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Industry News

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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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 IrgaCycleTM 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.

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

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

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

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

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

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

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

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

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

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capacities for all three products will only increase very slightly, though there will be a substantial exchange of outdated capacity for new capacity, hopefully improving economic and environmental aspects.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Feb 17, 2021: Brand Finance, a brand valuation company, valued Rongsheng Chemical at number 11 of its most recent ranking of global chemical companies. The next Chinese entry is Xinjiang Zhongtai.

Comment MCC: According to the company, Rongsheng`s brand value is about 1.6 bn USD compared to leading BASF`s 7.3 bn USD. To me, the exercise of determining these values seems relatively murky, and I doubt anybody would pay that much for Rongsheng as a stand-alone brand name (BASF might be a different matter). Still, the valuation company achieves its goal of getting some publicity, such as getting mentioned in this post.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Comment MCC: This indicates a shift of profitability towards the more specialized, more downstream parts of the petrochemical value chain. Even within the chemical segment, this shift is visible as the annual operating income and profit of basic chemical products decreased (-5.2%, -2.6%) while that of pesticides (+6.1%, +0.5%) and specialty chemicals (+1.6%, +13.4%) increased.

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Feb 07, 2021: Ongoing 2020 performance forecasts by domestic listed chemical companies show substantial increases in profit margin. For example, the profit of Rongsheng Petrochemical is expected to increase by about 230% yoy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Jan 19, 2021: Hunan Province issued a "Five-Year Action Plan for the Industrial Chain of New Chemical Materials in Hunan Province (2021-2025)", focusing on new petrochemical synthetic chemical materials, fluorine chemical materials, functional coatings, new chemical materials, and rail transit applications. The target is to achieve a total output value of 120 billion yuan, with 480 new chemical material companies that have passed the certification, 3 companies with more than 10 billion yuan, and 20 companies with more than 1 billion yuan.

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

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

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

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

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

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

Comment MCC: While the rankings of the three major petrochemical SOEs are somewhat lower than before, several others have gone up the ranks, including Tianci Materials, Dongfang Shenghong, Xinyubang and Sankeshu. This indicates that the market views companies active in new materials and related areas very favorably.

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

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

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

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

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

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

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Jan 12, 2021: According to a ranking of the world`s top brands, there are 10 oil and petrochemical brands among the top 500. Four of these are Chinese: Petrochina, Sinopec, CNOOC, Sinochem

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Jan 02, 2021: Global investment bank Torreya released the "Global 1000 Top Pharmaceutical Companies Report", of which 208 are Chinese.

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

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

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

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