dec 22, 2022: The energy crisis affecting Europe's chemical industry so far has resulted in a trade deficit in chemicals of €5.6 billion for the first half of 2022, it said in the October paper - for the first time ever, the EU now imports more chemicals than it exports, both in volume and value.

Comment MCC: This may further shift market share from the EU to China, which according to CEFIC already has a market share of 44.6% compared to 14.4% for the EU.

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Dec 21, 2022: According to the Washington Post, China uses only about 54% of its oil consumption for transportation while using 42% as a petrochemical raw material, a much higher share than in the US and the EU.

Comment MCC: The article states that this may mean any covid recovery in China will have a relatively low impact on Chinese oil consumption, as petrochemicals are more exposed to exports and thus depend on demand from outside of China.

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Dec 20, 2022: A paper in the Journal of Cleaner Production predicts that depending on the scenario, carbon dioxide emission from Chinese production of coal chemicals will increase rapidly between 2020 and 2030 and that the "coal-to-olefins industry will take the place of coal-to-ammonia and turn to be the largest one in 2020 and 2030 if no CO2 capture, utilization, and storage (CCUS) technologies are adopted". It also states that it is "probable that the contribution from coal-to-methanol will also play an important role for CO2 emission due to its rapid development".

Comment MCC: This is a paper by Shanghai-based authors, some of the Chinese Academy of Sciences - in effect, its statements seem to question the rapid expansion of coal chemicals in China, as they contradict China's proclaimed efforts to reduce carbon dioxide emissions. The paper can be found here:
https://www.sciencedirect.com/science/article/abs/pii/S0959652618333894?via%3Dihub

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Dec 19, 2022: Wanhua Chemical and Longi Green Energy, a large Chinese photovoltaic company, signed a cooperation agreement and intend to form a JV active in fields such as photovoltaics, new materials and hydrogen energy.

Comment MCC: Wanhua seems well aware of being left behind as a producer of chemicals that more and more turn into commodities, and thus tries to integrate itself into the fastest-growing segments via relevant materials such as olefin elastomer (POE), modified polycarbonate, polyurethane, battery positive electrode and lithium battery raw materials

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Dec 18, 2022: Ineos and Sinopec signed a JV agreement for a new petrochemicals complex in Tianjin, China. Ineos will acquire a 50% share in the Tianjin Nangang Ethylene Project, which is currently under construction by SINOPEC and is expected to be on-stream by the end of 2023. The cracker complex will include a 1.2 mtpa cracker, and 12 other derivative plants, including a 300ktpa ABS plant and a 500ktpa HDPE plant using INEOS technology as announced in July.

Comment MCC: Apparently, these JVs work well for both parties - it is already the fourth between the two.

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Dec 17, 2022: China and Saudi Arabia signed a "Comprehensive Strategic Partnership Agreement between the People's Republic of China and the Kingdom of Saudi Arabia.

Comment MCC: This may mean even more intensive cooperation in petrochemical projects, of which several large-scale ones have already been established.

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Dec 16, 2022: According to data from the IEA, China has both the highest stake in some technologies with high carbon dioxide emissions and in technologies that can help reduce these emissions.

Comment MCC: For example, China has about 70% of the global coal-power capacity that is younger than 20 years and about 45% of global heavy industry energy demand - both factors making the reduction of emissions more difficult. On the other hand, the country also has about 80% of global solar PV manufacturing capacity and more than 60% of global road transport electricity use - both factors which could facilitate a shift towards emission reduction.

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Dec 15, 2022: Zhongjing Petrochemical Group's annual output of 1.2 million tons of multi-component copolymerized polypropylene plant was officially put into operation in Fuzhou Jiangyin Zhongjing Petrochemical Science and Technology Park.

Comment MCC: According to the company, this is the largest copolymerized polypropylene plant in the world, again highlighting the continuing shift of the production of commodity chemicals to China.

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Dec 14, 2022: Saudi Arabia's Aramco and Shandong Energy group signed an MOU to cooperate in refining petrochemical products in China.

Comment MCC: Such cooperation seems sensible given Aramco's access to crude and China's big downstream market for petrochemical products.

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Dec 13, 2022: A chart published by the IEA shows employment changes in China as a result of carbon emission reduction pledges. The biggest losses are in the coal industry (about 1.5 to 2 million jobs lost to 2030 depending on the scenario) while major gains in the range of 1 million each are achieved in the segments "Non-fossil electricity and grids" and "Low-emissions buildings retrofit" as well as smaller gains in bioenergy, battery manufacturing, and CCUS/hydrogen.

Comment MCC: Some of these gains could be beneficial for the chemical industry, e.g., in buildings retrofit (PU demand) or in battery production.

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Dec 12, 2022: Saudi Aramco recently launched a non-metallic excellence and innovation center for building materials in Beijing. The center will focus on the research and development of non-metallic materials, including petroleum-based polymers that are more durable, have lower life cycle costs than conventional materials, and have the potential to reduce the carbon footprint of the construction industry.

Comment MCC: Statements from an Aramco executive indicate a slight fear of being left behind in a world with reduced or zero oil consumption, as indicated in the press release: "The Saudi executive said that oil and gas will continue to be critical to the world economy for decades to come. Therefore, new energy sources need to operate in parallel with hydrocarbons for a long time, and reducing the industry's emissions must be a priority for climate goals to be met, he noted."

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Dec 11, 2022: BASF introduced a biomass balance automotive OEM coating in China, the first such introduction to Asia after its launch in Europe in May. The coating is claimed to have a carbon footprint that is about 20% reduced without an impact on performance or formulation.

Comment MCC: It is interesting to see this introduction to China, as the demand for environmentally friendly products from Chinese car buyers currently is likely to be quite limited.

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Dec 10, 2022: The National Development and Reform Commission published a catalog of industries with a substantial share of production capacity exceeding the benchmark level of energy consumption. The list includes p-xylene, calcium carbide, caustic soda, ethylene glycol, ammonium phosphate, and yellow phosphorus.

Comment MCC: Energy laggards in these industries may see closures or forced upgrading.

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Dec 09, 2022: The operating performance of China's carbon black industry this year has declined significantly. The profit in the first three quarters was down 81% year-on-year.

Comment MCC: This is despite an increase in output value of 21% and a sales revenue increase of 20%. Factors cited for this include high oil prices, weakened demand, and repeated epidemics.

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Dec 08, 2022: The Ministry of Commerce has decided to initiate an anti-dumping investigation on imports of polycarbonate originating in Taiwan.

Comment MCC: According to a source reporting on this, "If the anti-dumping of polycarbonate in Taiwan can be implemented smoothly, the pressure of overcapacity of polycarbonate in China will be alleviated to a certain extent". To me, this clearly illustrates the spurious rationale behind such anti-dumping activities. But I guess as long as every country does this, none can complain too loudly.

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Dec 07, 2022: Indian analysts are optimistic about the prospects of Indian specialty chemicals producers: "We remain positive on the specialty chemicals sector owing to strong growth visibility on the back of new capacities along with the thrust by global chemicals majors de-risking their supply chains away from China - and now Europe" (Rohan Gupta, analyst, Nuvama Wealth Management)

Comment MCC: Indeed, covid-induced supply chain disruptions in China may want Western companies to source more of their chemicals from India rather than from China.

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Dec 06, 2022: According to China's agriculture ministry, the country aims to reduce the use of pesticides for cultivation of fruit and vegetables by 10% and for rice, wheat and corn by 5% within the next 3 years.

Comment MCC: While environmentally sensible, these measures may hurt chemical companies unless they can successfully shift demand towards more effective but pricier pesticides.

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Dec 05, 2022: Hainan Huasheng has officially started its 2×260 kta non-phosgene polycarbonate (phase II) project.

Comment MCC: This will further increase overcapacity in this area, continuing the commoditization of polycarbonate and increasing the difficulties for multinationals such as Covestro to stay profitable in this area. In addition, the phosgene production process may increasingly be viewed critically as non-phosgene alternatives are shown to be viable.

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Dec 04, 2022: Domestic PBAT production capacity is 873 kta with another 1660 kta to be added soon. By 2025, the production capacity will be about 25,000 kta.

Comment MCC: Given that the global production of PBAT was only around 500 kta in 2021, this represents a vast overcapacity that is likely to increase further. Tulip mania, railroad bubble, cryptocurrencies anyone?

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Dec 03, 2022: Shandong province publicly exposed 11 typical cases of safety production violations including the case of a petrochemical company in Longkou engaging in port operations without obtaining a port operation license according to law

Comment MCC: It seems this public exposure of companies violating safety regulations is still necessary to keep companies in line.

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Dec 02, 2022: According to Greenpeace, the Chinese fashion brand SHEIN has a business model based on hazardous chemicals and environmental destruction.

Comment MCC: Greenpeace tested 47 SHEIN products and found that 15% of them contained hazardous chemicals above EU regulatory limits. According to Greenpeace, this "SHEIN's careless attitude towards environmental and human health risks associated with the use of hazardous chemicals, in pursuit of profit."

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Dec 01, 2022: Asymchem Labs, a Chinese CDMO, plans to build a 4-5 billion RMB manufacturing site outside of Shanghai.

Comment MCC: The reported focus is on R&D as well as on production of chemicals. The company apparently benefits from the increased demand following the corona pandemic.

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Nov 30, 2022: Dongjing Bio-Environmental Protection Technology started up a BDO project with an annual output of 280 kt and a purity of 99.9%.

Comment MCC: According to the company, this is the world's largest integrated BDO production base - an example of the biggest and most modern chemical production now frequently being located in China.

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Nov 29, 2022: SABIC is collaborating with Jinming Machinery (Guangdong, China) and Bolsas de los Altos (Mexico) to focus on polyolefin based innovative applications in flexible packaging. The collaborative efforts will feature installation of Jinming's multilayer coextrusion machinery at Bolsas' Mexico facility using SABIC materials.

Comment MCC: It is interesting to see a cooperation between these three countries and an indication of China's growing sophistication in providing machinery.

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Nov 28, 2022: A fire at a factory at Kaixinda Trading Co Ltd in Anyang, Henan killed 38 people. It was caused by electric welding that flouted regulations.

Comment MCC: While some sources mention a connection to chemicals (e.g., NYT: "Kaixinda Trading sells, among other items, clothing, furniture, chemical products, and industrial equipment"), others do not mention this. Given the cause of the fire (electric welding) and the details provided by the NYT ("the fire had been fueled by the burning of plastics, cloths, furniture, and medications, among others"), it probably was not a chemical accident in a narrow sense.

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Nov 27, 2022: The surface treatment BU of BASF's Coatings division inaugurated its state-of-the-art surface treatment production site in Pinghu City, Zhejiang Province, China

Comment MCC: In line with BASF's pivot toward China, it is its largest surface treatment site globally.

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Nov 26, 2022: According to a 2022 paper in the Int. J. Environ. Res. Public Health, the annual number of hazardous chemicals road transportation accidents in China has not substantially changed between 2013 and 2020, a period with about 2600 such accidents. Mortality per accident is also relatively stable after 2013, reaching about 0.1 deaths on average per accident.

Comment MCC: Presumably this is a success of sorts, as the number of such transports has very likely increased - still, 250 accidents such as occurring in 2020 is still a high number.

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Nov 25, 2022: Among the 2657 accidents reported in China between 2012 and 2020 that involved the transportation of hazardous chemicals, 63% were related to flammable liquids, 14% to gases, 14% to corrosive substances, and 4% to toxic and infectious substances.

Comment MCC: This is more a reflection of the relative importance of these substances than the level of danger they pose in transportation.

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Nov 24, 2022: According to the National Bureau of Statistics, main business revenue of the major enterprises in China's chemical industry increased by 8.2% yoy in the period from January to September 2022

Comment MCC: On the other hand, industrial added value only rose by 3.9% and profit decreased by 2.3%, painting a less rosy picture.

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Nov 23, 2022: China controls about 60% of the world's capacity for processing raw lithium products into battery-grade chemicals

Comment MCC: This has led some countries to be concerned about their own supplies, and may thus lead to a longer-term shift away from China.

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Nov 22, 2022: The Chinese market for hazardous chemicals and dangerous products logistics industry exceeds 2 trillion yuan. There were 13,000 hazardous chemical road transport enterprises in September 2020, employing 1.62 million workers and operating 575,000 transport vehicles nationwide. The transport volume is approximately 1.2 billion tons, accounting for 70% of the total transport volume (source: Liu, Y.H. Operation report of China's hazardous chemicals logistics industry in 2021. In Proceedings of the China Chemical Logistics Industry Annual Meeting, Wuhu, China, 8 December 2021)

Comment MCC: The size and fragmentation of the industry explain why accidents are relatively common (2657 were reported between 2012 and 2020).

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Nov 21, 2022: The first phase of the 200 t project of Luxi Group's 1.2 million-ton bisphenol A project was started

Comment MCC: This will allow backward integration of the PC production, and thus will put further price pressure on the PC market.

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Nov 20, 2022: Wanhua's operating income in the third quarter increased by 4% year-on-year while net profit decreased by 46%

Comment MCC: Factors cited for the decrease in profit and the low growth include the covid lockdowns, high energy prices, and high inflation in some Western countries.

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Nov 19, 2022: The Ministry of Industry and Information Technology announced the National Recommended Catalogue of Energy-Saving Technology and Equipment in the Field of Industry and Information Technology

Comment MCC: This includes 12 energy-saving and efficiency-enhancing technologies in the petrochemical and chemical industry such as semi-water-dihydrate wet phosphoric acid technology

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Nov 18, 2022: The NDRC clarified that raw materials not used as fuel or power will not be included in the calculation of total energy consumption.

Comment MCC: Given that most of these materials will eventually end up as carbon dioxide anyway, this feels a bit dishonest to me, but it seems the authorities deem it necessary to protect certain segments such as coal chemistry.

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Nov 17, 2022: Canada ordered three Chinese companies to divest their investments in Canadian lithium miners, citing national security concerns

Comment MCC: Given such bans, the increasing Chinese focus on self-sufficiency is hardly surprising.

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Nov 16, 2022: Chinese acrylonitrile capacity grew at a CAGR of 11.4% from 2017 to 2022.

Comment MCC: As domestic consumption grew only by a CAGR of 4-5% during the same period, prices declined despite growing exports.

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Nov 15, 2022: Wanhua Chemical launched a new product, polyamide 12 (nylon 12)

Comment MCC: This marks a further step of Wanhua into higher-end chemicals and is aligned with China's focus on specific high-end engineering plastics, as outlined in relevant government plans.

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Nov 14, 2022: A 500 kt methanol-to-ethanol project of Shaanxi Yanchang Petroleum Yulin Kaiyue Coal Chemical passed the filing review of the Yulin Municipal Administrative Approval Service Bureau

Comment MCC: This represents an extension of the value chain building on the existing 600 kt coal-to-methanol project (to be extended to 1400 kt) and thus is part of the long-desired shift of coal chemicals into higher-value products.

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Nov 13, 2022: The operating income of Wuxi Acoli, a supplier of polyether amines, in the first three quarters of 2022 decreased by 10% while profit increased by 52%.

Comment MCC: According to the company, the revenue loss is due to logistics issues during lockdowns while the profit increase is due to lower raw materials prices and higher margins.

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Nov 12, 2022: From January to August 2022, the total output of the paint industry was down by 4.3% year-on-year while revenue was down by 2.0% year-on-year and profit was down by 26%.

Comment MCC: The largest declines were in areas most strongly affected by lockdowns, e.g., Shanghai.

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Nov 11, 2022: Covestro announced that it will suspend investment in a world-scale MDI factory construction project in response to economic uncertainty, energy crisis and global economic weakness

Comment MCC: The U.S. and China were potential locations for the new plant

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Nov 10, 2022: ThyssenKrupp and Binhua Group will cooperate in the Binzhou Beihai Polyether and Polyurethane New Material Industrial Park, focusing on extending the PO-PPG-PU integrated industrial chain

Comment MCC: Despite Germany being criticized by other Western companies for cooperating too closely with China, individual German businesses still seem to regard such cooperation as beneficial.

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Nov 09, 2022: DuPont terminated its $5.2 billion buyout of Rogers Corp due to a failure to clear Chinese regulatory hurdles (Reuters)

Comment MCC: According to DuPont, the company had received all approvals except from China. On the other hand, some sources speculate that DuPont may have been happy to get out of the deal in the current difficult market conditions. In any case, a Chinese source reporting on the termination did not provide the rationale of the lacking Chinese approval.

