China: Business Deal Lyondell Basell, Sinopec Form JV to Produce PO and SM in China
A 50-50 joint venture has been established by Lyondell Basell and Sinopec to manufacture propylene oxide and styrene monomer in China. The newly created joint venture firm is expected to construct two new units in Zhenhai Ningbo, China which will have 275 KTA capacity of propylene oxide and 600 KTA capacity of styrene monomer respectively.
Rotterdam/The Netherlands – Lyondell Basell and the China Petroleum & Chemical Corporation (Sinopec) have recently announced the signing of an agreement to form a 50:50 joint venture (JV) which will produce propylene oxide (PO) and styrene monomer (SM) in China's domestic market. First announced on December 23, 2019, the JV will operate under the name Ningbo ZRCC Lyondell Basell New Material Company.
"As China's economy continues to grow, so will the demand for propylene oxide and styrene monomer. We are excited to expand our relationship with Sinopec through this joint venture in order to better serve China's domestic market. Sinopec's outstanding operational capabilities combined with Lyondell Basell's leading technology are a win-win," said Torkel Rhenman, Executive Vice President, Intermediates and Derivatives, and Refining.
"Built on the remarkable success of our first Joint Venture, we are very delighted to continue to enhance the important partnership with Lyondell Basell for future achievements. The establishment of the new Joint Venture is not only in line with the national drive for further opening-up, but also a vital step for Sinopec to deepen and expand our international operations," said Yu Baocai, Senior Vice President of Sinopec Corp.
"We have great expectations on the new Joint Venture for propelling the economic development of the city of Ningbo to a new level. During the 14th Five-Year Plan period (2021-2025), Sinopec will continue to promote green industrial upgrading and innovative transformation, contributing to the everlasting economic growth of Zhejiang Province and Eastern China, and even the development of the chemical industry in China."
The JV will construct a new PO and SM unit in Zhenhai Ningbo, China. This new unit will have 275 kilotons per annum (KTA) capacity of PO and 600 KTA capacity of SM. The unit will use Lyondell Basell's leading PO / SM technology. Products produced by the JV will be marketed equally by both partners, significantly expanding their respective participation in the Chinese market for PO and SM. Startup is expected at the end of 2021.
The formation of the JV is subject to approvals by relevant government authorities, including antitrust review by the State Administration for Market Regulation. Lyondell Basell expects to make its equity contribution to the JV during the first quarter of 2021.
According to IHS Markit, China accounts for more than 60 per cent of chemical market demand in Asia and represents 40 per cent of global chemical market growth over the next decade.