BASF and Sinopec are to invest $1.4bn (€1bn) in expanding their Chinese specialty chemical joint venture, adding 10 plants and increasing capacity at three existing sites.
The companies can now push ahead with their expansion plans, which will boost capacity and broaden product portfolio, having had them approved by the Chinese central government.
Joint venture BASF-YPC (BYC) was established in 2000 with a $2.9bn investment and has been economically successful for both parties, according to Martin Brudermüller, member of the Board of Executive Directors of BASF SE responsible for Asia Pacific.
He added: “The expansion of BYC underscores our strong belief in the growth opportunities of the Chinese market and is another milestone in cooperative development.
“At the same time, it demonstrates BASF’s long-term commitment to China and will further expand our competitive advantage.”
The expansion is also good news for China, according to Wang Tianpu, president of Sinopec, who said the move is part of the country’s “revitalisation plan for the petrochemical industry”.
Building on success
BYC started commercial operations in 2005 and had one steam cracker for production of ethylene, a chemical used in the production of pharma excipient polyethylene glycol, and nine downstream plants.
The steam cracker is now being expanded and will produce 740,000 metric tons of ethylene per year when fully operational. BYC’s expansion of ethylene production is in contrast to Dow Chemical’s recent decision to shutter three facilities.
Dow is cutting back its ethylene production capacity as it moves away from basic chemicals that have small profit margins and are affected by crude oil fluctuations. BYC however appears to have found a way of making production viable.
In addition to the steam cracker expansion BYC’s ethylene oxide (EO) plant is being expanded. This will be supplemented by a new EO purification unit and construction of EO derivatives plants.
Startup of the new operations will take place in a staggered approach and are predicted to be online from 2011 onwards.