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Nov 08, 2022: From 2017 to 2021, Chinese supply and demand of pure benzene had an average annual growth rate of 8.7% in production, 4.3% in imports, and 10.5% in downstream consumption within five years.

Comment MCC: Consumption increased particularly in 2021 (by 19%) driven mainly by the production of styrene, which accounts for about 45% of Chinese benzene consumption.

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Nov 07, 2022: In China's coatings market, architectural coatings account for 52% of the total, about 10% higher than the global share.

Comment MCC: This highlights the importance of the real estate segment to the Chinese economy, and the risks of its current wobbly state, for the producers of chemicals.

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Nov 06, 2022: The National Development and Reform Commission officially released the newest Catalogue of Industries Encouraged for Foreign Investment

Comment MCC: Chemical materials covered include 50,000 tons/year or more of butadiene adiponitrile, hexamethylene diamine, high carbon alpha olefin copolymerized metallocene polyethylene, COC/COP cyclic olefin polymer, polyphenylene sulfide, polyether ether ketone, polysulfone, polyethersulfone, polyarylate, polyphenylene ether, and special polyamide

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Nov 05, 2022: Wanhua started a recycling factory for polyurethane hard foam recycling with a capacity of 60 tons per year

Comment MCC: Obviously, this is a very small capacity compared to the PU produced by Wanhua, but it is a start.

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Nov 04, 2022: Chinese electric vehicle maker Nio has suspended production due to COVID-19 ( Reuters)

Comment MCC: One of many examples of how China's zero-covid policy reduces demand for chemicals.

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Nov 03, 2022: Shandong province has given guidelines clarifying the conditions under which chemical parks will be allowed to extend their area.

Comment MCC: Key aspects include management quality, the relative importance of the chemical industry in the park, operating income per area, and the level of utilization of the current area. Overall, this should benefit well-run parks and allow the chemical industry to develop further

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Nov 02, 2022: Evonik's first lithium-ion battery center in the world will open in Shanghai on Nov 4.

Comment MCC: According to Evonik, more than 90% of the world's lithium-ion battery manufacturers are based in Asia, primarily in China. Thus it makes sense to focus R&D on materials for this segment here.

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Nov 01, 2022: The PMI for China's manufacturing sector was 49.2 in October, indicating an economic contraction and down from 50.1 in September.

Comment MCC: ... with obvious implications for the demand for chemical products.

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Oct 31, 2022: China's self-sufficiency rate of domestic para-aramid fiber production capacity is only about 20%, and it is heavily dependent on imports.

Comment MCC: As a consequence, Sinochem is expanding its production capacity for this material - presumably as it is seen as strategic due to its use in industries such as aviation.

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Oct 30, 2022: Chinese capacity utilization for the manufacturing of chemical raw materials and chemical products was 75.3% in the third quarter of 2022.

Comment MCC: This is likely to be a decline of between 1-2% compared to one year earlier, as the overall manufacturing capacity utilization (which includes chemicals) was down by 1.4%.

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Oct 29, 2022: BASF will reduce annual costs by 500 million euros in Europe up to 2024, or about 10%, including job cuts while maintaining its investment in China.

Comment MCC: The CEO has emphasized that BASF's China business is very profitable, and has warned against China-bashing: "We have a very, very profitable China business. Half of the world market is there. What kind of a risk does a company run into if it renounces half of the market?"

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Oct 28, 2022: Trading house Mercuria Energy Group has bought back the minority stake that Chinese state-owned ChemChina held in the Geneva-based company since 2016 (Reuters)

Comment MCC: Originally, ChemChina intended to increase its stake in Mercuria, but these plans got scrapped after the merger with Sinochem.

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Oct 27, 2022: The UK government denied permission for work to continue at two major research centers involving Imperial College London and Chinese companies with links to China's defense industry (chemistryworld)

Comment MCC: Indeed, given the increasingly critical attitude in Europe toward China, any such collaborations will get harder.

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Oct 26, 2022: In the first half year of 2022, China's production of chemical pesticides was 1.297 million tons, a year-on-year decrease of 0.3% (agropages)

Comment MCC: This is in line with China's declared target to not increase the level of pesticide use in China (though of course production may also be exported)

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Oct 25, 2022: Xi Jinping secured a third term as general secretary of the Communist Party

Comment MCC: Just a quick reminder that he actually studied chemical engineering at Tsinghua University.

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Oct 24, 2022: Chinese production of silicon may soon start to exceed demand. Currently, at least 13 silicon companies have expansion plans for the next 2-3 years, with a combined project scale of 2.1 million tons compared to the current production of 0.8 million tons and 1.2 million tons of capacity in 2022. By 2025, global demand is expected to reach 1.9 million tons while Chinese capacity is expected to be at least 5 million tons.

Comment MCC: It seems China's chemical industry is still prone to its boom and bust cycles. With China currently accounting for 85% of global silicon production, these cycles also matter on a global level.

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Oct 23, 2022: Chinese refiner Zhejiang Petrochemical Corp has been awarded a 10 million ton additional crude oil import quota for 2022 (Reuters)

Comment MCC: With this additional amount, the company can fully utilize its refining capacity. While the government may to some extent restrict private refiners, at the moment the support of a weak economy seems to be more important.

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Oct 22, 2022: According to CGTN, Chinese researchers have invented an AI system that facilitates chemical research and experiments. The system can perform the essential steps for chemical research including data collection, processing, analysis and visualization.

Comment MCC: Without working with such a system, it is hard to judge whether this really is a breakthrough or basically just a gimmick.

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Oct 21, 2022: China's demand share of a portfolio of common polymers rose from 6% in 1990 to 42% in 2021 (ICIS)

Comment MCC: Interestingly, 2021 is the only year in which the share dropped, though only by one percent (from 43% to 42%)

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Oct 20, 2022: China's demand share of a portfolio of common polymers rose from 6% in 1990 to 42% in 2021 (ICIS)

Comment MCC: Interestingly, 2021 is the only year in which the share dropped, though only by one percent (from 43% to 42%)

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Oct 19, 2022: Sinopec has successfully produced its first batch of large tow carbon fiber in Shanghai. It claims this is the first time in the country and only the fourth time in the world.

Comment MCC: The problem of China's chemical industry in many areas - including carbon fiber - is overcapacity at the low end of the quality spectrum but a lack of high-end grades. Sinopec's activities reflect the ambition to overcome this issue.

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Oct 18, 2022: According to ICIS, China contributed 33% of global demand growth of a portfolio of basic polymers between 1990 to 2001 but 63% between 2002 and 2021.

Comment MCC: Seeing these figures, the often-quoted forecast that half of the global chemical growth to 2030 will come from China sounds credible.

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Oct 17, 2022: Linde has started up a new air separation unit to supply gaseous oxygen and nitrogen to Wanhua

Comment MCC: This is the fifth plant on the site - all are built, owned and operated by Linde

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Oct 16, 2022: In 2021, China was the largest global producer of chemical fibers accounting for 73% followed by India with 7%.

Comment MCC: This figure highlights the high share of China's chemical industry for some key chemical products, and will be hard to reduce given the new and large plants located in China.

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Oct 15, 2022: Shanghai plans to establish a material industry cluster with a focus on high-end membrane materials, high-performance composite materials, and non-silicon-based core materials.

Comment MCC: This is part of a longer-term shift - Shanghai is no longer interested in production of chemicals but rather in functions such as administration, R&D and marketing, particularly in innovative areas of the chemical industry.

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Oct 14, 2022: BASF will invest in a new 80 kt neopentyl glycol plant at its Zhanjiang integrated site in China.

Comment MCC: The rationale given is the usual one heard for foreign chemical investment in China these days - "the investment in the neopentyl glycol plant at the Zhanjiang integrated base will allow BASF to support the growing needs of customers in Asia".

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Oct 13, 2022: Chinese electric-vehicle battery maker Gotion High-Tech Co. Ltd. will invest $2.36 billion to build a battery material plant in Michigan

Comment MCC: Michigan is a center of the US auto industry, and building a plant there may strengthen the position of Chinese battery producers with regard to trade conflicts.

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Oct 12, 2022: Johnson Matthey started the recycling of fuel cells recycling at Zhangjiagang, specifically the platinum group metal content from membrane electrode assemblies from Unilia

Comment MCC: Despite the current low importance of this recycling, it is important for companies to establish a position in this segment, which is likely to massively increase in importance.

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Oct 11, 2022: The US was the biggest export destination for chemicals in 2020 followed by India, South Korea, and Japan (Statista).

Comment MCC: European countries (Germany, the Netherlands) are only in positions 6 and 7 while the other countries in the top 10 are mostly in Asia, except for Brazil.

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Oct 10, 2022: Arkema announced the successful start-up of the production facility for its fluorinated specialty 1233zd at its partner Aofan in China.

Comment MCC: Zibo Aofan Chemical is a smallish Chinese chemical company specializing in fluorine refrigerants and foaming agents. Possibly, letting Aofan produce the material for Arkema reduces costs or reduces the time for the setup of production.

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Oct 09, 2022: According to a report just published, the market for IoT in the chemical industry is expected to grow at a CAGR of 8.5% between 2022 and 2028.

Comment MCC: Growth is forecast to be particularly driven by China.

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Oct 08, 2022: CALB, China's third-largest lithium battery manufacturer after CATL and BYD with a market share of about 6% had a relatively weak IPO on the HK stock market.

Comment MCC: This is probably more a consequence of the general downturn in global stock markets than investors thinking that the segment no longer has huge growth potential.

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Oct 07, 2022: Shandong Province has the largest total number of petrochemical projects followed by Zhejiang Province and Guangdong Province, though Zhejiang Province is the largest by amount of investment.

Comment MCC: The chemical industry in China is relatively concentrated in 6 provinces, Liaoning, Shandong, Jiangsu, Zhejiang, Fujian and Guangdong. These six provinces account for 80% of investment volume of current and planned projects.

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Oct 06, 2022: China has substantially increased its export of solar panels to Europe, already exceeding the total exports of 2021 in the first seven months of the year.

Comment MCC: China is the largest producer of solar panels and ships about 55% of its total exports to Europe. As a consequence of Europe's energy crisis, the EU plans to more than double its solar capacity by 2025

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Oct 05, 2022: China will extend the 10% tax exemption on purchases of new-energy vehicles (NEVs) until the end of 2023 to support development of the NEV market

Comment MCC: This support has contributed strongly to making China the biggest market for electric vehicles with strong growth of about 74% in September 2022 compared to September 2021.

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Oct 04, 2022: Shandong Yike is planning to build a 450 kt ABS plant.

Comment MCC: While this plant is not extremely large compared to global annual demand of about 11,380 kt, it is substantial compared to South Korean exports of ABS to China (499 kt in 2020).

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Oct 03, 2022: Several government departments issued an action plan for the protection of the Yangtze river.

Comment MCC: A core part of the plan is the prohibition to transfer backward chemical production capacity across regions - if applied, this would mean that affected companies cannot just move their old plants to provinces with less strict regulations.

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Oct 02, 2022: In 2021, Southeast Asia accounted for more than 48% of China's polypropylene exports.

Comment MCC: Primarily, this is PP exported to Vietnam (34% of total Chinese PP exports).

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Oct 01, 2022: PVC demand in China is under pressure as China's construction sector is declining.

Comment MCC: The real estate segment accounts for more than 60% of China's PVC demand - any weakening thus seriously affects PVC demand.

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Sep 30, 2022: China's operating rate of ethylene glycol production is currently about 58%.

Comment MCC: This is a considerable decline from the 74% rate in 2019, though, in 2020, the operating rate was even lower at about 56%.

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Sep 29, 2022: The number of calcium carbide producers in China has dropped by about half between 2015 and 2021, but there still are 120 domestic producers, indicating a highly fragmented market

Comment MCC: Calcium carbide demand is under pressure as the production of PVC via ethylene is more economic. Consequently, the share of calcium carbide-based PVC has decreased from 83% in 2014 to 77% in 2022, with corresponding gains for ethylene-based PVC.

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Sep 28, 2022: The Ministry of Industry and Information Technology has announced 2025 goals for the energy electronics industry including an annual output value of 3 trillion yuan

Comment MCC: This segment includes several areas which strongly rely on chemical materials, e.g., solar photovoltaics and energy storage batteries. The chemical industry could thus profit from public support for these goals.

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Sep 27, 2022: BASF announced that its multifunctional fuel additive production unit has been put into operation in Shanghai to meet the growing demand for fuel additives in the Asian market

Comment MCC: Increasingly, even smaller-scale products that in the past were partly imported are being localized in order to secure supply chains.

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Sep 26, 2022: Goldman Sachs has cut its 2023 growth forecast for China to 4.5% while forecasting 3.0% for 2022.

Comment MCC: At the basis of this forecast is the assumption that China will keep its strict anti-COVID measures for at least the first quarter of 2023. These have a substantial effect on the economy - for example, Shanghai's economy shrank by 13.7% in Q2 2022 due to the lockdown of the city.

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Sep 25, 2022: July 2022 was the first month in which Chinese caprolactam exports were larger than imports. In 2021, exports were still far below imports.

Comment MCC: This is partly the result of differences in energy costs, as these have risen far more in Europe than in China. Of course, added production capacity for caprolactam in China is also an important factor.

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Sep 24, 2022: A coal chemical project, the Yulin Chemical Project, is the largest coal chemical project under construction in the world, with a planned total investment of about 125 billion yuan and an annual conversion of about 24 million tons of coal.

Comment MCC: Constructing the largest coal chemical project in the world while at the same time aiming to reduce carbon dioxide emissions seems like a contradiction to me.

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Sep 23, 2022: Wuxi Akeli Technology canceled a project with an annual output of 20 kt of polyetheramine and an annual output of 30 kt of optical materials (cyclic olefin monomers and polymers)" to be built in Taixing Economic Development Zone.

Comment MCC: Reasons given for the cancelation include the epidemic situation, the concentration of production bases in Jiangsu, the adjustment of downstream customers of major products, and other factors. My personal guess is that the main factor is that Jiangsu province is less and less keen on chemical production.

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Sep 22, 2022: The German Chemical Industry Association (VCI) forecasts a decline of 8.5% of German chemical production in 2022.

Comment MCC: Reasons indicated are supply bottlenecks (particularly for natural gas) and sharply rising input prices - factors that should affect Chinese companies much less, increasing their relative competitiveness.

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Sep 21, 2022: According to a senior BASF China employee, China is the second biggest market for BASF after the US, contributing about 12 billion EUR in sales.

Comment MCC: Even more importantly, the company states that over the next decade, 60% of the growth in global chemical demand will come from China.

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Sep 20, 2022: The acquisition of Snapdragon Chemistry, a US drug services firm specializing in flow chemistry technology, by Asymchem, a pharmaceutical research and manufacturing company based in China, will not proceed.

Comment MCC: This is due to a lack of agreement on mitigation terms by the US Treasury's Committee on Foreign Investment in the United States (CFIUS).

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Sep 19, 2022: The chemical industry accounts for 25.6% of the operating income and 27.8% of the profit of Shandong province.

Comment MCC: Indeed, Shandong has the biggest concentration of chemical companies in China and depends strongly on this industry - much more than Jiangsu, which has substantially more alternatives and thus seems to take a stricter approach to the industry.

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Sep 18, 2022: Gulf Resources, a Chinese manufacturer of bromine, crude salt, and specialty chemicals, is building a new production plant, with a planned investment of about 70 million USD.

Comment MCC: This is the replacement of an older plant that needed to be relocated to a chemical park. The company took a write-down of about 17 million USD.

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Sep 17, 2022: BASF has started production of the first chemicals (60 kt of engineering plastic compounds for automotive and electronic applications) at its new site in southern China's Zhanjiang.

Comment MCC: When completed in 2030, this will be the third-largest of BASF globally.

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Sep 16, 2022: According to a Huachuang report, Chinese chemical businesses will increase their competitiveness compared to European companies that suffer from high natural gas prices as a consequence of the Russian-Ukrainian war (Quartz).

Comment MCC: Indeed, companies such as BASF depend heavily on relatively cheap natural gas, a source that is unlikely to be available in the future, while China's chemical companies are largely unaffected.

