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Industry News

This section contains information and comments on China´s chemical industry, as posted from January 2024 onwards. Entries are not revised later. For older entries, see separate sections. For daily updates, please join the LinkedIn group "News and Trends in China´s Chemical Industry".

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Feb 23, 2024: BYD started construction of a sodium-ion battery project, an investment of about 10 billion RMB.

Comment MCC: Sodium-ion batteries have several potential advantages over the lithium-based batteries currently used, such as cost-effectiveness and a more abundant raw material. However, there are also substantial disadvantages regarding energy density, cycle life, and the maturity of the technology. It seems BYD is taking at least a partial bet on overcoming these challenges.

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Feb 22, 2024: China's Ministry of Commerce will retain anti-dumping duties on imports of o-chloro-p-nitroaniline originating in India

Comment MCC: The source of this information, the Chinese paper Global Times, states that this is "a move that experts said is a legitimate response to concerns raised by domestic producers" - but then, this is what a Chinese paper would say anyway. On the other hand, according to the same source, during the period from 1995 to 2023, India launched 336 antidumping investigations against China while China only launched 12 against India, though these were mostly in chemicals.

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Feb 21, 2024: According to TASS, Russia sees huge prospects in cooperation with China in the chemical industry and trade in fertilizers

Comment MCC: The Russian Ambassador to Beijing Igor Morgulov is quoted as having said in a TV interview "Apart from energy there are other sectors where I see huge prospects, those being the chemical industry, production of the paper industry, fertilizers, various types of metals and ore"

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Feb 20, 2024: According to ChemAnalyst, Chinese PX imports declined by 14% in December 2023 compared to December 2022.

Comment MCC: This is an obvious consequence of the increasing domestic PX capacity.

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Feb 19, 2024: Canadian company Neo Magnequench started construction of a plant for rare earths permanent magnets in Estonia.

Comment MCC: This is in the interest of the EU in order to reduce dependency on China for these materials, which currently is about 98%.

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Feb 18, 2024: China's acetone capacity increased by 51% in 2023 compared to 2022, with 8 new plants coming on stream.

Comment MCC: Correspondingly, imports decreased by 43%, and China is already close to 90% self-sufficiency after less than 80% in 2022.

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Feb 17, 2024: China's MDI capacity increased at a CAGR of 6.9% between 2018 and 2022 and actual output increased by a similar CAGRd (6.8%). However, domestic consumption only increased by a CAGR of 4.1% (data from CCR).

Comment MCC: As China gets self-sufficient for some chemicals, for other such as MDI, for which the country is already self-sufficient, the pressure to seek exports increases. This will affect foreign producers in their home and export markets.

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Feb 16, 2024: As a destination for South Korea's exports of petroleum products, China dropped from fourth place in 2022 to fifth in 2023 after ranking number one from 2016 to 2021.

Comment MCC: This is even more surprising given that the drop in 2022 was associated with Covid-19, and shows that China's growing domestic production capacity strongly affects selected other countries

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Feb 15, 2024: Despite the announced exit from two JVs in China, BASF aims to increase its presence in China. According to the CFO, BASF targets achieving 20% of its global sales from China in 2030, up from around 15% now.

Comment MCC: Given the continued investment in China, this seems plausible. BASF expects around 80% of global chemical growth to 2030 coming from China.

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Feb 14, 2024: In 2023, 45 hazardous chemical enterprises in urban densely populated areas of Hunan were relocated while 34 chemical companies along the Yangtze River were moved to chemical parks (CCR)

Comment MCC: It seems Hunan will easily achieve its targets for these relocations as after 3 years of a 5-year program, 89% of firms have already been relocated.

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Feb 13, 2024: Solvay is expanding the capacity of its joint-venture hydrogen peroxide plant in Shandong

Comment MCC: The demand driver is the production of solar cells, for which hydrogen peroxide is used as a cleaning agent. According to Solvay, China is the world's largest market for hydrogen peroxide.

