Global industrial chain reshuffle! BASF and Shell are investing heavily in China!

In recent years, the United States has imposed a series of sanctions on China's polyethylene (PE) industry, including increased tariffs and anti-dumping investigations. In 2024, the U.S. has become one of the main import sources for Chinese polyethylene, with an import share reaching 17.24%. The U.S. has imposed a 10% tariff on Chinese polyethylene products, significantly increasing the cost of imported polyethylene from China. Additionally, the U.S. has implemented restrictions on the export of certain plastic products from China, further affecting the export of downstream products made from Chinese polyethylene.

These sanctions have had a significant impact on the upstream and downstream of China's polyethylene industry chain. On the import side, the increase in tariffs has raised the cost of polyethylene imports from the United States, leading to a loss of some orders. Meanwhile, the restrictions imposed by the U.S. on the export of plastic products to China have impacted the export of China's downstream products, further suppressing the domestic demand growth for polyethylene.

However, foreign companies are still continuously advancing their ethylene project layout in China, indicating that their long-term confidence in the Chinese market has not been shaken by U.S. sanctions. For example, companies like BASF and ExxonMobil are still increasing their investments in China, constructing new ethylene facilities. These companies may hope to reduce their reliance on the U.S. market through localized production in China, while taking advantage of the country's vast market demand and well-established industrial chain to enhance their competitiveness.

Project Name: Sinopec Tianjin Nangang Ethylene Project

Project Location: Binhai New Area, Tianjin City

Project Content: The Nangang Ethylene Project is a representative project of Sinopec's Nangang high-end new materials industry cluster. The project features a 1.2 million tons/year ethylene unit as the core, extending downstream along the C2 and C3 product chains, including: a 1.2 million tons/year ethylene unit, a 150,000 tons/year butadiene unit, a 90,000/40,000 tons/year MTBE/1-butene unit, a 500,000 tons/year catalytic gasoline hydrotreating unit, a 300,000 tons/year aromatic extraction unit, a 500,000 tons/year HDPE unit, a 300,000 tons/year LLDPE unit, a 100,000 tons/year ultra-high molecular weight polyethylene (UHMWPE) unit, a 100,000 tons/year polyolefin elastomer (POE) unit, a 200,000 tons/year alpha-olefin (LAO) unit, a 130,000 tons/year acrylonitrile unit, a 300,000 tons/year PP unit, and a 300,000 tons/year acrylonitrile-butadiene-styrene (ABS) resin unit, along with the necessary utilities and auxiliary facilities.

The second phase of the integrated refining and petrochemical project at Gulei, jointly invested by Saudi Aramco, Sinopec, and Fujian Refining & Petrochemical, completed the design bidding in February 2025, with a total investment of 71.1 billion yuan. It plans to build the world's largest ethylene unit with an annual production capacity of 1.5 million tons, targeting the high-end polymer and engineering plastics market. In addition, it has acquired a 10% stake in Hengli Petrochemical to deepen the integration of the polyester industry chain.

Zhongsha (Tianjin) Petrochemical

China Saudi (Tianjin) Petrochemical Co., Ltd. is a large petrochemical enterprise jointly established by China Petroleum & Chemical Corporation and Saudi Basic Industries Corporation with a 50:50 shareholding ratio.

In January 2010, its 1 million tons/year ethylene plant successfully conducted its first trial run and produced qualified products. On January 17, 2021, the company's ethylene capacity expansion and renovation project successfully completed the trial run of the newly added cracking furnace and cold box system on the first attempt, increasing the ethylene production capacity from 1 million tons/year to 1.2 million tons/year.

The Zhongsha Gulei Ethylene Project is the largest single investment foreign joint venture project in Fujian Province to date. It is jointly constructed by Saudi Basic Industries Corporation (SABIC), Fujian Energy and Chemical Group, and Zhangzhou Jiulongjiang Group. The construction includes a world-class ethylene plant with a capacity of 1.5 million tons per year (with an expected annual production capacity of up to 1.8 million tons), as well as downstream deep processing facilities. The total investment is 44.8 billion RMB (approximately 6.4 billion USD). The main engineering construction activities commenced on February 19, 2024, with a total investment of about 44.8 billion RMB, and the project is expected to be completed in 2026.

The main construction of the project includes:

Ethylene and downstream - The ethylene production capacity is 1.5 million tons/year. The downstream plans include the construction of 100,000 tons/year of ethylene oxide/ethylene glycol, 400,000 tons/year of HDPE, 600,000 tons/year of mLLDPE/HDPE, and 50,000 tons/year of hexene-1.

Acrylic and downstream—The downstream plans for propylene include the construction of 400,000 tons/year of polypropylene (impact-resistant/random) and 550,000 tons/year of polypropylene (homopolymer/random). Additionally, there are plans to build 250,000/150,000 tons/year of phenol and acetone, 270,000 tons/year of bisphenol A, and 290,000 tons/year of polycarbonate.

In addition, supporting facilities are being constructed for a 910,000 tons/year pyrolysis gasoline hydrogenation (including styrene extraction), a 220,000 tons/year butadiene extraction, a 56,000 tons/year butene-1 unit, and a 570,000 tons/year aromatics extraction.

The Huajin Amei Fine Chemicals and Raw Materials Engineering Project in Panjin City has a total investment of 83.7 billion yuan. It is a significant project under the Belt and Road Initiative of China and Saudi Arabia, included in national planning. It is an essential part of the China Northern Industries Group's efforts to build a petrochemical industry chain and is key to Panjin's development as a national hub for the petrochemical and fine chemicals industry. The project is located in the Liaobin Coastal Economic and Technological Development Zone of Panjin City, Liaoning Province, covering an area of 8.9 square kilometers, with mechanical completion expected by 2025.

The refining section includes: a new 15 million tons/year vacuum distillation unit, light hydrocarbon recovery unit, coal diesel hydrocracking unit, diesel hydrocracking unit, wax oil hydrocracking unit, residue hydrorefining unit, residue catalytic cracking unit, high propylene catalytic cracking unit, gasoline desulfurization unit, aromatic complex (including p-xylene) unit, gas refining unit, gas fractionation unit, C2 recovery unit, PSA unit, coal-to-hydrogen unit, ammonia synthesis unit, methanol unit, acid water vapor extraction unit, solvent regeneration unit, and sulfur recovery unit, totaling 20 process units.

The chemical engineering section includes: a newly constructed 1.5 million tons/year steam cracking unit (accounting for the recovery of ethylene from each unit, which can produce 1.63 million tons/year of ethylene), a 1-hexene unit, an ethylene glycol unit, an ethylbenzene/styrene unit, a high-density polyethylene (HDPE) unit, a full-density polyethylene (FDPE) unit, three polypropylene (PP) units, an acrylonitrile unit, an MMA unit, an ABS unit, a butadiene extraction unit, a C4 combined unit, and a cracking gasoline hydrogenation combined unit, totaling 15 process units.

Although US sanctions have intensified the cost and compliance pressures on China's polyethylene industry in the short term, they have unexpectedly accelerated the structural upgrade of the industry chain. Foreign enterprises maintain their advantages in the high-end market through technological deepening and localization strategies, while China is gradually building a more resilient industrial ecosystem through capacity expansion and policy countermeasures (such as Article 22 of the "Anti-Foreign Sanctions Law").

In the future, the global game surrounding polyethylene will not only be a contest of capacity and cost but also a competitive integration of technological innovation and geopolitical strategies.