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Sep 15, 2022: BASF and Ingredi, a China-based supplier of natural actives and solutions for the personal care industry, agreed on a partnership, including a strategic equity investment into Ingredi by BASF.

Comment MCC: BASF's contribution will be in demonstrating how to add these ingredients into personal care formulations and market these products globally to its customers.

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Sep 14, 2022: Shanghai issued policies to support the development of a hydrogen energy industry including supporting leading enterprises, establishing a hydrogen energy trading platform, improving policies, and supporting research.

Comment MCC: Hydrogen is clearly seen as one of the leading coming technologies and supported accordingly.

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Sep 13, 2022: The world's largest photovoltaic film material project officially started construction at the Lianyungang Petrochemical Industrial Base. It will consist of three sets of photovoltaic film material installations, a high-performance engineering plastics installation, and a high-end polyolefin installation.

Comment MCC: The main objective is to lower the current high import rate of photovoltaic film materials (more than 60%), increasing China's self-sufficiency.

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Sep 12, 2022: China's toluene capacity increased by 3.36
million t/a to 20.407 million tons in 2021 while output was 8.58 million tons (CCR).

Comment MCC: A large but not absolutely atypical mismatch in China's chemical industry.

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Sep 11, 2022: An order of the State Council requests to "cancel all unnecessary environmental law enforcement"

Comment MCC: While it remains to be seen what specific consequences this order will have, it seems to indicate a backlash against environmental regulation, possibly against the background of a weakening Chinese economy. One practical consequence is the decline of on-site inspections, which should lead to a decrease in fines and potentially to weaker enforcement of environmental regulation.

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Sep 10, 2022: 1,139 of the 1,176 hazardous chemical production enterprises included in the government relocation and transformation plan have been completed, with a completion rate of 97%. All 1,089 enterprises included in the tasks of the first stage (to 2020) have been completed. 50 of the 87 large and super-large enterprises included in the tasks of the second stage (to 2025) have been completed while the remaining 37 are progressing as planned.

Comment MCC: It seems that overall, the relocation is a success and has not caused massive disruptions to the chemical industry in China.

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Sep 09, 2022: SK Geo Centric and Weixing Chemical will establish a new 40 kta Ethylene Acrylic Acid production facility in China in a 60/40 JV.

Comment MCC: The company already has production plants for this chemical in Europe and the USA - adding capacity in China is the logical step in being a worldwide player.

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Sep 08, 2022: In 2021, China was the third-biggest global exporter of chemicals with a share of 9.6% of total global exports (Statista)

Comment MCC: This may be somewhat surprising given China's much larger share of the global chemical market (about 45%). China's chemical industry produces primarily for domestic consumption, though some of the final goods are subsequently exported. On the other hand, China's share of global chemical exports is increasing - it doubled from 2010 (4.8%) to 2021 and is likely to increase further given that many new chemical plants are being built in China.

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Sep 07, 2022: JinkoSolar will procure 336 kt of primary polysilicon from Xinte Energy Company from January 1, 2023 to December 31, 2030 at a current value of about 90 billion yuan.

Comment MCC: Apparently, this is the largest polysilicon order in history.

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Sep 06, 2022: Sinopec launched China's largest demonstration base for carbon capture, utilization and storage, the "Qilu Petrochemical - Shengli Oilfield million-ton CCUS project".

Comment MCC: China is thus making progress with regard to mastering the CCUS technology - at the same time, highly emission-intense projects such as coal-to-chemicals and coal power generation are continuing, which seems to contradict such efforts.

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Sep 05, 2022: In August 2022, the groundbreaking ceremony of the 500,000-ton/year LDPE plant of the ExxonMobil Huizhou Ethylene Project was held. This is an investment of about 10 billion USD, with the first phase including an output of about 1.5 million tons of different PE types

Comment MCC: This project was planned long before the worsening of US-Chinese relations - it will be interesting to see whether similarly, large projects will still be possible in the future.

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Sep 04, 2022: China National Petroleum Corporation ("PetroChina") issued a statement saying that it took "PetroChina", "PetroChina" and "PetroChina" as its corporate abbreviation and core name.

Comment MCC: Apparently, about 136 enterprises not part of the corporation still have the word "PetroChina" in their names, potentially misleading their business partners about their capabilities and financial stability.

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Sep 03, 2022: Among the top 50 global chemical companies by sales in 2021, the companies with the highest year-on-year sales growth are Syngenta, Wanhua Chemical, and Rongsheng Petrochemical, whose sales in 2021 increased by 122%, 113%, and 90% respectively.

Comment MCC: It is not an accident that all three are either Chinese companies (Wanhua, Rongsheng) or owned by Chinese ones (Syngenta).

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Sep 02, 2022: Wanhua Chemical received the approval to build a 1.2 million tons/year ethylene cracking unit, 250 kt LDPE unit, and 2×200 kt POE unit (along with others) at the Yantai Chemical Industrial Park, an investment of 17.6 billion RMB.

Comment MCC: While Western chemical companies more and more focus on specialty chemicals, Chinese chemical companies such as Wanhua invest in expanding their value chain even into upstream areas that have more or less been abandoned by the leading Western players.

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Sep 01, 2022: In 2022, China's MMA capacity will increase by 56% after an annual CAGR of 14% between 2017 and 2021.

Comment MCC: This will put substantial pressure on the industry to expand exports.

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Aug 31, 2022: Chinese self-sufficiency for isobutylene-isoprene rubber has increased from about 30% in 2017 to about 62% in 2021.

Comment MCC: With some new capacity coming on stream soon, this will potentially result in overcapacity at the lower end of the quality spectrum, as high-end products may still need to be imported.

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Aug 30, 2022: PetroChina, Sinopec, and Sinopec Shanghai Petrochemical will voluntarily delist their American Depositary Shares from the New York Stock Exchange.

Comment MCC: The rationale given is the heavy compliance costs given the small trading volumes of the US listing. Of course, this is also an indication of the ongoing bifurcation of the global economy.

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Aug 29, 2022: The Jiangsu Provincial Department of Ecology and Environment announced 16 typical cases of violations of pollutant discharge permits.

Comment MCC: It is interesting to see that apparently the positive expected effect from naming and shaming offenders is regarded as more important than the potential negative effect on the companies or the image of the responsible authorities.

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Aug 28, 2022: In the first half of the year, the operating income of the petrochemical industry was 8.13 trillion yuan, accounting for 12.4% of the national total industrial income above the designated size, an increase of 1.0 percentage points over the same period of the previous year (11.4%)

Comment MCC: Another indicator of the high importance of the chemical industry in China compared to most other countries.

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Aug 27, 2022: China's carbon black output has increased at a CAGR of 1.1% between 2014 and 2021 while capacity grew at a CAGR of 3.8%.

Comment MCC: This has led to capacity utilization declining from 78% (2014) to 65% (2021), with further announced capacity expansions likely leading to even lower utilization rates in the future. It is also interesting to see that demand for some of the very basic chemical materials such as carbon black do not really grow much faster than in the developed markets (even though producing companies still act as if they do).

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Aug 26, 2022: After Wanhua's current MDI projects in Fujian and Ningbo are put into operation, the total MDI production capacity of Wanhua Chemical will reach 3.65 million tons per year.

Comment MCC: This means that Wanhua will have more than double the MDI capacity of Covestro, the second biggest player, cementing the company's dominance.

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Aug 25, 2022: Covestro started construction of its first physical recycling production line dedicated to the blended production of polycarbonate recycled materials at its integrated base in Shanghai.

Comment MCC: Providing recycled material is now important for many customers, even if the price of that material is above that of virgin resin. 

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Aug 24, 2022: CATL, the world's largest producer of lithium-ion batteries, has announced plans to build Europe's largest battery plant, in Debrecen, Hungary.

Comment MCC: The plant is to supply batteries to European carmakers including BMW and VW, and should substantially increase the demand for the materials going into these batteries in Europe.

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Aug 23, 2022: In August 2022, the Ministry of Ecology and Environment announced 4 typical cases in the field of whistleblowing and rewarding.

Comment MCC: In an example case, Weifang city received reports from the public that a criminal gang planned to illegally dump hazardous waste. I have seen similar waste dumps in Shanghai - if rewards for such whistleblowing help, it is a good thing for the environment, though from my experience the local authorities often are not particularly interested in pursuing such hints.

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Aug 22, 2022: The 2022 list of China's top 2000 industrial enterprises by market value contains 179 chemical and chemical fiber companies while the top 500 include a total of 51 companies in the petroleum, petrochemical and chemical and chemical fiber industries.

Comment MCC: Another indicator of the high importance of the chemical industry in China compared to most other countries.

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Aug 21, 2022: In the first half of the year, the total import and export volume of the petrochemical industry was US$515.72 billion, a year-on-year increase of 28.6%. Among them, the export value was 171.64 billion US dollars, a year-on-year increase of 24.6%; the import value was 344.08 billion US dollars, a year-on-year increase of 30.7%. In the first half of the year, the trade deficit was US$172.45 billion, a year-on-year increase of 37.4%.

Comment MCC: The value increases are primarily due to the high prices as they were accompanied by volume decreases. However, overall China's position as a strong net importer of chemicals remains unchanged.

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Aug 20, 2022: In the first half of 2022, Chinese petrochemical and chemical enterprises above designated size achieved an operating income of 8.13 trillion yuan, a year-on-year increase of 20.9%; a total profit of 752.12 billion yuan, a year-on-year increase of 24%; and a total import and export volume of 515.72 billion US dollars, a year-on-year increase of 28.6%

Comment MCC: While some weakening is expected, the recent past has been very good for China's chemical industry.

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Aug 19, 2022: Power cuts are affecting several chemical companies in Sichuan province.

Comment MCC: For example, Lutianhua expects to reduce its urea production by about 35 kt.

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Aug 18, 2022: As of the end of June 2022, the number of regulated enterprises in the petrochemical industry was 28,500, an increase of 1,823 compared with 26,677 in the same period last year

Comment MCC: This marks the end of a long trend of decreasing numbers, probably due to the rise of new entrants in new fields of the chemical industry.

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Aug 17, 2022: Shenyang Chemical will shut down a 250 kta polyether polyol plant in Shandong due to policy requirements of the local government - the plant is located in a prohibited development zone of Zibo district.

Comment MCC: While this will bring losses, it also offers the chance to replace an aging plant with a newer one with slightly higher capacity (300 kta). Depending on the amount of government support received, this may not be such a bad deal for the company overall.

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Aug 16, 2022: China's apparent EVA consumption in 2021 was about 2.05 million tons, up 10.1% from 2020

Comment MCC: Photovoltaic is by far the biggest application with about 40% of consumption and also the major growth driver (it accounted for only 18% in 2020, according to CCR). Other, more stable applications are foaming (27%) and wire & cable (17%)

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Aug 15, 2022: Chinese production capacity for fuel ethanol - mostly based on fermentation of corn - has increased at a CAGR of 10.8% from 2017 to 2021 while production volume increased by a CAGR of 9.4% and apparent consumption by a CAGR of 10.8%.

Comment MCC: Still, capacity utilization of domestic capacity is only about 63%, hinting at issues such as low profits or even losses.

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Aug 14, 2022: China's new photovoltaic generating capacity is expected to reach 100 GW in 2022 (CCR)

Comment MCC: This is indeed a huge number given that China reached "only" 48 GW in 2020, a record (up to then) 53 GW in 2021 and that total global capacity added in 2022 is likely to be below 200 GW. All this obviously makes China the market to be in if you are a supplier of chemical materials to the industry, such as EVA or silicon.

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Aug 13, 2022: The Shanghai municipal government has released guidelines for achieving peak carbon emissions by 2030 and carbon neutrality by 2060. According to the guidelines, Shanghai will implement a low-carbon action plan in 10 industries, aiming to cut carbon dioxide emissions per unit of GDP by 70% of the 2005 level by 2030

Comment MCC: China generally leaves itself some wiggle room by only committing to emission cuts per unit of GDP, meaning in principle emissions can still increase despite achievement of the emission goals. Still, a 70% cut sounds impressive, though it is probably less impressive if one considers the shift Shanghai has undertaken from being a major location for production of physical goods to one focusing on services.

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Aug 12, 2022: Covestro broke ground on two new Shanghai plants for polyurethane dispersions (PUDs) and elastomers.

Comment MCC: Investment by foreign chemical companies in China is likely to continue, as these new plants target the local rather than export markets.

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Aug 11, 2022: WuXi STA, the pharmaceutical contract services division of WuXi AppTec, has expanded oligonucleotide and peptide manufacturing with a new large-scale facility at its Changzhou, China, complex after announcing the opening of a plant for high-potency active pharmaceutical ingredients at Changzhou in June, and the opening of a continuous manufacturing plant at the site in July.

Comment MCC: These expansions highlight the fast expansion of WuXi AppTec - in 2021, revenue grew 38.5% year-on-year

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Aug 10, 2022: The 2022 Fortune Global 500 list contains 19 petrochemical companies based in Greater China.

Comment MCC: This is a significant share of the 145 companies from the same region in the list. In addition, 7 of these 19 companies are among the top 100 in the list, further emphasizing the importance of the chemical industry for Greater China.

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Aug 09, 2022: China's domestic sales of new-energy vehicles (NEVs) grew by 120% year-on-year to 2.6 million in the first six months of 2022 while exports grew by 113%. Main export destinations are Western Europe (34% of total exports) and SE Asia (16%). However, exports are still relatively small compared to domestic sales, reaching only 14% of domestic sales. Meanwhile, BYD became the second biggest seller of pure EV in 1H2022 after Tesla, overtaking SAIC Motor and VW.

Comment MCC: This again highlights the high importance of China for EV and thus also for providers of materials to the industry.

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Aug 08, 2022: Tianjin will build a "world-class green chemical new material base" in Tianjin Nangang Industrial Zone

Comment MCC: As more and more usual these days for Chinese chemical projects, the inclusion of the word "green" seems not to have any specific meaning. The two biggest projects announced are one by Sinopec for various PE types, one by Tianjin Bohua Nangang New Material which includes the production of PVC, and one by Zhongsha New Material for the production of polycarbonate. None of these - and in particular the PVC production - strike me as particularly green.

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Aug 07, 2022: Henan province forbids hazardous chemical production and construction projects with a one-time fixed asset investment of less than 300 million yuan (excluding land costs) except for projects listed in the National Strategic Emerging Industry Key Products and Services Guidance Catalogue, and chemical projects outside chemical parks.

Comment MCC: It is an interesting and probably sensible regulation to require potentially dangerous chemical projects to have a certain minimum size - it is well aligned with the overall government assumption that larger, fewer companies pose fewer risks than a multitude of small chemical companies. They are easier to control and supervise, too.

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Aug 06, 2022: An explosion in a raw material tank farm of the 300,000-ton/year coal tar hydrotreating unit of Henan Yutian Chemical Co., Ltd. in January 2022 was examined for the causes of the accident.

Comment MCC: The analysis indicates that the direct cause of the accident was improper cleaning of a tank with volatile organic compounds. Indirect causes included the use of temporary staff not familiar with the safety procedures and the regulation regarding checking the licenses of other operators.

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Aug 05, 2022: The construction progress of Huayi Qinzhou's 750,000-ton PDH project is above 90%, and completion is expected for September.

Comment MCC: PDH is one of the areas in which future overcapacities are very likely. Chinese propylene capacity is expected to increase by 17% in 2022, and operating rates are expected to drop considerably due to this increased production capacity. The herd mentality of Chinese chemical companies has not changed.

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Aug 04, 2022: The State Council decided to continue the acquisition tax exemption for new energy vehicles, presumably for another year or longer.

Comment MCC: This exemption was set to end at the end of the year - its continuation will further encourage the production of EVs, something that China promotes both for environmental and economic reasons. It should give a further boost to producers of materials going into EV.

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Aug 03, 2022: Ineos has agreed to buy a 50% interest in Shanghai SECCO Petrochemical from Sinopec, and will partner with Sinopec on projects in acrylonitrile-butadiene-styrene (ABS) and high-density polyethylene. The total deal size is about 7 billion USD.

Comment MCC: Given the massive importance of China in basic organic chemicals and commodity polymers as well as Ineos' focus on this area, these seem sensible steps.