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Feb 12, 2024: BASF will sell its stakes in two joint ventures in Xinjiang. The local JV partner as been accused of human rights abuses by human rights groups

Comment MCC: While BASF claims that these divestures are mainly due to environmental and economic reasons, the real driver very likely is the criticism mentioned above. Of course, with its huge investments in China, BASF is very careful to openly address these charges.

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Feb 11, 2024: BASF Environmental Catalyst and Metal Solutions and Heraeus Precious Metals have started operations at a new JV plant, BASF HERAEUS Metal Resource in Pinghu, China.

Comment MCC: According to the press release, the "facility recovers precious metals from spent automotive catalysts, enabling a circular economy, while supporting China's security of supply and sustainability goals."

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Feb 10, 2024: Two major Chinese chemical companies, ChemChina and CNOOC, are on a US list of "Entities Identified as Chinese Military Companies Operating in the United States"

Comment MCC: This seems a bit weird as the main focus of these two companies - similar to China Mobile, which is also on the list - is not in the military area.

https://media.defense.gov/2024/Jan/31/2003384819/-1/-1/0/1260H-LIST.PDF

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Feb 09, 2024: BASF inaugurated a Thermoplastic Polyurethane (TPU) plant at the Zhanjiang Verbund site.

Comment MCC: The fact that this is the largest single TPU production line for BASF globally once again underlines China's unique position as the biggest chemical market by far.

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Feb 08, 2024: According to Japanese law firm Sonoda & Kobayashi, since 2020, China and South Korea have surpassed Japan in yearly patent applications for perovskite solar cells: "In 2021, China submitted 70 applications, South Korea submitted 39, and Japan submitted only 19."

Comment MCC: The law firm warns that if the current situation persists, China will be superior to Japan in this field despite the efforts of Japanese companies such as Panasonic, Sekisui, and Toshiba.

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Feb 07, 2024: Sasol reported "challenging market conditions" for its chemicals business, with average sales prices in their 1H FY 24 being 24% lower than one year earlier.

Comment MCC: Among the factors cited are macroeconomic weaknesses in Europe and China.

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Feb 06, 2024: BASF again gets criticized by the German media (ZDF, Spiegel) for being involved in human rights violations via its Xinjiang JV partner Markor.

Comment MCC: As commented on before, this is a difficult situation for BASF as the company - with its big and increasing investments in China - cannot afford to offend the Chinese government, but its image in the West may suffer from these accusations. In reality, BASF has presumably very limited influence on the actions of its Chinese JV partner, so only an exit from the JV would keep BASF from facing similar accusations in the future.

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Feb 05, 2024: China's output of refined oil products increased by 16.5% in 2023 after a growth rate of 13.3% in 2022.

Comment MCC: This is mainly a reflection of China's increased capacity and its aim to reach a greater degree of self-sufficiency rather than of greater demand.

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Feb 04, 2024: BASF will cooperate with China's Envision Energy to develop a process for converting green hydrogen and CO2 into e-methanol. BASF will provide the catalyst technology while Envision will be responsible for the overall process design.

Comment MCC: The demand for such sustainable fuels will increase substantially in the future due to EU legislation requiring a share of the fuel used in aircraft and ships to be sustainably sourced.

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Feb 03, 2024: A recent paper by Chinese authors covers the topic "Fine-tuning Large Language Models for Chemical Text Mining"and states that "The fine-tuned LLMs models demonstrated impressive performance, significantly reducing the need for repetitive and extensive prompt engineering experiments". It concludes "Given its versatility, robustness, and low-code capability, leveraging fine-tuned LLMs as flexible and effective toolkits for automated data acquisition could revolutionize chemical knowledge extraction."

Comment MCC: This is certainly an interesting topic for the chemical industry - according to the authors, AI has a huge potential. My only gripe is that the paper has 17 authors - were there really 17 people doing substantial work on this paper, or did a number of people catch a free ride due to their position in the hierarchy?

https://chemrxiv.org/engage/chemrxiv/article-details/65baa07b9138d231612...

