Chinese chemical giant SINOPEC has recently closed the 7 billion dollars deal with major international INEOS, which has induced optimism among the domestic polymer consumers in the country. The analysis states that this deal will drive China closely towards self-sufficiency in HDPE (High-density Polyethylene) and ABS (Acrylonitrile Butadiene Styrene) domain.
This deal primarily bifurcated into three segments; number one includes the 50% acquisition of Shanghai SECCO Petrochemical Company Limited, which produces many feedstock chemicals like Ethylene, propylene, Styrene, Benzene, Butadiene, Acrylonitrile, etc. in China.
Number second includes 50-50 Joint ventures of the new 600 KTPA ABS plant in the country. China is the world's major ABS importer, and this joint venture would reduce the country's dependency on imports. Although China produces ample feedstock chemicals, it uses to import a significant quantity of the product from other Asian countries like Taiwan and South Korea.
The 3rd and final part of the deal includes 50-50 joint ventures of the 500 KTPA HDPE plant in Tianjin, China. Like ABS, China imports an enormous amount of HDPE from the Middle East and Asia; thus, it is part of the deal that INEOS might also build 2 more plants of the same capacities in the future to produce INEOS licensed Pipe grade HDPE.
China's huge HDPE and ABS imports have already made the domestic market uncompetitive, and major global disturbances remain the driving factor behind any price variations in the country. Thus, these capacities additions are likely to translate the market more competitive, and price variations would be more demand-driven.
Additionally, the environmental concerns of China might also affect the country's growth dynamics, as the government has been trying to reduce emissions like other countries.
According to the ChemAnalyst analysis, China's domestic consumption of HDPE and ABS is likely to keep increasing in the future; thus, these production expansions will help China grip over products' pricing dynamics.