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Aug 02, 2022: Hubei Hongrui New Materials Co., Ltd., a wholly-owned subsidiary of Dongfang Shenghong, will start a new project with an annual output of 1.5 million tons of acetic acid and other special chemicals.

Comment MCC: This is one example of the massive scale of some of the new commodity chemicals plants being built in China. 1.5 million tons is about 9% of the current global annual consumption of 16.7 million tons, and about 7% of global capacity. Or to put it into even more striking terms, it is about 130% of current annual Indian consumption. Very hard for other countries to compete with these new producers as long as they fully exploit their scale advantages.

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Aug 01, 2022: Air Liquide will operate its first biomethane production unit in China by
the end of 2022. It will have a production capacity of 75 GWh per year, producing biogas from
agricultural and livestock waste coming from local farms and purifying it into biomethane. The biomethane will then be used for household consumption and to generate electricity.

Comment MCC: This sounds like an interesting - though smallish - demonstration project on the long road to a more sustainable energy supply.

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Jul 31, 2022: According to the National Energy Administration, China's energy regulator, the share of national energy consumption produced from sources other than fossil fuels grew 0.7 percentage points to 16.6% in 2021 (Caixin). The target is for the proportion of green energy in the national energy mix to rise at an average annual rate of 1% over the next eight years.

Comment MCC: Compared to other countries, this share seems low, and the targets relatively unambitious. Germany currently gets 41% of its energy from non-fossil fuels and targets 100% by 2035, by which date China will probably only reach 25%. Even the USA - hardly a leader in this area - already gets 21% of its energy from non-fossil sources.

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Jul 30, 2022: In 2022, the Ministry of Emergency Management dispatched 8 working groups to inspect 60 districts and cities, 54 chemical parks, and 184 hazardous chemical enterprises. More than 2,700 potential problems were found.
 
Comment MCC: In particular, 19 enterprises were found not to meet safety production conditions and thus had to suspend business at least temporarily - this seems like a high share (10%) of the companies inspected, indicating that there still is a lot of work ahead.

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Jul 29, 2022: According to Sun Lianying, President of the China Coatings Industry Association, from January to May, the total output of coatings nationwide decreased by 2% yoy; total main business income decreased by 1.2% yoy and total profit decreased by 26.2% yoy.

Comment MCC: Four main reasons are indicated for the negative development: the impact of the pandemic, the negative effect of the Ukraine conflict, the weak Chinese property market and the high price of raw materials & supply chain interruptions.

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Jul 28, 2022: India will extend anti-dumping measures on TDI from China, India and South Korea. China will extend anti-dumping measures against acrylic fibers from Japan, South Korea and Turkey.

Comment MCC: Anti-dumping measures are almost always bad, unless you impose them yourself. Then they are justified, obviously.

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Jul 27, 2022: In the first half of 2022, the output of raw coal was up 11% YoY to 2.19 billion tons (CCR)

Comment MCC: I thought my view that China might try to push coal consumption as much as possible until 2030 to make the targeted decline afterward easier was a rather cynical one, but I am not so sure anymore.

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Jul 26, 2022: The 2021 C&EN ranking of top 50 global chemical companies now has 7 mainland Chinese entrants - the expected state-owned petrochemical ones (Sinopec, Petrochina), the MDI-producer-turned-BASF-imitator (Wanhua) as well as four lesser-known companies producing relatively basic petrochemicals and fibers (Hengli Petrochemical, Hengyi Petrochemical, Rongsheng Petrochemical, and Tongkun Group).

Comment MCC: A few observations - China is now the country with the second biggest number of entries (7 compared to 8 for the USA but only 5 for Germany and 6 for Japan), and except for one company (Petrochina), all Chinese companies kept or improved their position in the ranking (two are completely new in the ranking). This indicates the continuous growth in the importance of Chinese players. On the other hand, except for parts of Wanhua, all Chinese players are still firmly in the commodity/volume segment of the chemical industry, relying on massive investments close to the start of the chemical value chain rather than on sophisticated products - a weakness compared to countries such as Japan and Germany.

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Jul 25, 2022: Chinese output of NEVs rose by 111% YoY in 1H 2022 while solar cells rose by 32% and mobile communication base station equipment by 20% (CCR)

Comment MCC: These are all products that require significant chemical input and should therefore drive the sales of relevant chemical companies.

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Jul 24, 2022: The China Chemical Reporter states that "In spite of the coronavirus and more complicated international environment, China's economy, due to factors like policies to stabilize the economy and combat against the Covid-19, rebounded in the first half of 2022, with H1 GDP rising 2.5% YoY ... and Q2 GDP rising 0.4% YoY ..."

Comment MCC: I admire the sunny disposition of the writer of this statement - to call an increase of 0.4% in Q2 a rebound when the official growth target is about 5.5% is indeed a very optimistic view of the situation.

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Jul 23, 2022: According to a recent study published by Deloitte, China was the second biggest market for chemical M&A in 2022. The number of deals in 2021 increased slightly from 2020. Foreign investment accounted for about 14% of the deals.

Comment MCC: According to Deloitte - and confirmed by my own experience - a major driver of domestic M&A is the objective of companies to achieve a greater degree of vertical integration, i.e., the acquisition of suppliers or customers.

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Jul 22, 2022: Hubei province set up 7 basic rules which recognized chemical parks in the province must obey, including having government approval documents, assessments of environmental, risk and other impacts, not being within one km of the Yangtze, having a big enough safety distance from habitation outside the park, and having professional wastewater treatment.

Comment MCC: None of these rules are surprising or very specific to Hubei - I still do not quite see why there is a need for each province to set these rules separately though.

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Jul 21, 2022: China's State Administration for Market Regulation has launched an investigation against chemical fertilizer producers and distributors over suspicions of price gouging

Comment MCC: The watchdog emphasized its focus on monitoring fertilizer prices and punishing acts such as price collusion.

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Jul 20, 2022: On May 11, 2022, the Emergency Management Agency of Jiaxing city published a WeChat post regarding a company that used and produced hazardous chemicals, but did not register them or store them in a separate storage place as required, and which was fined 110,000 yuan (enviliance)

Comment MCC: The fine still seems somewhat low given the potential risks of inappropriate storage and the cost of setting up a dedicated warehouse, leaving some incentive for future lawbreaking. The other interesting aspect is to see how WeChat now completely dominates public communication in China.

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Jul 19, 2020: China's biggest lithium compounds producer Ganfeng Lithium will buy Argentina-focussed Lithea Inc for up to $962 million

Comment MCC: Obviously, Ganfeng aims to secure the key raw material for the production of batteries for EVs and other applications

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Jul 18, 2022: The 1H 2022 results of a number of big Chinese chemical companies are likely to be below those of 1H 2021, for example, Wanhua (profit forecast -3% compared yoy), Shanghai Petrochemical (loss compared to profit before), Sinochem International (profit decrease of about 50% yoy), and Weiyuan (profit decrease of about 65%).

Comment MCC: The obvious reason is the impact of the anti-Covid measures on the economy (not just on the chemical industry) - though companies such as Shanghai Petrochemical also claim other reasons such as oil price increases and weakening demand (which may, in turn, be a consequence of the anti-Covid measures - an SOE may be less willing to openly address this issue). Given that some of the restrictions are still being maintained, the impact on the chemical industry may continue to be felt in 2H 2022.

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Jul 17, 2022: Umicore will build a large-scale fuel cell catalyst plant in Changshu in China

Comment MCC: The rationale is to benefit from China's expected partial shift towards hydrogen-based mobility.

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Jul 16, 2022: Chinese GDP fell by 2.6% in the three months to the end of June from the previous quarter while year-on-year growth in Q2 2022 was 0.4%.

Comment MCC: This seems like an obvious consequence of the lockdown of major cities, particularly Shanghai - the author of this post himself was under lockdown for 78 days during that period.

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Jul 15, 2022: DIC Corporation acquired chemical manufacturing operations in Guangdong covering 40 kt of solvent- and water-based resins and chemicals from Guangdong Tong Tak New Materials

Comment MCC: The existence of an expansion plan to go to 150 kt highlights the good prospects DIC sees for the Chinese market.

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Jul 14, 2022: The Ordos Municipal Government, China's largest coal production base, issued the "14th Five-Year Energy Comprehensive Development Plan for Ordos City", with a total investment of 154.847 billion yuan in 27 hydrogen energy projects.

Comment MCC: It is remarkable that a place as strongly relying on coal as Ordos now also promotes hydrogen energy - though many of these products may just be products in which coal is used to produce hydrogen without avoiding carbon dioxide emissions.

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Jul 13, 2022: According to a recent paper, China's PC industry is at the end stage of the capacity expansion period now, with a year-on-year growth of 21%.

Comment MCC: Indeed, domestic PC capacity continues to increase much faster than demand, which has actually suffered from lower demand for some consumer products which utilize PC as a raw material.

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Jul 12, 2022: The Biodegradable Resin Branch of China Synthetic Resin Association issued a warning against capacity expansions for PBAT (polybutylene terephthalate-adipate) stating that the current production capacity of PBAT resins far exceeds market demand and is still increasing further.

Comment MCC: Indeed, some figures show that this warning is justified. By the end of 2022, the annual production capacity of PBAT will reach 2.26 million tons compared to expected domestic sales of 200 kt in 2022.

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Jul 11, 2022: The profit of the Chinese chemical industry was up 13.8% year on year for the period from January to May.

Comment MCC: This is much better than for most other industries, of which more than half saw a decline in profit. Automotive was hit particularly hard, losing 37.5%.

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Jul 10, 2022: Shaanxi Coal Group Yulin Chemical Co. is progressing with constructing the largest coal chemical project under construction in the world. It covers a total area of about 13 square kilometers. The planned total investment is about 125 billion yuan. Products include 5.6 million tons of methanol, 1.8 million tons of ethylene glycol, 2 million tons of olefins, and downstream intermediate raw materials.

Comment MCC: It is hard to see such a project as being aligned with China's official commitment to reduce carbon dioxide emissions. The cynical view might be that as the first target is to reach peak emission by 2030 and only reduce emissions afterward, it could actually be beneficial to emit as much carbon dioxide as possible by 2030, as it makes the required reductions afterward easier to achieve. But of course, only a very cynical person would argue that way.

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Jul 09, 2022: Hengli Petrochemical established Dalian Hengli Fine Chemical Sales Co., Ltd. with a business scope including food sales, petroleum product sales, chemical product sales, plastic product sales, rubber product sales, lubricant sales, and auto parts.

Comment MCC: While I find the combination amusing (auto parts, food - where is the synergy) - this seems to indicate an increased interest of Hengli in downstream businesses.

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Jul 08, 2022: The self-sufficiency rate of carbon fiber in China is less than 40%. This is despite low domestic capacity utilization of only about 55% as local products tend to be of lower quality.

Comment MCC: This may be a worry for the central government as carbon fiber is a raw material used in several important applications - for example, 41% of demand is used in wind turbine blades.

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Jul 07, 2022: In 2021, China's chemical fiber output was 65.24 million tons, a year-on-year increase of 8.29%. China's chemical fiber imports totaled 834 kt while exports reached 5199 kt, an increase of 11.55% year-on-year

Comment MCC: Chemical fiber is another area now strongly dominated by Chinese production.

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Jul 06, 2022: Hebei encourages the development of green pesticides, expands the scale of products such as environmentally friendly coatings and dyes , develops high-end fine chemicals around high added value, substitutes imports, and fills domestic gaps, and promotes the combination of biotechnology and fine chemicals; around emerging industries, high-performance chemicals New materials are the development direction, accelerating the development of organofluorosilicon, polyurethane, polyoxymethylene, polycarbonate, polyamide, polyphenylene ether, polyimide, electronic special gases, photothermal heat media, bio-based materials, degradable plastics, special lubricants and other products. In addition, it is also mentioned to promote the integration, reorganization and green transformation and upgrading of oil refining enterprises in the province, and convert oil products into chemical products such as low-carbon olefins such as propylene.

Comment MCC: The usual - everybody does everything, no discernible focus.

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Jul 05, 2022: Sichuan announced an additional 16 recognized chemical parks, which were added to the list of existing 6 parks, adding up to a total of 22 parks.

Comment MCC: While the province may still add more parks to the list later, any park not on the current list is in danger as it obviously did not easily pass the initial check of criteria. Given my impressions from visiting a few parks in Sichuan a few years ago, that is not very surprising - the concept of chemical parks then seems to have been barely understood.

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Jul 04, 2022: China Petrochemical Corporation (Sinopec) issued a statement clarifying that a number of companies using the name Sinopec have no affiliation with the SOE.

Comment MCC: This highlights several points: the Chinese IP regime is still not very strict (this includes usage of brand names - I cannot imagine a fake "BASF" group operating in the Western world for very long), parties dealing with companies claiming to be part of Sinopec need to verify such claims, and finally, Sinopec still has a strong domestic brand name (otherwise nobody would fake an association with the company).

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Jul 03, 2022: Chinese investment in New Energy Storage may approach RMB900 Billion in 2030 (CCR). Wind and solar power generation will double by 2025.

Comment: Certainly, these are growth areas that will show up in the strategy presentations of chemical companies soon, if they are not already listed there.

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Jul 02, 2022: ExxonMobil, Shell, and CNOOC will evaluate a project to capture and store carbon at China's Dayawan Petrochemical Industrial Park. Shell and CNOOC operate a petrochemical joint venture in the park while ExxonMobil plans to build a large chemical plant there (C&EN)

Comment MCC: These companies presumably want to establish themselves as "model citizens" helping China to reach its target of reaching carbon neutrality by 2060. Indeed, for the chemical industry - which differs from other industries as it uses carbon compounds as direct raw material and not only as an energy source - embracing carbon capture may be unavoidable.

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Jul 01, 2022: Lianchuang (300343.SZ) announced the termination of a biodegradable polymer project with an annual output of 60,000 tons.

Comment MCC: The rationale provided cites market immaturity and low industry profitability with no short-term changes expected despite favorable policies. This sounds quite mature, which makes me wonder whether this is the real reason. I guess I am getting more and more cynical with age.

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Jun 30, 2022: The number of Chinese companies producing polysilicon has been between 11 and 43 between 2010 and 2021. In this period, China domestic polysilicon production capacity increased by five times, with an average annual growth rate of 17.9%. As of the end of 2021, domestic polysilicon production capacity as a share of the global capacity increased from 29.8% in 2010 to 77.3% in 2021 (CCR)

Comment MCC: This shows the dominance of China in polysilicon production, and explains the dependence of countries such as the US on this source.

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Jun 29, 2022: A CCR paper on "The Development Trend of Silicon Industry from the Perspective of Silicon Energy" by Wang Yuwu and Liang Yating, China Chemical New Materials Research Institute, Sino Alliance of Green Development of Silicon Industry (SAGSI) starts with the sentence "Silicon has similar properties to carbon but is more stable, which endows its better performance."

Comment MCC: I find this dumbing down by (presumably) knowledgeable scientists appalling. Of course, both silicon and carbon are stable elements, so one cannot be less stable than the other. And given the very limited amount of elemental silicon in the environment compared to the larger amounts of elemental carbon, this statement does not make much sense anyway. What they presumably mean is that silicon compounds are more stable than carbon compounds - and even that is highly debatable.

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Jun 28, 2022: The producer price index of the Chinese chemical industry is up by 13.6% YoY compared to 6.4% for manufactured goods.

Comment MCC: Of course, being more tightly linked to oil prices, this is not particularly surprising but could still be an issue if these price increases cannot be passed on to downstream buyers.

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Jun 27, 2022: In 2021, Sinopec Corp. had a substantial increase in the proportion of Sinopec executives quitting or being fired, with the total number reaching 1280 leaders, as many of these employees were "not suitable to perform their duties in their original positions"

Comment MCC: The background was a target of increasing labor productivity by 26% over the previous year - a rather ambitious goal.

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Jun 26, 2022: Lianhong Xinke started three major projects - a 100 kta lithium battery material-carbonate project, a 20 kta UHMWPE/ 90 kt vinyl acetate project and a 200 kta EVA project.

Comment MCC: I do not know which specific capabilities Lianhong has, but it seems the projects started are based more on hot markets and government-supported areas than on these capabilities. This may make it difficult for Lianhong to be successful.

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Jun 25, 2022: In June, national standards came into force for biodegradable plastics and for biodegradable drinking straws.

