Chinese state chemical producers Sinochem (Beijing; www.sinochem.com) and China National Chemical (ChemChina; Beijing; www.chemchina.com.cn) have completed their merger by creating a new holding company, Sinochem Holdings (Beijing; www.sinochem.com), a move that followed reports of such a strategy in late 2020 (see Plasteurope.com of 23.12.2020).

The deal has been under discussion since 2017 and was announced in the third-quarter of 2020 (see Plasteurope.com of 25.09.2020). It creates a behemoth of 220,000 employees and annual sales of around EUR 128 bn, more than BASF, Bayer, and Evonik combined.

The main business of the new giant from China is likely to be in agrochemicals following ChemChina’s 2017 purchase of the Swiss Syngenta Group (Basel; www.syngenta.com) for EUR 35.3 bn, the largest foreign acquisition made by a Chinese state-owned company. In addition, Israeli crop protection producer Adama (Tel Aviv; www.adama.com), which has annual sales of more than EUR 3 bn, has been wholly owned by ChemChina since 2016.

German plastics machinery maker KraussMaffei (KM, Munich; www.kraussmaffei.com) has also been part of the group since 2016. The company told Plasteurope.com that it did not expect the new holding to increase its influence on corporate management.

Sinochem, on the other hand, owns Spanish ABS manufacturer Elix Polymers (Tarragona / Spain; www.elix-polymers.com), which, according to PIE’s Polyglobe database (www.polyglobe.net), has a production capacity of 180,000 t/y.

For refinery products and specialty chemicals in particular, it should be interesting to see if and what synergies the merged company can leverage and thus increase its efficiency. At first glance, the amalgamation of the two state corporations follows the “economies of scales” strategy the Chinese leadership likes to pursue: the larger a company is, the more powerful it can appear in the globalised marketplace.

Polyglobe says ChemChina products include BDO, butadiene, ethylene, EPS, phenol, POM, polypropylene and PVC, with a total production capacity of over 6m t/y. A further 720,000 t/y is planned for the PVC segment.

Polyglobe lists an impressive capacity for Sinochem: with plants for PP, ethylene, propylene and styrene, the company has an available production of 4.77m t/y, with plans for an additional 56,000 t of ABS compounds.

For comparison, Polyglobe says BASF's production capacity in the plastics sector is more than 17m t/y.