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Feb 02, 2024: According to Oxfordenergy, China's coal chemical industry accounts for about 5.4% of China's emissions of carbon dioxide. The site highlights the political importance of the sector for China: "As coal chemicals' potential to slow China's rising oil and gas imports bodes well with Chinese leadership's rising energy security anxiety amid geopolitical tensions, coupled with strong political desire for investment-driven growth exaggerated by a sluggish post-pandemic economic recovery, especially at the local level, the coal chemical industry becomes the only major coal consuming sector in China that still possesses great potential for substantial capacity expansion as well as emissions spike in the coming decades."

Comment MCC: However, it also wonders about the contradictions in China's policy: "Without an appropriate decarbonisation strategy in place, further expansion of the industry is expected to contradict with China's dual carbon goals of peaking national carbon emissions before 2030, and achieving carbon neutrality before 2060."

https://www.oxfordenergy.org/research/prospects-of-the-chinese-coal-chemical-industry-in-an-increasingly-carbon-constrained-world/
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Feb 01, 2024: According to the China Ecological Environment Bulletin of 2020, agricultural chemicals contribute to 50 % of the environmental pollution sources in China

Comment MCC: A surprisingly high number hinting at the greater need for control of the use of these chemicals. Interestingly, in another study, it was found that once non-local employment in a given agricultural area rises, the amount of fertilizer used decreases. In other words, urban migration may itself alleviate the problem somewhat.

https://www.sciencedirect.com/science/article/abs/pii/S0959652624001677

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Jan 31, 2024: SABIC announced the final investment decision for its $6.4 billion petrochemicals complex in Fujian, China. This is a 51%/49% JV with Fujian Fuhua Gulei Petrochemical to build a mixed feed steam cracker with a production capacity of up to 1.8 million mt/year of ethylene and subsequent production of PE, PP, and PC.

Comment MCC: This again shows the determination of SABIC to move further into chemicals - and to rely on China as a major market.

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Jan 30, 2024: A US-China working group will meet in Beijing to discuss fentanyl precursor chemicals

Comment MCC: According to one official, China has already started taking action against the producers of such chemicals since last November, when Mr. Biden and Mr. Xi met.

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Jan 29, 2024: BASF Monomers Division and Xuchuan Chemical plan to cooperate on bio-mass balanced (BMB) Methylene Diphenyl Di-isocyanate (MDI) in synthetic leather applications

Comment MCC: The stated objective is to reduce carbon emissions in the production of polyurethanes for the industry.

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Jan 28, 2024: Sinopec and BP signed a memorandum of understanding at the World Economic Forum in Davos, Switzerland, on Thursday, covering cooperation in areas including fuel sales, oil, and gas trading, marine fuel and upstream activities.

Comment MCC: BP's interest is likely to gain an entry into the charging of EVs in China, for which demand is growing fast.

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Jan 27, 2024: According to Nikkei, Japanese production of ethylene is the lowest in 35 years, falling by 1.7% last year

Comment MCC: The main explanation provided is China's fast-growing capacity - and indeed, it is hard to imagine how Korean and Japanese producers of basic petrochemical products can in the long run keep relying on exports to China for a substantial part of their sales.

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Jan 26, 2024: DuPont issued a profit warning, citing weak demand in China as a major reason

Comment MCC: Apparently, DuPont expects a fourth-quarter 2023 loss and lower-than-expected 2024 first-quarter sales

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Jan 25, 2024: According to Reuters, Germany's chemicals sector is starting to get affected by delayed shipments via the Red Sea

Comment MCC: The article quotes one owner of a German chemical business, Gechem, stating that procuring necessary materials has gotten much harder recently and continues that "As a result of the delays, Gechem, which makes annual sales in the double-digit millions of euros, has lowered production of dishwasher and toilet tablets because it can't get enough trisodium citrate as well as sulfamic and citric acid." Of course, a large share of these materials comes from China.

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Jan 24, 2024: China will initiate a three-year campaign in 2024 to tackle workplace safety risks in areas from mining to firefighting.