Comment MCC: By providing criteria for the authenticity of biodegradable plastics, the use of such materials should be facilitated and promoted.

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Jun 24, 2022: The Tongkun Qinzhou Green Chemical Base Phase I Chemical New Material Project not only has a rather long name but is also a project with a planned capacity of 3 million tons PTA, 600 kt PDH, 400 kt PP, etc.

Comment MCC: It seems it is obligatory these days to add "Green chemical" to the name of such projects even though the chemistry does not have to have any obvious green aspect.

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Jun 23, 2022: At present, 70% of China's Photovoltaic grade EVA demand is satisfied by imports. However, from Jan to May 2022, Silbon in Lianyungang produced 115,000 tons of photovoltaic-grade EVA, an increase of 18.6% year on year. According to the company, the product quality has greatly improved.

Comment MCC: Chinese players struggle to succeed in this market, with obstacles including the long period of 4-5 years required for capacity expansion and the high product quality requirements for this type of EVA. However, local companies like Silbon show improvements in quality and may eventually match the quality of imports.

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Jun 22, 2022: According to a plan of Liaoning province, by 2025 the proportion of refined oil production in Liaoning Province in crude oil processing will drop to 40%, the operating income of the fine chemical industry will reach 200 billion yuan, and the chemical refinement rate will reach 50%. Other goals are a ratio of R&D investment in the petrochemical industry of 1.5% of operating income, R&D investment in fine chemical enterprises reaching 5% of operating income, and the output value of chemical parks reaching 70% of the industry.

Comment MCC: None of these goals is particularly surprising as they are basically just deduced from central government objectives.

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Jun 21, 2022: The Guangzhou Intellectual Property Court ruled in favor of Solvay in a patent infringement case against Zhejiang Fonolin Chemical New Materials Co., Ltd., which involved a PVDF material reported to be the most advanced material for adhesive or separator/separator assemblies for high-end lithium batteries.

Comment MCC: Another example of improving IP protection in China. Foreign companies tend to win their IP cases as the system improves and Chinese companies themselves own more IP which they themselves want to see protected.

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Jun 20, 2022: BASF Shanshan Battery Materials, a JV between BASF and Shanshan, will expand its battery material production capacity in Ningxia. The expansion will increase annual production capacity of cathode active materials to 100,000 tons.

Comment MCC: Presumably, this is primarily to meet local demand for the electric vehicle market.

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Jun 19, 2022: On June 16, an explosion occurred at a chemical company in Lanzhou City, Gansu Province, causing 8 injuries and likely 6 deaths. The enterprise is mainly engaged in the production and operation of pesticide intermediates and pesticide products. A day later, one person died at a fire at a Sinopec Shanghai Petrochemical Co. plant in Jinshan

Comment MCC: It seems that the frequency of such accidents is still higher than in the Western world despite some improvements.

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June 18, 2022: Fujian Fuhua Gulei Petrochemical Co. has plans for a 200 kt hexamethylenediamine, 300 kt adipic acid and 400 kt of PA66 plant.

Comment MCC: Indeed, PA66 - at the lower end of engineering plastics - is an area in which domestic players gradually take over.

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Jun 17, 2022: From 2017 to 2021, the CAGR of China's ABS production capacity was 5.9%, and the CAGR of apparent consumption was 3.7%. The supply in the domestic market was tight, and the five-year average operating load was as high as 96.1% (CCR)

Comment MCC: However, in the next five years, it is expected that 5.785 million t/a of ABS production capacity will be added on the market, more than doubling current capacity and potentially leading to excess capacity as the production capacity increase CAGR of almost 20% in this period is unlikely to be matched by demand growth.

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Jun 16, 2022: A government safety inspection of the Shengli Refinery of Sinopec Qilu Branch found more than 160 hidden dangers. The inspectors plan to punish 11 illegal acts.

Comment MCC: It is interesting that even well-connected SOEs such as Sinopec are now the targets of such inspections, and that the negative findings are publicized rather than quietly remedied.

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Jun 15, 2022: PetroChina has adjusted the company's business scope to include new energy segments such as heat, electricity, hydrogen, carbon emission reduction, and low-carbon technology, as well as synthetic materials, bio-based materials, graphene materials, electronic special materials.

Comment MCC: Of course, the big state-owned oil companies need to find ways to stay relevant even after the energy transition. However, having both "old" and new energy in the same company may not be the best way to achieve a speedy and efficient transition. Of course, Western oil companies have similar issues.

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Jun 14, 2022: Analysts have downgraded their projections for China's economic growth this year in response to lockdowns imposed on Shanghai and other cities under the government's zero-COVID policy (Nikkei), and now range between 2% and 4.4%

Comment MCC: This is substantially lower than the government target of 5.5%

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Jun 13, 2022: All 31 chemical plants within 1 km of Changzhou's Yangtze River coastline were dismantled

Comment MCC: Another example of the implementation of tighter environmental regulation as outlined in the 5-Year Plans.

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Jun 12, 2022: Brand Finance, a brand consulting company, released their assessment of the 2022 Top 25 Most Valuable Chemical Brands in the World. Four Chinese chemical brands entered the top 25: Rongsheng Petrochemical ranked 8th, Hengli Petrochemical ranked 14th, Hengyi Petrochemical ranked 22nd, and Wanhua Chemical ranked 23rd.

Comment MCC: Frankly, I am a bit mystified by this ranking. My assumption is that what is measured here is brand value - basically the value of the branded company compared to a no-name company with identical business. However, it is a bit hard to see how particularly the first three Chinese chemical companies have a particularly strong brand - in fact, most people will not even know them. Wanhua is a bit different as it has a history of innovation and is a clear global market leader, which indeed helps its brand. What adds to my confusion is that the report states that the brand value of BASF, the most highly valued company in the list, increased by 15% mainly due to improved revenue and a reduction in the company's weighted average cost of capital. Now, these are nice things, but how are they related to brand value? Could it be that all this is just a press release to get a consulting company in the news?

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Jun 11, 2022: Zhongtai Chemical plans to invest in the construction of a BDO (1,4-butanediol) project with an annual output of 300,000 tons, stating that this is to "extend the industrial chain of circular economy".

Comment MCC: While it is true that BDO is a main raw material for the production of biodegradable plastics, this does not make it part of the circular economy. Anything that is coal-based (a finite fossil resource) is almost by definition not really part of the circular economy. It seems Chinese chemical companies have learned a lot about PR from some of their more ruthless Western competitors. And of course, if a company assumes that people are essentially dumb, it is easy to think they will equate "biodegradable" with "circular economy" which indicates sustainability.

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Jun 10, 2022: Most listed Chinese chemical companies increased their operating income in the first quarter of 2022 compared to the same quarter in 2021. Examples: Rongsheng Petrochemical +98%, Hengli Petrochemical +0.3%, Wanhua +33%, Hengyi Petrochemical +8%, Sinochem International +8%, Oriental Shenghong +24%, Yuntianhua +13%, Tongkun +17%. For Hengli Petrochemical, the increase was very low (+0.3%) while Zhongtai Chemical had a decrease of 33%

Comment MCC: So far, so good, but the second quarter will probably be more interesting as April and May were heavily affected by lockdowns.

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Jun 09, 2022: Ningbo Wanglong, a Chinese producer of downstream derivatives of acetic acid, has a number of open positions, with salary ranges indicated for each position.

Comment MCC: Somewhat surprisingly (or maybe not, given the recent high unemployment in China), some of the salaries strike me as quite low. For example, a full-time position described as Production Management Reserve - Computer Inspection Post (machine translation - please do not ask exactly what this means) pays 6000-8000 yuan per month. I would prefer not to live on this salary in a large Chinese city, much less try to buy an apartment. So, at least for some of these lower-end positions, salaries are still much lower than in the West.

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Jun 08, 2022: Forbes released the list of the world's top 2000 companies. The number of companies in China (including Hong Kong, Macao, and Taiwan) reached 399 this year. Wanhua Chemical ranked 392, up 141 places from the previous year, while Hengli Petrochemical, Rongsheng Petrochemical, and Hengyi Petrochemical are also on the list, ranking 455th, 642nd, and 1670th.

Comment MCC: The strong position of Hengli Petrochemical was also indicated by its recent inclusion into the Shanghai Stock Exchange 50 Index

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Jun 07, 2022: According to CEO Mr. Brudermüller, Basf has "never seen a theft of technology" since it started production in China in the late 1960s.

Comment MCC: A recent article on BASF activities in China highlights Brudermüller's positive attitude towards China - the article claims that he admires the country's pragmatic authorities and dedicated workers while contrasting China with the higher energy costs and stricter environmental regulations in Europe. This attitude explains BASFs recent high investments in China.

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Jun 06, 2022: Merck plans to build a new semiconductor integrated base in Zhangjiagang, including a semiconductor material production base, warehouse, and operation center, with an initial investment of 550 million yuan.

Comment MCC: Merck states that they want to provide comprehensive material solutions for local customers in China with a fast response speed.

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Jun 05, 2022: Kingfa started a major petrochemical project in Yangpu including a 600 kta ABS unit, 600 kta PDH unit, 260 kta acrylonitrile unit, and a 100 kta tons methyl methacrylate unit.

Comment MCC: In some ways, the current projects of major Chinese chemical players are reminiscent of much earlier activities of Western players - the extension of value chains independent of companies' original capabilities or (seemingly) the economics of individual segments. This is very different from the current approach of Western chemical companies, which are focusing on non-commodity segments in well-defined focus areas.

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Jun 04, 2022: Evonik is planning to sell its C4 Verbund unit worth over 10% of the group's sales. It manufactures performance intermediates and plasticizers for a wide range of industries, including automotive, tire, and construction.

Comment MCC: Companies such as Evonik stick to their strategy of trying to outrun commoditization (largely driven by Chinese chemical companies) via the sale of maturing businesses.

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Jun 03, 2022: On June 1, nine ministries and commissions jointly issued the "14th Five-Year" renewable energy plan containing carbon peaking, carbon neutrality, and 2035 long-term goals.

Comment MCC: How many ministries does it take to change a lightbulb in China? Apparently 9. To me, the fact that somehow responsibilities for this important topic are so muddled is not encouraging (the alternative that some of these measures will be very unpopular or hard to implement and thus need to be pushed through by many ministries is not much more positive either). Also, on the same day of this announcement, there came the announcement of a 50 billion RMB coal chemical project in Hami, Xinjiang, sending a decidedly mixed message about the country's carbon emission reduction policy.

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Jun 02, 2022: The supply of domestic EVA is still dominated by imports , of which imports of photovoltaic grade EVA account for more than 60%, while only a few domestic companies such as Lianhong Xinke, Dongfang Shenghong, and Rongsheng Petrochemical can produce photovoltaic grade EVA (CCR)

Comment MCC: EVA accounts for about 12% of the cost of photovoltaic modules. EVA production capacity is gradually increasing as a consequence of high and growing demand, but it will take some time before the market will be more balanced.

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Jun 01, 2022: Today, Shanghai will fully reopen. Some of the chemical companies have already started producing again - for example, the production capacity of BASF in Shanghai supposedly already has returned to 70% of the old level.

Comment MCC: However, it will presumably take quite some time until things fully normalize, and it remains to be seen to what extent the maintenance of anti-Covid measures such as testing requirements affects both chemical production and chemical logistics.

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May 31, 2022: From 2017 to 2021, 439 chemical companies in Hubei province along the Yangtze River have been closed or relocated. For example, in Yichang, 130 companies saw substantial changes

Comment MCC: This has been accompanied by a shift in the portfolio - in the case of Yichang, the proportion of fine chemicals in the city's chemical industry increased from 18.6% to more than 36%.

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May 30, 2022: Zhejiang province plans 100 new renewable energy pilot projects over the next three years, becoming the first region in the country to release a roadmap to kick off its green energy transition (Caixin)

Comment MCC: This initiative could make the province an interesting market for producers of chemical materials that are needed for renewable energy projects such as solar, hydrogen and wind.

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May 29, 2022: The market demand for high-end polyolefins (mPE, EVA, POE) in China exceeds RMB100 billion with an apparent consumption of close to 13 million tons. However, China's self-sufficiency rate for these materials is only about 45%.

Comment MCC: The main reason is technical barriers, e.g. polymerization technology, catalysts, process technology, etc. This particularly applies to POE, for which so far there is no domestic supplier yet, though Wanhua is doing research in this area.

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May 28, 2022: Shandong Longhua Polymer Materials started a 1.08 million tons/year PA66 project at Gaoqing County Chemical Industrial Park.

Comment MCC: In reality, the start will be a more modest 160 kt followed by 320 kt and then 600 kt. Still, such investments are a major reason for polyamide becoming unattractive for Western chemical companies.

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May 27, 2022: Wanhua has started a 300 kta MDI separation project in Ningxia

Comment MCC: This will provide a local supply of the separated MDI varieties, with the raw MDI coming from Wanhua's Yantai plant. Wanhua has also announced to increase the MDI capacity of the Ningbo plant and add capacity for HDMI there. This news reflects both Wanhua's intention to remain the global market leader for MDI and strengthening of MDI demand in non-coastal China

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May 26, 2022: China has an MTBE capacity of about 23.7 million t/a while output was only about 13.0 million t/a in 2021, a capacity utilization of only about 55%.

Comment MCC: While this low utilization is not even that unusual in China for commodity chemicals with low entry barriers and undifferentiated products, the emergence of electric vehicles may worsen the situation as these vehicles are not a market for MTBE as a gasoline additive.

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May 25, 2022: Sumitomo Chemical will exit the dye business next year, the third traditional chemical business exited by the company within a year after ethylene-propylene rubber and caprolactam.

Comment MCC: The Japanese chemical companies with their comparatively high costs and the smallish domestic market will find it harder and harder to compete in those chemical segments that by now in terms of technology can be done equally well by Chinese players.

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May 24, 2022: The average salary of a chairman in the Chinese petroleum and petrochemical industry is 1,312,200 yuan while the average salary of employees is 239,500 yuan.

Comment MCC: While I cannot vouch for these figures, they would indicate a relatively low compensation of top management and a relatively small difference between management compensation and employee compensation compared to Western chemical companies.

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May 23, 2022: According to John Richardson in his ICIS blog, China's global capacity share for 9 common polymers ranges from 25 to 74% while China's share of global growth for these polymers from 2021 to 2022 ranges from 34-84%.

Comment MCC: You should not be too surprised for a consultant whose work depends on the well-being of China's chemical industry to occasionally highlight the importance of this industry.

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May 22, 2022: Goldman Sachs cut its 2022 economic growth forecast for China to 4% from 4.5%

Comment MCC: This is substantially below the government target of 5.5%. Also, the reduction in growth should be comparatively larger for those industries relying on the distribution of physical goods - e.g., the chemical industry.

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May 21, 2022: A chemical engineer has been sentenced to 14 years in prison for trying to steal secrets about BPA-free internal coatings of beverage cans while working at Coca-Cola and Eastman Chemical Company in the USA.

Comment MCC: According to the prosecution, the engineer stole the trade secrets to establish a BPA-free coating company in China, and the Chinese partner received millions of dollars in Chinese government grants to back the new company

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May 20, 2022: 6 government departments have issued benchmark levels for the clean and efficient utilization of coal, covering sectors including coal-to-synthesis ammonia, coal-to-coke, coal-to-methanol, coal-to-olefins, and coal-to-ethylene glycol.

Comment MCC: For new projects, the benchmark levels are binding while for existing projects, a three-year period for upgrading is given.

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May 19, 2022: According to Reuters, China is considering extending costly subsidies for electric vehicles (EV) that were set to expire in 2022.

Comment MCC: This is presumably more to help the economy - that is suffering from the anti-Covid lockdown - in general than specifically this industry, though of course, chemical producers of materials for EV could be among the main beneficiaries.

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May 18, 2022: China's April factory production fell 2.9% from a year earlier

Comment MCC: Of course, this is due to the disruptions caused by the anti-Covid measures. Needless to mention that this affects the chemical industry at least to the same degree.

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May 17, 2022: As PP capacity in China is increasing, Chinese producers aim to move into specialty varieties such as ultra-low ash PP with ash content less than 0.005, which is mainly used in electronic and electrical applications (CCR)

Comment MCC: Currently, 95% of ultra-low ash polypropylene products are covered by imports, mainly from KPIC, Borouge and TPC

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May 16, 2022: According to government information, container throughput of the Shanghai port has recovered and reached 82.4% of the volume of April 2021.

