LYB and Sinopec Finalize Ningbo JV Agreement
LyondellBasell (LYB) and China Petroleum & Chemical Corporation, better known as Sinopec, have finalized plans for a 50:50 joint venture to produce propylene oxide (PO) and styrene monomer (SM) in China for the domestic market. A non-binding Memorandum Understanding (MoU) was signed at the end of 2019.
The new jv of the two petrochemical and plastics giants will be based in the city of Ningbo and trade under the name Ningbo ZRCC LyondellBasell New Material Company. Business will kick off with construction of a new propylene oxide (PO) and styrene monomer (SM) plant at Zhenhai, which will have capacity for 275,000 t/y of PO and 600,000 t/y of SM planned to start up at the end of 2021.
The deal is still contingent on regulatory clearance by Chinese authorities, including an antitrust review by the State Administration for Market Regulation, The new facility will use LyondellBasell's technology and output will be marketed equally by both partners. The Houston, Texas, USA-managed group said it expects to make its equity contribution to the jv during the first quarter.
Both groups said the new plant would “significantly expand” their respective participation in the Chinese market for PO and SM. An existing joint venture between Sinopec and, LYB, Ningbo ZRCC Lyondell Chemical, already operates plants for the two commodity plastics feedstocks at Zhenhai. In China, LyondellBasell additionally has five wholly-owned facilities in Guangzhou, Suzhou, Dalian, Dongguan and Changshu.
"As China's economy continues to grow, so will demand for propylene oxide and styrene monomer, “said Torkel Rhenman, LyondellBasell’s executive vice President, Intermediates and Derivatives and Refining, said. According to IHS Markit, China accounts for more than 60% of chemical market demand in Asia.
Senior vice president Yu Baoca said the new jv is not only in line with Sinopec’s national drive for a “further opening-up,” but also a vital step for the Chinese group to deepen and expand its international operations. It also represents a chance for propel the economic development of the city of Ningbo to a new level, he said.
During China’s 14th Five-Year Plan period (2021-2025), Sinopec said it will continue to promote “green” industrial upgrading and innovative transformation, thus contributing to the “everlasting economic growth” of Zhejiang Province and eastern China, and even the development of the chemical industry in China."
Author: Dede Williams, Freelance Journalist