Comment MCC: This will include the formulation of emergency disposal codes for chemical enterprises

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Jan 23, 2024: According to the CEO of Intel, China's semiconductor industry lags behind the global standard by about ten years, and he foresees this gap persisting for the next decade.

Comment MCC: A partial reason for the gap is the lack of chemicals such as resists, highly purified gases, and other chemicals used to manufacture advanced chips.

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Jan 22, 2024: An article by US News includes 3 mainland Chinese universities among the 10 best chemistry universities, along with 4 US ones, 2 Singaporean ones, and one in Saudi Arabia.

Comment MCC: It is a bit of a surprise to see this - for example, to have Tsinghua ranked higher than Berkeley - but presumably reflects a genuine improvement in the quality of Chinese chemistry universities.

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Jan 21, 2024: According to chemanalyst.com, the expansion of China's petrochemical companies raises concerns in the Korean chemical sector.

Comment MCC: In particular, apparently Rongsheng Petrochemical plans to invest $12.2 billion in a refinery and petrochemical project located in China's Zhoushan Islands. The chemicals to be produced there overlap substantially with those of Korean companies and include EO, POE, phenol, acetone, PO, styrene, 1,4-butanediol and ABS. In ABS, the new plant will directly compete with Korean companies such as Lotte, LG and Kumho.

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Jan 20, 2024: China's crude oil imports increased by 11% in 2023 compared to 2022.

Comment MCC: This figure also represents an annual record, being about 9% higher than the import volume of 2020.

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Jan 19, 2024: China's PDH capacity will rise substantially in 2024 and 2025, up 77% from the end of 2023 (Mysteel).

Comment MCC: While delays and poor margins will delay the startup of some of these capacities, the capacities coming on stream in time will still add about 50% to the current capacity.

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Jan 18, 2024: A study by ResearchAndMarkets forecasts a CAGR of 12.4% for China's market for industrial wastewater treatment between 2022 and 2030.

Comment MCC: While such market studies tend to be overly optimistic (perhaps in the belief that this makes potential buyers more likely to obtain the study), this is still an impressive growth rate even if one subtracts a few percent.

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Jan 17, 2024: The Jan-Nov investment in China's chemical industry between January and November 2023 was up 13.3% year on year.

Comment MCC: This is a larger increase than for the manufacturing sector as a whole (6.3%), indicating a somewhat surprising optimism regarding the sector.

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Jan 16, 2024: According to an article in the Economic Times India, in solvent and commodity chemicals, Indian companies will continue to face pressure from Chinese chemical companies.

Comment MCC: The article mentions battery chemicals as a bright spot for Indian chemical companies, but adds that in this segment, pressure will also come from Chinese competitors.

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Jan 15, 2024: According to Eurostat, the EU trade in chemicals with China turned into a slight deficit in 2021 and a substantial one in 2022 after continuous surpluses between 2009 and 2020.

Comment MCC: The main reason for the big deficit in 2022 is the strong increase in Chinese exports to the EU (+93%) that was not compensated by a much smaller increase in exports to China (+15%),

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Jan 14, 2024: In the last quarter of 2023, BYD overtook Tesla as the producer of the largest number of electric vehicles

Comment MCC: While Tesla has a strong brand, BYD and other Chinese players have their own advantages, including the lower price, strong government subsidies, and strong supply chains for critical materials such as rare earths. BYD has the additional advantage of having a background in battery manufacturing, which also helps the company reduce overall production costs.

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Jan 13, 2024: A recent paper provides an assessment of recent major chemical accidents in China

Comment MCC: The paper notes a lower occurrence of accidents in summer and an overall decline of accidents in the period from 2017 to 2022.

https://link.springer.com/article/10.1007/s44268-023-00024-0
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Jan 12, 2024: A paper published at the World Economic Forum Annual Meeting states that China's growth forecast has improved

Comment MCC: Key drivers of growth are innovation, green tech, and capital markets. At least the first two have a strong connection with the chemical industry.

https://www.weforum.org/agenda/2024/01/china-future-trends/

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Jan 11, 2024: According to Xinhua, the world's largest ethanol production equipment, with an annual output of 600,000 tonnes, went into trial in Huaibei, Anhui. The plant converts coke oven gas into ethanol.