Comment MCC: It seems surprising to me how a reduction by more than 17% can be sold as a recovery by the government. Chemical companies suffering a corresponding loss of 17% in sales or delivery of raw materials will likely disagree. In addition, there are also massive problems getting the containers to and from the port due to the lack of truck drivers - so, in reality, the problem is even more serious than indicated by the 17% figure.

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May 15, 2022: In recent years, China's production capacity for PS has increased substantially and now accounts for 38% of global capacity, which will continue to increase. Domestic production growth has been rapid, too, reaching 15% from 2019 to 2020 and 23% from 2020 to 2021.

Comment MCC: As a consequence, imports are expected to drop to only about 10% of China's consumption in 2022. As in many commodity polymers, overseas producers of PS relying on exports to China will face increasingly difficult times as domestic production increases.

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May 14, 2022: In a survey by the EV Observer, about 90% of EV producing companies in China stated that their deliveries are delayed due to pandemic control restrictions. For almost 30% of companies, the delay exceeds one month.

Comment MCC: Logistics issues are being mentioned as the biggest business disruptor (Caixin).

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May 13, 2022: China's photovoltaic installed capacity increased by 21% in 2021, and is expected to increase by another 26% in 2022

Comment MCC: Based on this domestic demand increase and photovoltaic modules produced for export, it is estimated that China's photovoltaic-grade EVA consumption will increase by 23% in 2022.

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May 12, 2022: China's auto sales plunged 47.6% year-on-year in April (Reuters)

Comment MCC: The negative economic effects of the strict anti-covid policy will probably extend at least into May, and will not only affect car sales but also car production - for example, Tesla currently has issues in getting some of the required parts.

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May 11, 2022: In Shanghai, spray disinfection is widely utilized in the fight against covid.

Comment MCC: This is despite the WHO and even some city officials regarding such measures as essentially ineffective and causing health hazards. However, according to HK university professor Nicholas Thomas, "The robots and street-spraying are performative acts designed to bolster public trust in government actions"

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May 10, 2022: China has extended the deadline to submit certain data under its cosmetics regulation from 1 May until 31 December (Chemical Watch)

Comment MCC: This is a consequence of the covid-related restrictions in many cities including Shanghai.

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May 09, 2022: FMC Corporation announced the Hangzhou Intermediate People's Court granted FMC a permanent injunction against Hangzhou Udragon Chemical and Zhejiang Udragon Bioscience. They infringed on FMC's patent for a key intermediate chemical used in the manufacturing of chlorantraniliprole.

Comment MCC: IP protection in China is improving - the court also ordered the Chinese companies to compensate FMC for related damages.

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May 08, 2022: Firmenich increased its equity stake in strategic partner ArtSci Biology Technologies moving to majority ownership

Comment MCC: That seems like a staggered acquisition approach (Firmenich had a minority stake before), and it seems to have been successful, as the company states that "ArtSci will continue to operate as normal, with its management team remaining in place"

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May 07, 2022: The sales volume of specialty rubber chemicals producer China Sunsine Chemical declined by 11.3% in Q1.

Comment MCC: The rationale given by the company reflects the effect of Covid: "Trucks are not allowed to exit the highway, which has delayed the transportation of raw materials to factories and finished goods to customers. The tire-makers also experienced lower production utilization rate and lower profits due to these control measures"

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May 06, 2022: According to Mr. Wuttke, president of the EU chamber of commerce, freight transportation volume in the greater Shanghai area contracted by 81% in the first three weeks of April 2022 compared to the same period in 2021.

Comment MCC: A data point illustrating the massive impact of the Shanghai lockdowns on the local economy.

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May 05, 2022: DOMO Chemicals is expanding the production capacity of polyamide at their Jiaxing site, with total capacity reaching 14 kt of PA6 from April 2022

Comment MCC: In addition, DOMO plans a new plant in Haiyan which will eventually have a capacity of 50 kt - an investment of 14 million EUR.

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May 04, 2022: Sinopec and BASF laid the foundation stone for the expansion project of the integrated production base in Nanjing. The expansion project includes a new set of tert-butyl acrylate (TBA) plants and the expansion of several downstream chemical plants.

Comment MCC: This seems to be an example of a JV going reasonably well - though, of course, the existence of this JV is due to governmental requirements, not due to a strong desire for one on the side of BASF. However, BASF has faired well as the JV is focusing on the lower-margin upstream products and leaves the more knowledge-intensive, more profitable products to BASF.

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May 03, 2022: China's factory activity in April shrank at the fastest in 26 months to the lowest since the early months of the pandemic

Comment MCC: An obvious challenge to the chemical industry as well.

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May 02, 2022: Sinopec subsidiary Hubei Petroleum has closed its 8 oil depots and 17 terminals along the Yangtze River in Hubei.

Comment MCC: A positive development that will hopefully help restore the Yangtze river.

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May 01, 2022: Several Japanese chemical companies have announced the exit from specific organic chemicals and/or plant closures, e.g., Idemitsu (acrylic acid), Mitsui (PTA), Sumitomo (caprolactam), Mitsubishi (petrochemicals in general).

Comment MCC: While the individual rationale differs, a key aspect is growing and more modern production in China.

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Apr 30, 2022: According to an analysis from ING bank, a shutdown of Shanghai lasting a whole month will subtract 2% from China's annual economic growth.

Comment MCC: Given that the lockdown is still more or less complete - despite media reports suggesting otherwise - China's economy and thus its chemical industry will indeed suffer substantially.

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Apr 29, 2022: According to CNCIC, China's PEEK market demand has developed rapidly from 2015's 250 tons to 2019's 1 400 tons.

Comment MCC: CNCIC further predicts annual growth of 20% between 2020 and 2024, and demand reaching 3050 tons in 2024.

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Apr 28, 2022: China's existing ABS production capacity of 4.1 million t/a is dwarfed by the approximately 10 million t/a of planned and proposed capacity (CCR)

Comment MCC: This is most likely going to lead to intense competition and lower prices for ABS.

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Apr 27, 2022: 68 enterprises accounted for 87.6% of China's total calcium carbide production while the top 10 accounted for 42.8%, an increase of 3.5 compared to 2020.

Comment MCC: As for many basic chemicals, China's producer landscape is highly fragmented, and consolidation - while happening - is relatively slow.

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Apr 26, 2022: Retail sales of passenger cars in China were down by 4.5% yoy in the period of January to March 2022 while new energy passenger cars increased by 145% and accounted for about 24% of the total.

Comment MCC: This presumably reflects both the current relatively weak Chinese economy - partly affected by covid - and the ongoing shift towards electric vehicles.

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Apr 25, 2022: Yunnan Tian'An Chemical is a partner in an Algerian stock company which will be active in the field of phosphate mining and fertilizer production in Algeria.

Comment MCC: The project is a large investment of about 7 billion USD, indicating the importance of securing the supply of phosphate fertilizer for China.

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Apr 24, 2022: Industrial output in Shanghai dropped by 7.5% year-on-year in March.

Comment MCC: Given the extension and continuation of lockdowns in April, the drop for the current month is likely to be even bigger.

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Apr 23, 2022: In 2021, Sinochem International achieved an operating income of 80.648 billion yuan, a year-on-year increase of 48.90%; net profit of 2.175 billion yuan, a year-on-year increase of 608.90 %.

Comment MCC: Another indicator for the bumper year the Chinese chemical industry had in 2021.

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Apr 22, 2022: Investment in the chemical sector was up 15.7% YoY in 2021 after decreasing by 1.2% YoY in 2020.

Comment MCC: The high profitability of chemical companies obviously made the segment an attractive target.

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Apr 21, 2022: The Shanghai Municipal Information Commission issued the "Guidelines for the Prevention and Control of the Epidemic in Shanghai Industrial Enterprises Resuming Work and Production", allowing 666 key enterprises in key industries to resume work and production, including several multinational chemical companies.

Comment MCC: While hinting at how desperate the government is to prevent an economic collapse, these measures will still only dampen the highly negative effect of the lockdown. Even in these selected companies, production will be severely reduced due to a lack of workers, lack of raw materials, and lack of local logistics (e.g., truck drivers).

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Apr 20, 2022: Semiconductor output in China declined by 5.1% in March from a year earlier (SCMP)

Comment MCC: The SCMP also quotes Mr. Wang, a consultant on semiconductor manufacturing: "The latest lockdown in Shanghai has further aggravated the situation by disrupting logistics and clogging up supply chains, which has affected many small and medium-sized enterprises".

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Apr 19, 2022: Operating rates for Chinese DMC producers increased from about 52% in 2020 to about 60% in 2021.

Comment MCC: Still, as there are many additional projects under construction, there may be continued overcapacity despite fast demand growth.

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Apr 18, 2022: The apparent Chinese consumption of DMC increased by more than 50% in the first half of 2021, registering a year-on-year increase of more than 50% in the first half of the year

Comment MCC: Key drivers include the use of DMC as solvent in lithium batteries and as raw material for PC, both booming applications.

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Apr 17, 2022: Asymchem, a China-based contract development and manufacturing organization will acquire Snapdragon Chemistry, a US drug services firm for $58 million.

Comment MCC: The basic idea seems to be to utilize Snapdragon's customer network (including Johnson Matthey and Amgen), and to
transition small volume production from Snapdragon customers to its larger facilities in China.

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Apr 16, 2022: Deliveries of VW products in China fell by almost 24% in the three months to the end of March. VW has been affected by covid outbreaks and subsequent lockdowns in Changchun and Shanghai, the locations of its joint ventures in China, while a fifth of its dealerships in the country were forced to close in March because of the virus.

Comment MCC: As the automotive industry is a major customer of the chemical industry, this will hurt the latter even in the unlikely event that chemical companies are not directly affected by lockdowns. The aftermarket should also be affected - I have not been able to move my car in the last 31 days and thus have not used any such services or required any materials.

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Apr 15, 2022: According to Bloomberg, the solar power sector is also affected by China's recent Covid-related restrictions, with manufacturers lowering production levels thanks to shipment delays and staffing issues. Wafer production has been suspended in some factories in the coastal region close to Shanghai while domestic shipping of polysilicon has also faced delays due to outbreaks in the major sourcing region of Xinjiang.

Comment MCC: It seems that one of the two big promises of China's government - zero covid and economic growth - will have to be broken soon.

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Apr 14, 2022: Nomura estimates that as many as 45 cities in China are now implementing either full or partial lockdowns, making up 26.4% of the country's population and 40.3% of its GDP (Reuters)

Comment MCC: With these lockdowns, it will be very hard to achieve China's GDP growth goals for 2022. And the chemical industry will probably be affected disproportionally, as - in contrast to services - the use of chemical materials can hardly be done working remotely.

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Apr 13, 2022: Six ministries issued the "Guiding Opinions on Promoting the High-quality Development of the Petrochemical and Chemical Industry during the 14th Five-Year Plan". Key goals for 2025 include reaching an R&D investment of at least 1.5% of sales, capacity utilization for bulk chemicals of above 80%, and a self-sufficiency rate for new chemicals of at least 75%.

Comment MCC: Some of these objectives seem underwhelming (e.g., the R&D spending) while others (capacity utilization) will be very hard to achieve.

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Apr 12, 2022: In 2022, all chemical segments except the coal chemical segment were profitable.

Comment MCC: This will add economic pressure to stop coal chemicals projects to the pressure based on climate change concerns.

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Apr 11, 2022: The lockdowns in Shanghai and other parts of China are affecting supply chains. Nomura estimated that 23 Chinese cities have implemented either full or partial lockdowns. The cities collectively are home to an estimated 193 million people and contribute 22% of China's GDP. According to ING Chief Economist for Greater China Iris Pang, if Shanghai's lockdown continues throughout April the city will suffer a 6% loss in GDP, amounting to a 2% GDP loss for China as a whole.

Comment MCC: However, so far, any comments or articles mentioning the trade-off between the strict corona measures and the losses not only of GDP but also of human lives seem to get deleted quickly.

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Apr 10, 2022: Chinese import volume of organic chemicals was down 13.7% YoY, while export volume was up 30.1% YoY, decreasing net imports by 26.4% YoY to 42.01 million tons. Net imports of synthetic materials declined 39.1% YoY to 28.21 million tons, given a reduction of 18% YoY in import volume and a soaring of 68.1% YoY in export volume (CCR).

Comment MCC: In the long run, the trend is toward China no longer being a net importer of chemicals, something that will be highly appreciated by the Chinese government.

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Apr 09, 2022: Six ministries issued the "Guiding Opinions on Promoting the High-quality Development of the Petrochemical and Chemical Industry during the 14th Five-Year Plan". The Guiding Ideology is described as follows (machine translation from Chinese): Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th National Congress of the Communist Party of China and the 19th Plenary Sessions, base on the new development stage, fully, accurately and comprehensively implement the new development concept, build a new development pattern, and promote high-quality Development as the theme, with deepening the supply-side structural reform as the main line, to meet the people's needs for a better life as the fundamental purpose, with reform and innovation as the fundamental driving force, to coordinate development and safety, to accelerate the transformation and upgrading of traditional industries, and to vigorously develop new chemical materials and fine Chemicals, accelerate the digital transformation of the industry, improve the level of intrinsic safety and clean production, accelerate the quality change, efficiency change and power change of the petrochemical and chemical industry, and promote my country's progress from a big petrochemical and chemical country to a strong country.

Comment MCC: Nothing to add to this.

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Apr 08, 2022: Annual operating revenue of the chemical sector was up 31.1% YoY in 2021, reaching RMB8.7 trillion, while profits rose by 85% YoY.

Comment MCC: While profits of the chemical industry increased again in the first two months of 2022, the covid lockdowns will make it very hard to keep this momentum. For example, Shenyang Chemical announced that the company will temporarily suspend production from now on in request to the government's pandemic prevention and control requirements

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Apr 07, 2022: While early plants for production of either n-butanol or 2-ethylhexanol were not switchable once started up, newer facilities allow switching.

Comment MCC: This offers producers one pathway to reduce volatility of demand by shifting capacity towards the product with higher profitability.

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Apr 06, 2022: Maanshan Wansheng Chemical was ordered by the emergency management department to suspend production and business for rectification, and received a fine of 120,000 yuan as a N-methyl aniline construction project with an annual output of 15,000 tons was not constructed according to the construction blueprint

Comment MCC: This fine still seems low compared to the costs of such projects and to the potential financial gains when skimping on security measures.

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Apr 05, 2022: A total of 524 chemical parks have passed the accreditation.

Comment MCC: This is still substantially lower than the pre-accreditation number of 667 parks, though additional parks may still get accredited.

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Apr 04, 2022: Despite having about 40% of the global capacity of 2-EH (2-Ethylhexanol), China is a net importer of the chemical.

Comment MCC: Such figures for individual chemicals indicate that the estimated overall China share of more than 45% of the global market is a realistic figure.

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Apr 03, 2022: China's epoxy resin segment suffers from what the CCR calls structural contradictions, i.e. surplus of low-end products and shortage of high-end goods like high-grade composite materials used in large aircraft, high-grade epoxy materials used in roads and bridges, etc.

Comment MCC: Of course, this applies to many other chemical segments, and changing this situation is one of the major government objectives for the chemical industry. The mismatch in quality is a major reason for China's self-sufficiency rate for these resins to only reach about 82% in 2020.

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Apr 02, 2022: Volkswagen partially shuttered its factory in the Chinese city on Thursday, citing supply shortages. Its factory in the northeastern city of Changchun has been closed for several weeks.

Comment MCC: These are of course consequences of the various covid-related lockdowns in China, which will have an increasingly larger effect on the chemical industry both directly and indirectly, threatening China's economic growth in 2022.

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Apr 01, 2022: The first phase of the acrylonitrile plant of Tianchen Qixiang nylon new material project in Zibo, Shandong was successfully started.

Comment MCC: Another chemical segment - nylon - in which localization is progressing rapidly.

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Mar 31, 2022: Zhejiang suspended the implementation of chemical, chemical fiber, printing, and dyeing industry production capacity before the national chemical, chemical fiber, printing, and dyeing industry capacity replacement policy is issued.

Comment MCC: This sounds like a no-brainer: Wait with the implementation of a provincial policy until the national policy is clear. However, this is not always the case in China.

