China Market Insider What Does China's Big Petrochemical Plans Have to Do with BASF?

Author / Editor: Henrik Bork* / Ahlam Rais

China has announced massive investments in one of the country's largest petrochemical industry sites. In Zhanjiang, at the southern tip of the People's Republic in Guangdong Province, another 45.2 billion dollars is being pumped into a Verbund site which will focus on petrochemicals and steel production over the next five years. The German chemical giant BASF is right in the middle of all this.

With the format ‘China Market Insider’, PROCESS Worldwide regularly reports on the Chinese chemical and pharmaceutical market.
With the format ‘China Market Insider’, PROCESS Worldwide regularly reports on the Chinese chemical and pharmaceutical market.
(Source: ©sezerozger - stock.adobe.co)

Beijing/China – BASF and Sinopec have already settled in the ‘Zhanjiang Economic Development Zone’ with large-scale projects. Now, modern industrial clusters with a total of 124 projects are to be built, PROCESS (China) quotes from the new five-year plan for the region.

These are big plans: from now until 2025, in just five years, the total value added of the region is to be doubled once again, from currently 47.5 to around 100 billion yuan (about 15.3 billion dollars). Major foreign projects, including BASF's Verbund site, in which the company plans to invest a total of more than 9.7 billion dollars in the coming years, play a decisive role in this.

The investment by BASF, which is building its third-largest production facility in the world after Ludwigshafen and Antwerp in Zhanjiang, is ‘seen as an opportunity’ to build a ‘world-class petrochemical site’ in Zhanjiang, the five-year plan states. The construction of a new ‘Sino-German Industrial Park’ in Zhanjiang is under consideration, it adds.

The BASF project and a petrochemical Verbund site of Sinopec are to serve as an anchor for a complete downstream value chain of the petrochemical industry. Polyurethane and other specialty chemical products, new materials for the automotive and e-car industries, performance materials for China's semiconductor and electronics industries and similar products are to be produced in the new industrial cluster.

The first of BASF's plants, which are currently under construction, are scheduled to come on stream from 2022 and produce engineering plastics and thermoplastic polyurethane (TPU). The entire BASF plant is scheduled to be ready in 2030.

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Air Liquide also Gets Involved

As another major foreign investor, Air Liquid will invest more than 304 million dollars in new industrial gas production facilities in Zhanjiang in the coming years, which will be built from next year and are scheduled to start operations from 2025.

Many of the plants, including Air Liquide's new gas production facility, are located on Donghai Island off the port city of Zhanjiang, the epicentre of the Zhanjiang Development Zone. This island, China's fifth largest, benefits from a particularly favourable geographical location in terms of accessing strategic markets in South China and Southeast Asia. For example, Zhanjiang is the port on the South China Sea with the shortest sea route to Southeast Asia, Africa, the Middle East and Europe.

In the immediate vicinity of Zhanjiang, Beijing is developing one of the largest megacity clusters on earth with its ‘Greater Bay Area’ in the Pearl River Delta, whose regional GDP is already as large as that of Indonesia. Zhanjiang is located not only in Guangdong, a traditional centre of China's manufacturing industry, but also very close to the rapidly growing provinces of Hainan and Guangxi.

To promote its development zone, the local government of Zhanjiang has pumped 530 million dollars into the infrastructure of Donghai Island in recent years, including the construction of docks, highways, bridges, and electricity and water plants. The petrochemical industrial park alone, one of several, is now to be expanded by another 26 square kilometres. The entire development zone is just under 500 square kilometres.

* Henrik Bork, long-time China correspondent for the German Süddeutsche Zeitung and the Frankfurter Rundschau, is Managing Director at Asia Waypoint, a Beijing-based consulting agency specialising in China. ‘China Market Insider’ is a joint project of Vogel Communications Group, Würzburg/Germany, and Jigong Vogel Media Advertising in Beijing/PR China.

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