Comment MCC: The press release further remarks that this"will massively increase the added value of coal and provide a feasible way for the low-carbon development of steel and petrochemical industries."Given that the ethanol is derived from fossil resources rather than from plants (bioethanol), at least the last part of the statement is wrong.

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Jan 10, 2024: Sinopec expects Chinese coal consumption to peak around 2025 at 4.37 billion metric tons while oil consumption is projected to peak around the middle of 2026-2030. China's total carbon emissions from energy activities are expected to peak during the 15th Five-Year Plan period at 10.1 billion metric tons, up from 10.02 billion tons in 2023.

Comment MCC: It seems China is on track to achieve the - rather unambitious - goal of peak emission by 2030. The zero-emission target for 2060 will be much harder to achieve.

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Jan 09, 2024: A team led by Chinese researchers has mapped the chemical composition of the lunar surface with greater precision than before, using samples brought back by China's Chang'e-5 mission.

Comment MCC: Apparently, these samples provide information on the more recent geological past of the moon, a period that previously collected samples did not cover.

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Jan 08, 2024: IMCD acquired the specialty distribution company Guangzhou RBD Chemical, a distributor of lubricant additives.

Comment MCC: This is a fairly small deal in a niche of the chemical distribution segment - the annual sales of RBD are only about 10 million EUR.

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Jan 07, 2024: According to a recent paper, China's five most dangerous industries are coal mining, metal and non-metal mining, construction, and chemical and fireworks manufacturing.

Comment MCC: The paper highlights the dangers in the chemical industry: "Especially in the chemical industry, major accidents occur more frequently. According to statistics, from 2016 to 2021, there were 1050 chemical accidents in China, resulting in 1330 deaths."

https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-023-17...

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Jan 06, 2024: According to Statista, China's share of global chemical exports dropped from 9.6% in 2021 to 9.3% in 2022.

Comment MCC: However, given the long lock-downs in China in 2022, this may not be an indication of a broader trend. The long-term trend from 2009 (4.7%) to 2022 still suggests that China's share may increase further.

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Jan 05, 2024: According to the Hellenic Shipping News, some Indian chemical producers are planning to increase production in 2024 to take advantage of the China Plus One strategy adopted by some global chemical buyers, which should boost India's export potential.

Comment MCC: However, currently many Chinese basic chemicals exports are sold at very low prices (Indians talk about dumping) - this will make it hard for Indian producers to compete.

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Jan 04, 2024: China imposed stricter export controls on graphite, a critical EV battery material, since December 1 (Digitimes Asia)

Comment MCC: As a consequence, some Japan-based companies have been diversifying their supply chains and purchasing from other countries to reduce the risk of not being able to buy the material from China

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Jan 03, 2024: An analysis of snowpack collected in Harbin revealed the presence of different pollutants depending on the collection site. Specifically, "coal combustion, industrial emissions, and traffic-related activities lead to the enrichment of heavy metals in the snowpacks of urban and suburban areas, while coal combustion and biomass burning contribute to pollution in rural areas."

Comment MCC: An interesting approach to analyse pollution.

https://www.sciencedirect.com/science/article/abs/pii/S0045653523031569

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Jan 02, 2024: The market share of the top 5 Chinese maleic anhydride producers reached 64% in 2023, up almost 10% from 2022 and double the share in 2013.

Comment MCC: Underlying causes are the shift to larger scale plants, shifts in production technology, and value chain integration.

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Jan 01, 2024: A recent paper analyzes the origin, evolution, and current status of Chemical Industrial Parks in China.

Comment MCC: Perhaps even more important, the paper also analyzes the characteristics and causes of 90 chemical accidents in detail.

https://www.sciencedirect.com/science/article/abs/pii/S0950423023002632