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Mar 30, 2022: About half of Shanghai is under lockdown at the moment for a period of 4 days, with the other half being locked down for 4 days afterward.

Comment MCC: Obviously, this will affect the chemical industry, its customers, and its supply chains. In addition, the effective length of these lockdowns is much longer. For example, the compound I am living in has been locked down for 15 days now, and the lockdown will continue for at least another week. Also, it is not clear whether the lockdown currently affecting Pudong, which is supposed to be lifted on April 1, will indeed be lifted, as the case numbers there are very high. So, the overall damage to the chemical industry could be much bigger than implied by a 4-day lockdown.

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Mar 29, 2022: BASF and Zhejiang Lifu Sign a Strategic Cooperation Agreement to develop recycled material formulations for the automotive, packaging, and consumer goods industries. Under the agreement, BASF will provide its recently launched IrgaCycle^TM additive solution and provide technical advice and support for the formulation of recycled polymers.

Comment MCC: My guess is that in any other chemical segment, this would not be the subject of a press release, as it seems just like normal technical support given to clients. But of course, both companies like to see their recycling engagement highlighted.

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Mar 28, 2022: Based on the annual reports already released for Chinese companies for 2021, the chemical industry is currently the fastest growing industry. Among the top 10 companies, 5 are in this segment.

Comment MCC: According to Bai Wenxi, an economist with IPG, the reasons include rapid recovery of domestic supply chains, strong external demand, production restrictions due to environmental and energy consumption issues and the resulting increase in prices.

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Mar 27, 2022: In 2021, the average annual increase of 94 commodities in the chemical sector was 49.08%. 10 products had a negative year-on-year increase while 84 products had a positive year-on-year increase.

Comment MCC: The top 3 products with the highest increase were lithium carbonate (432.00%), lithium hydroxide (316.67%), and ammonium sulfate (214.29%), highlighting the booming EV market.

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Mar 26, 2022: Saudi Aramco will participate in the development of a major integrated refinery and petrochemical complex in Northeast China. Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group, will develop the liquids-to-chemicals complex.

Comment MCC: Another example for the close cooperation between Saudi Arabia and China, presumably both with the objective of isolating themselves from Western supply chains and business practices.

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Mar 25, 2022: BASF will almost double the production capacity for its synthetic ester base stocks at its site in Jinshan, China. According to the company, "The new production capacity for synthetic ester base stocks will bring additional security of supply for our customers, particularly in the Asia Pacific region. Building on our backward integration into key raw materials we will be leveraging the full strength of BASF as a leading and reliable component provider to the lubricant industry."

Comment MCC: The company rationale clearly reflects growing customer concerns about supply chain security, which are increased via localization of production capacity and upstream integration.

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Mar 24, 2022: In a recent speech, Fu Xiangsheng of the CPCIF highlighted the three types of chemical products that will no longer be encouraged or even be permitted in China - the three "do not starts". These are projects not in line with general restrictions (e.g., outside of chemical parks or far away from raw materials), projects in areas that already have access capacity, and projects with high energy consumption and/or emission.

Comment MCC: While certainly relevant for MNCs, these restrictions will affect commodity chemicals more strongly than specialties - an area in which MNCs are less present in China.

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Mar 23, 2022: Wanhua Chemical increased its total operating income in 2021 to 145.538 billion yuan, a year-on-year increase of 98.19% while the net profit attributable to the parent showed a year-on-year increase of 145.47%.

Comment MCC: According to the company, main drivers of the improved performance include greater production volume of MDI and ethylene as well as price rises for key products.

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Mar 22, 2022: DuPont suspended production and operations at its factories and warehouses in Shenzhen, China from March 14 to March 20.

Comment MCC: This is one of many examples of current covid prevention measures affecting the chemical industry. About half of China's chemical companies are in areas currently under some kind of covid control measure.

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Mar 21, 2022: Hubei Yihua, a producer of phosphorus chemicals, will spend 3.565 billion yuan to build a 550,000-ton/year ammonia alcohol project in the Tianjiahe area of Yaojiagang Chemical Park, Yichang.

Comment MCC: Basically, this is the replacement of a plant with the same capacity that has to be relocated due to the government policy of protecting the area closest to the Yangtze River. The company's diammonium phosphate and hydrosulfite plant will also have to be relocated by the end of 2025. It is probably an indication for the current rude health of the chemical industry that these investments are possible.

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Mar 20, 2022: Luxi Chemical is advancing the second phase of a propionic acid project as scheduled. If the project is completed, Luxi Chemical will have an annual production capacity of 200 kt of propionic acid

Comment MCC: This will make Luxi the clear global market leader with about 32% of the total global capacity of about 630 kt, followed by BASF with about 17%.

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Mar 19, 2022: Sinopec signed a memorandum of understanding with Saudi Aramco covering Sinopec's existing refining and chemical projects and future expansion projects

Comment MCC: Such cooperation makes sense for both parties as both countries try to reduce their dependency on the West and in combination now have the resources - mainly raw materials, capital, technology, and markets - to be successful without input from the West.

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Mar 18, 2022: Sinochem recently established a Central Research Institute, the Academia Sinica. As a matrix management mechanism to coordinate Sinochem's key business areas, R&D directions, and R&D resources, the Academia Sinica has established 21 professional research centers around Sinochem's core industrial chain and key common technologies.

Comment MCC: This is reminiscent of the Central Research Departments prominent in large Western chemical companies such as BASF before the trend shifted towards mostly business-specific R&D organizations.

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Mar 17, 2022: Chinese polysiloxane capacity was 1 573 kt/a in 2020, with output at 1 338 kt (85% capacity utilization). In 2021, capacity reached 1 973 kt/a and output 1 500 kt (76%).

Comment MCC: Several projects are under way, which may add 750 kt in 2022 and 770 kt in 2024, indicating a high probability for access capacity in the future. The usual story, in a way.

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Mar 16, 2022: Lihua Yiweiyuan Chemical signed a 20,000 tons/year high-purity dimethyl carbonate technology license agreement with Japan's Ube Industries

Comment MCC: As high purity DMC is mainly used in lithium battery electrolyte, this is another example of chemical companies investing in the EV market.

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Mar 15, 2022: China's polyethylene decrease of 21.3% in 2021 compared to 2020, the first decline in China's polyethylene imports in more than a decade

Comment MCC: The self-sufficiency increased from 54% to 62%, with further capacity to be added in 2022.

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Mar 14, 2022: China announced a growth target of 5.5% for 2022, the lowest in thirty years

Comment MCC: Given that the strict covid measures currently undertaken are likely to have a measurable impact on the economy, even this sounds optimistic to me.

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Mar 13, 2022: Baowu Carbon Technology Co. will establish a JV, Zhejiang Baowan, with Wanhua Chemical Group. Co. The JV will produce polyacrylonitrile (PAN)-based carbon fibers

Comment MCC: Another step in Wanhua's move towards high-end materials.

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Mar 12, 2022: According to the South China Morning Post, the Chinese EV sector is experiencing delays in car delivery due to a shortage of batteries

Comment MCC: This further indicates the strong growth in the EV market and is leading to delivery delays for several carmakers including Tesla and Xpeng Motors.

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Mar 11, 2022: EV battery maker CATL signed a deal with Fujian Provincial Expressway to form a JV operating battery-swapping stations along the expressways in Fujian.

Comment MCC: It seems as if the EV landscape is more driven by collaborations than that of traditional cars. This also applies to the participating chemical companies.

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Mar 10, 2022: Phosphorus chemical producer Sichuan Development Lomon plans to invest 12 billion yuan in Mianyang, Sichuan to build a lithium battery new energy material project with products such as iron phosphate and lithium iron phosphate.

Comment MCC: Another example of the irresistible attraction of the lithium battery market for Chinese chemical players, even though some of them may not be particularly well-positioned in this segment.

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Mar 09, 2022: Chongqing city plans for an average annual growth rate of about 9.3% for the chemical industry between 2021 and 2025. In particular, the growth will be focused on chemical enterprises with R&D institutions: the number of companies with such R&D is to have an average annual growth rate of 12%

Comment MCC: Such growth targets - if achieved - may indeed suggest an inland shift of the Chinese chemical industry. On the other hand, the focus areas mentioned by Chongqing city sound like they have just been copied from central government documents: "New chemical materials in the direction of performance resins, high-performance coatings, special chemicals, functional membrane materials, high-performance fibers, etc.".

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Mar 08, 2022: The sales of new energy vehicles in China reached 2.99 million units from January to November 2021, an increase of 1.7 times year on year, and the market penetration hit 12.7%. In November, the sales of new energy vehicles were up by 1.2 times from a year ago. The market penetration of new energy passenger vehicles in this month reached 19.5%

Comment MCC: In addition, it is predicted that the production and sales of China's new energy vehicles will exceed 5 million units in 2022, with an annual growth rate of about 50%

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Mar 07, 2022: China's dye production is concentrated in Zhejiang (63%) and Jiangsu (16%)

Comment MCC: This matches with the output of printed and dyed cloth in the same year, 2021: 58% for Zhejiang and 13% for Jiangsu. Fujian is a bit of an outlier with 12% of cloth output but no substantial dye production.

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Mar 06, 2022: While China's dye output is expected to be up by 3.24% year on year in 2021, this reflects a decline of 12.8% compared to 2017.

Comment MCC: Capacity utilization - at 65.3% in 2021 - is not substantially lower than in 2017 (66.9%), indicating that quite a few plants have shut down. This is not surprising given the fragmented nature of the segment, the tightened environmental regulation and the gradual shift of the textile industry away from China.

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Mar 05, 2022: In 2021, the revenue margin of the Chinese chemical industry reached 8.0%, the highest level since 2010, a year-on-year increase of 3.4%

Comment MCC: Another sign of the robust health of China's chemical industry

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Mar 04, 2022: According to He Xiangming, Director/Researcher of Institute of Nuclear and New Energy Technology and Research Office of New Energy and Materials Chemistry, Tsinghua University, lithium battery and its raw material industry will keep a high compound annual growth rate of 30-50% in quite a long period of time

Comment MCC: Such forecasts explain the strong interest of chemical companies in this segment.

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Mar 03, 2022: According to the National Bureau of Statistics, chemical product manufacturing was the second-most profitable industry sector in China in 2021, with only electronics/telecom manufacturers achieving higher profits.

Comment MCC: This is an improvement on 2020, when chemicals ranked no. 4.

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Mar 02, 2022: The Trade Commission of the Ministry of Industry, Trade and Energy of South Korea said on February 27 that it will conduct anti-dumping investigations on imported polyamide films originating in China, Thailand and Indonesia, as well as aluminum hydroxide products originating in China and Australia.

Comment MCC: It remains beyond me how such antidumping duties can be in the spirit of free trade (which supposedly everybody approves of) - but I guess as long as every country imposes some, nobody can really complain.

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Mar 01, 2022: Ashland will expand capacity for hydroxyethylcellulose, a biobased thickener, at its plant in Hopewell, Virginia, instead of in Nanjing, China, as previously announced (C&EN)

Comment MCC: In the explanation given by the company, any notion that this is due to US-China frictions or supply chain worries is carefully avoided: "The investment in the Hopewell site will delay the expansion of the company's site in Nanjing, China, which was previously announced. This change in timing is due to the immediate industry need for HEC." Of course, this does not mean such concerns did not play a role in the relocation of the investment.

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Feb 28, 2022: Yuntianhua, a leading Chinese phosphorus chemical company, will enter the lithium battery segment via a JV with several other Chinese companies

Comment MCC: While the details are hazy, it seems this JV will target the complete value chain from mining to production of batteries. Accordingly, the quoted investment in the first two phases is high - 52 billion RMB.

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Feb 27, 2022: The number of chemical enterprises above designated size is increasing. By the end of 2021, there were 26,947 companies, an increase of 908 over the end of 2020

Comment MCC: Another sign of the robust health of China's chemical industry as it benefits from government support for new materials and specialty chemicals

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Feb 26, 2022: China is planning to revise and integrate the current seven national mandatory standards on limits of harmful substances of coatings into three by 2025.

Comment MCC: Hopefully, this will make compliance with these standards more straightforward and easier to control.

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Feb 25, 2022: According to government plans, by 2025, the number of pesticide production enterprises will be reduced from 1,705 in 2020 to 1,600 while the total production output will slightly decrease.

Comment MCC: Pesticide overuse is an environmental problem in China, and government plans have long propagated a zero-growth approach. The reduction in the number of producing companies is still minor - in the long run, further consolidation will be necessary.

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Feb 24, 2022: Arkema plans to acquire the engineering adhesives producer Shanghai Zhiguan Polymer Materials (PMP), specialized in hot-melt adhesives for the consumer electronics market.

Comment MCC: The announcement states that the target "generates over €1 million in annual sales", which is actually very small for a foreign company to bother with an acquisition process in China. Apparently, Arkema seems to see huge potential for growth in this market, which is plausible given that the key applications are growth areas such as the bonding of mobile phones, tablets, and laptops.

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Feb 23, 2022: In 2021, there were 122 chemical accidents and 150 deaths across the country, a year-on-year decrease of 15.3% and 15.7%

Comment MCC: While these numbers are still high compared to Western countries, clearly the focus on safety is having a positive effect.

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Feb 22, 2022: A list of 22 leading universities for chemistry was published. It includes Nankai University, Tianjin University, Jilin University, Northeast Normal University, Fudan University, Shanghai Jiaotong University, East China University of Science and Technology, Nanjing University, Zhejiang University, University of Science and Technology of China, Xiamen University, Fuzhou University , Shandong University, Zhengzhou University, Wuhan University, Hunan University, Sun Yat-sen University, South China University of Technology, Sichuan University, Lanzhou University, Xinjiang University, University of Chinese Academy of Sciences.

Comment MCC: With my German background, it never mattered too much where in Germany I studied chemistry - but the situation is different in the US and in China, where this matters much more. Chemists from the above universities may thus on average more qualified than those from other universities - or at least had a harder time getting into these universities.

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Feb 21, 2022: Hualu Hengsheng plans to invest 46 billion yuan to build the Hualu Hengsheng Jingzhou modern coal chemical base. Annual production will include one million tons of acetic acid, 700,000 tons of urea, and 150,000 tons of DMF, to which later fine chemicals are to be added.

Comment MCC: To me, the government policy towards coal chemicals seems not very consistent at the moment, with some projects being canceled while others progressing.

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Feb 20, 2022: According to new government guidelines, for eight chemical segments (paraxylene, modern coal chemical industry, synthetic ammonia, calcium carbide, caustic soda, soda ash, yellow phosphorus, and coking), any production capacity below certain energy efficiency benchmarks will be eliminated by 2025

Comment MCC: This sounds like a decent plan to reduce energy consumption for these segments, and to eliminate outdated capacity.

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Feb 19, 2022: A note issued by Henan province states that in the production of chemicals from coal, the coal used as raw material will not be included in the assessment of total coal consumption

Comment MCC: This could be a lifeline to coal chemicals but also will create further complexity as it requires a separation of coal used as energy in chemical processes from that used as raw materials.

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Feb 18, 2022: A list of key projects released by the Yantai Municipal Government includes 36 chemical projects, 14 of which are by Wanhua.

Comment MCC: The scope and investment scale of these 14 projects further emphasizes Wanhua's ambition to become a chemical leader not only on a national but on an international scale, reaching from petrochemicals to specialty chemicals.

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Feb 17, 2022: 18 of the top 20 Chinese A-share listed companies in chemical raw materials have released performance forecasts for 2021. 17 have recorded a year-on-year increase in net profit, and 14 have increased their net profit by more than 100%.

Comment MCC: As stated before, 2021 was a good year for the chemical industry in China.

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Feb 16, 2022: Shares in the Hong Kong-listed fragrances and tobacco flavorings company Huabao have lost more than two-thirds of their value since the probe into "suspected disciplinary violations" by chairwoman Chu Lam Yiu was announced

Comment MCC: According to the Financial Times, taxes on cigarettes account for more than 5% of the revenue of the central government, which presumably has protected the industry for some time even though very likely the combined health damages from smoking far exceed the government revenue.

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Feb 15, 2022: Shandong Province is phasing out outdated refining capacity and forcing the development of new materials and fine chemicals industries. More than half of the major chemical projects announced for 2022 are new material type of chemical projects while 24% of chemical projects are bulk chemical projects, 12% of major chemical projects are pharmaceutical and intermediate projects, and 12% of chemical projects are fine chemicals projects.

Comment MCC: If indeed less than one-quarter of chemical projects is related to bulk chemicals, this is a substantial shift of emphasis, though the number of projects alone (without an indicator of size) is an insufficient measure.

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Feb 14, 2022: Wanhua Chemical (Fujian) has broken ground for a 400 t MDI, 250 kt TDI, and 800 kt PVC project.

Comment MCC: The inclusion of PVC production as an outlet for the chlorine created during the isocyanate production shows that at least, in this case, Wanhua regards the full integration of value chains as more important than a focus on particularly attractive or technologically demanding products. This is somewhat different from the approach taken by the leading Western companies, including BASF, which is often regarded as a model for Wanhua.

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Feb 13, 2022: During the "14th Five-Year Plan" period, Hebei Province will optimize and strengthen the petrochemical industry, vigorously develop high-end fine chemicals, actively expand synthetic materials, accelerate the construction of petrochemical parks, carry out the identification of chemical parks, and promote the transfer of industries to the coast and the agglomeration of chemical parks.

Comment MCC: While the separate planning of the individual provinces provides room for experimentation, it also means that some provincial statements just seem to be copied and pasted from those of other provinces or the central government.

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Feb 12, 2022: Shenghong's Inner Mongolia Sierbang Energy and Chemical Technology Co., Ltd.'s green new material circular economy industrial park project has been approved for pre-examination. The first phase covers the production of methanol and downstream acetic acid, formaldehyde, acrylic acid, 1.8 million tons/year of olefins, degradable materials, superabsorbent resins and other high-end new materials. and fine chemical products; the second-phase investment covers methanol, methanol-to-olefins and new downstream chemical materials

Comment MCC: It almost seems as if the projects have not changed much except for having added the adjective "green" to their names. Is this progress?

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Feb 11, 2022: According to C&EN, policies to control investment in products that require a lot of energy to make-including many basic chemicals-should benefit existing chemical companies by capping new supplies.

Comment MCC: While this is true, it will also put pressure on the less energy-efficient players to improve their processes and catch up with the industry leaders.

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Feb 10, 2022: The ten major Chinese producers of pivaloyl chloride have a combined capacity utilization of 54%

Comment MCC: Given the low expected market growth of only 3.6%, it seems that these overcapacities will persist, and margins will be depressed.

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Feb 09, 2022: Shanxi Coking Coal Group Feihong Chemical Co. canceled a 600,000-ton/year olefin and coke oven gas-to-methanol integration project

Comment MCC: The rationale given is that "Under the background of China's establishment of carbon peaking and carbon neutrality goals, continuing to promote coal-to-olefin projects will face greater market risks"

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Feb 08, 2022: The total profit of the chemical raw materials and chemical products industry in 2021 was 801.94 billion yuan, an increase of 87.8%

Comment MCC: As stated before, 2021 was a good year for China's chemical industry.

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Feb 07, 2022: Hengyi Petrochemical, via its subsidiary Guangxi Hengyi New Materials Co., Ltd. plans to invest in a caprolactam-polyamide project with an annual output of 1.2 million tons. Fujian Fuhua Gulei Petrochemical received environmental approval for a 400 kt nylon 66 project.

Comment MCC: Not surprisingly, these activities coincide with the likely exit of several Western chemical companies from these markets, indicating that they are afraid of the lower price level and commoditization from the entry of more Chinese competitors.

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Feb 06, 2022: In the Hurun list of the top 500 non-state-owned enterprises in China, 38 are chemical companies

Comment MCC: Perhaps more interestingly, the chemical industry as a whole rose from sixth to third place compared to 2020, indicating the increasing importance of the industry.

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Feb 05, 2022: According to ICIS, China per capita consumption of HDPE ranges from 6 kg g per year and person in Gansu province to 28 kg in Beijing.

Comment MCC: This is a good illustration of the diversified state of China's chemical market, making a one-size-fits-all approach to the country problematic.

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Feb 04, 2022: Wanhua Chemical will start a lithium iron phosphate lithium battery cathode material project with an annual production of 50 kt

Comment MCC: Another project establishing Wanhua's credentials as a broad-based chemicals producer.

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Feb 03, 2022: BASF will partner with China BlueChemical and Wuhuan Engineering to develop new technology for use of CO2 rich marine gas. Specifically, BASF will develop and supply innovative catalyst solutions that enable CO2 direct utilization via reforming and synthesis gas to chemicals - this will allow the utilization of Marine gas with a high CO2 content

Comment MCC: It is encouraging to see such cooperation - an indication that IP issues seem manageable from the perspective of BASF.

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Feb 02, 2022: In 2015, exports accounted for 25% of China's GDP while in 2020 this was down to 19% (ICIS/Richardson, Globaleconomy.com)

Comment MCC: Consequently, most recent foreign chemical investments target the local market, not exports from China.

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Feb 01, 2022: According to John Richardson of ICIS, in 2000, China's HDPE per capita demand was 37% more than the developing world, but in 2020 there was a difference of more than 300%.

Comment MCC: Of course, there are many ways to illustrate China's remarkable economic growth in the last 2 decades - this is one of them

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Jan 31, 2022: The profit of Chinese chemical companies increased by 116% in the first 10 months of 2021 compared to only 42% for the overall industry (C&EN)

Comment MCC: Strong export demand is one important contributor to this increase.

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Jan 30, 2022: About 100 new firms, many focused on high-end specialties, entered the ranking of the top 500 Chinese chemical companies, mostly replacing basic chemical producers (C&EN).

Comment MCC: According to the China Chemical Industry News, the rise of these firms is due primarily to their investment in products necessary for low-carbon development

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Jan 29, 2022: The Jiangsu Provincial Emergency Management Department terminated the license for production of hazardous chemicals of 112 enterprises

Comment MCC: Recently, Jiangsu seems to be at the forefront of regulating and restricting chemicals, despite this being an important sector for the province. Apparently, Jiangsu - with its proximity to Shanghai and its well-developed economy - has more alternatives to chemical production than most other provinces, and thus can afford to restrict the industry more tightly.

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Jan 28, 2022: Though capacity utilization for carbon black in China is below 70%, producers keep expanding capacity.

Comment MCC: This is a situation typical for China's chemical industry - but still puzzling for Western observers.

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Jan 27, 2022: China has imposed antidumping duties on monoalkyl ethers of ethylene glycol and propylene glycol originating in the United States.

Comment MCC: It is still beyond me how such antidumping duties can be in the spirit of free trade - but I guess as long as every country imposes some, nobody can really complain.

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Jan 26, 2022: Among the three major state-owned oil companies, Sinopec is the most active one in the hydrogen energy industry and has formulated the goal of becoming China's largest hydrogen energy company

Comment MCC: In military terms, this could be described as mission creep. More helpful in this case is system theory - an organization, once established, develops its own will to survive, whether or not the new objectives are a good fit with the original organization.

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Jan 25, 2022: Five of the top 7 biggest private companies in Inner Mongolia are chemical companies covering, e.g., calcium carbide, methanol, coal-to-natural gas, chlor-alkali industries, polysilicon industries and other key chemical industries.

Comment MCC: This shows the importance of chemicals for Inner Mongolia and makes it a bit doubtful to what extent stricter environmental regulations will be fully implemented in the province.

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Jan 24, 2022: According to the Work Safety Committee of the State Council, there are still 60 chemical parks that have not completed the assessment and classification, and individual provinces have not even identified and announced chemical parks as required.

Comment MCC: This is surprising given the amount of attention this topic has received recently - if I was a chemicals producer in one of these 60 parks, I would certainly be rather worried now.

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Jan 23, 2022: Sinopec Zhijin is running a 500 kta PGA (polyglycolic acid) project consisting of coal gasification, cryogenic separation and hydrogen production, coupling hydrogenation and polyglycolic acid production.

Comment MCC: According to the official statements, "traditional coal resources will be converted into easily degradable polyglycolic acid, which will be used by enterprises to produce high-end green products." This sounds a lot like greenwashing to me.

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Jan 22, 2022: The number of new chemical materials enterprises in China increased until 2019, when it reached a peak of 475 companies. This number declined by almost 10% to 433 in 2020.

Comment MCC: This is despite further substantial growth of the market, indicating consolidation as the market matures.

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Jan 21, 2022: The profit of Hebang Bio, a Chinese manufacturer of chemical products, is expected to increase by more than 70 times year-on-year, from 41 million RMB in 2020 to more than 3 billion RMB in 2021.

Comment MCC: The company profits from increased sales prices of its main products including glyphosate, soda ash, ammonium chloride, and glass. In turn, these price increases are due to the increase in environmental protection requirements and the elimination of outdated production capacity, which limited capacity expansions while downstream demand increased.

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Jan 20, 2022: While best-in-class natural gas to ammonia synthesis requires a minimum energy consumption of 27 GJ/ton, the domestic minimum consumption is about 30 GJ/ton.

Comment MCC: This is an example for opportunities for China to improve energy consumption just by adopting more modern technology. Indeed, a number of Chinese companies including CNOOC and Yuntianhua are working on improving this process.

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Jan 19, 2022: In 2021, the price of chemical raw materials and chemical products manufacturing industry increased by 19.1%, the first time in the past three years that the price increase of chemical raw materials and chemical products manufacturing industry has achieved positive growth (2020 was -5.9%, 2019 was -3.9% %).

Comment MCC: This was a good year for China's chemical industry - at least for those bigger ones that have survived the tightening of environmental regulation.

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Jan 18, 2022: Pharmaron, a Beijing-based drug services firm, has acquired the Cramlington, England, site of Aesica Pharmaceuticals from Recipharm (C&EN)

Comment MCC: An interesting move as there could be obvious benefits for Chinese API producers in having a production basis in Europe in times of increasing efforts to shorten supply chains.

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Jan 17, 2022: China's chemical companies account for 4% of the country's total carbon emissions.

Comment MCC: While this is a relatively low share, the carbon intensity (the amount of carbon dioxide per unit of value created) of the chemical industry is high. That in turn means that the chemical industry will be one of the focus industries for reducing carbon dioxide emissions, and thus will be strongly affected.

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Jan 16, 2022: The coal-to-ethylene glycol project of Xilingol Sunite Alkali Industry Co., Ltd., a wholly-owned subsidiary of Henan Zhongyuan Chemical Co., Ltd., will be terminated.

Comment MCC: To me - though not necessarily to all industry participants - it is clear that the short period of modern coal chemicals is already drawing to an end despite the progress China has made in this area. According to the information published, the approval of energy consumption indicators has become the biggest bottleneck for the continued construction of the project

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Jan 15, 2022: Arkema will double its Sartomer photocure resins capacity at its Nansha plant in China.

Comment MCC: The company states that this is due to the rising demand in Asia "for innovative solutions in electronics and renewable energies".

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Jan 14, 2022: Ascend Performance Materials will construct a new hexamethylene diamine and specialty chemicals plant in Lianyungang, China

Comment MCC: This is the largest investment of the company outside of the US, highlighting the importance of the Chinese market for engineering plastics.

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Jan 13, 2022: Chinese consumption of carbon fiber consumption is growing at a rate of over 20% annually. Industrial fields, especially wind power and photovoltaic will become big users of carbon fiber (CCR)

Comment MCC: While China's carbon fiber production capacity is substantially below demand, there is also a mismatch between lower-grade domestic material and demand for higher-end grades which is mainly satisfied by imports

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Jan 12, 2022: From now until the end of March, Shanxi Provincial Emergency Management Department will carry out a "Hazardous Chemical Enterprises Safety Production Risk Inspection and Remediation", a large-scale investigation and rectification of the safety production risks of hazardous chemical enterprises.

Comment MCC: The announcement specifically mentions that small-scale chemical production and chemical production in rental sites will be a focus area. While such production is indeed more likely to incur safety risks, this also points to industry consolidation as a desirable secondary objective of the campaign.

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Jan 11, 2022: China aims to raise water reuse rates of industrial enterprises above designated size to around 94% by 2025, when water consumption per RMB10 000 of industrial added value will be down 16% from 2020.

Comment MCC: Affected industries include petrochemicals and chemicals, potentially forcing relevant companies to reduce their water usage or invest in water recycling technologies.

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Jan 10, 2022: In the first 11 months of 2021, foreign investment in China was up 15.9% YoY to RMB1.04 trillion (around US$157.2 billion, up 21.4% YoY), excluding banking, securities, and insurance areas.

Comment MCC: China continues to be an interesting investment location for foreign companies, including chemical ones.

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Jan 09, 2022: The Ministry of Industry and Information Technology published the list of energy efficiency "leaders" in key energy-using industries in 2021 including a total of 29 chemical companies. The selected industries include crude oil processing, ethylene, synthetic ammonia, methanol, caustic soda, soda ash, p-xylene, calcium carbide, and coking industries.

Comment MCC: Assuming energy efficiency will become even more of an issue in the future, these benchmarks could in the long run well be applied to all companies, or at least to new projects.

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Jan 08, 2022: The Chinese Ministry of Ecology and Environment (MEE) has barred companies from expanding HFC production capacity from January 1, according to the CGTN website.

Comment MCC: This is a necessary but not sufficient step in strengthening control of HFCs.

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Jan 07, 2022: Wanhua established a subsidiary, Wanhua Chemical (Yantai) Fine Chemical Co., Ltd. with a registered capital of 50 million yuan.

Comment MCC: The business scope includes new catalytic materials and additives, feed additives, and bio-based materials, indicating that Wanhua will in the long run also be active in specialty chemicals

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Jan 06, 2022: India has imposed antidumping duties on some Chinese chemicals, for five years to guard local manufacturers from cheap imports from China. The chemicals are sodium hydrosulphite (used in dye industry); silicone sealant (used in manufacturing of solar photovoltaic modules, and thermal power applications); hydrofluorocarbon (HFC) component R-32; and hydrofluorocarbon blends (both have uses in refrigeration industry) (Indiatimes)

Comment MCC: It is still beyond me how such antidumping duties can be in the spirit of free trade - but I guess as long as every country imposes some, nobody can really complain.

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Jan 05, 2022: Clariant will construct its first Chinese production facility for Exolit OP flame retardants at its existing site in Daya Bay, Huizhou, Guangdong Province, an investment of about CHF 60 million.

Comment MCC: The rationale given is to increase the speed of providing products to Chinese customers, particularly in E&E applications.

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Jan 04, 2022: In the latest list of China's top 500 listed companies by market value, there are 9 chemical companies among the top 100: PetroChina ranks 11th, Sinopec ranks 20th, China Shenhua ranks 28th, Wanhua Chemical ranks 50th, China National Offshore Oil ranks 52nd, Enjie ranks 75th, Ganfeng Lithium ranks 86th, Salt Lake Co., Ltd. ranks 93rd, and Rongsheng Petrochemical ranks 99th.

Comment MCC: While this is an impressive number of chemical entries compared to Western markets, it also shows that the higher ranks are still dominated by commodity producers rather than specialty chemical players.

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Jan 03, 2022: 39 listed chemical companies were recently identified to have environmental risks, mainly in Beijing, Guangdong, Jiangsu, and Zhejiang. 17 are state-owned enterprises, and 7 are enterprises with a market value of 100 billion yuan.

Comment MCC: The large share of state-owned enterprises among them suggests that these are not protected from environmental examinations. However, the fines handed out - for example, Xinjiang Zhongtai was fined 600,000 RMB for burying hazardous waste under a lawn - are still relatively low compared to the value and revenue of these companies.

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Jan 02, 2022: Satellite Chemistry will invest in what they describe as new green chemicals in Lianyungang Xuxu New District New material industrial park project. The total investment is about 15 billion yuan. Planned annual output includes 200 kt of ethanolamine and 800 kta of polystyrene.

Comment MCC: So far, so unremarkable - however, it is not clear to me why an investment in chemicals such as PS is now regarded as an activity in "new green chemicals".

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Jan 01, 2022: In 2020, the top 100 private chemical enterprises accounted for 27.1% of the industry's operating income and 28.7% of the industry's total profit.

Comment MCC: This indicates the substantial (and increasing) importance of major private chemical companies in China. Somewhat to my surprise, their profitability is only slightly above the industry average though, probably partly reflecting the fact that the largest private companies are more likely to be active in commodity and semi-commodity chemicals than in specialties.