Sinochem Plastics transitions into production

Sinochem Plastics is transitioning into a producer after more than 30 years in the chemical trading and distribution business, with a plan to build an acrylonitrile butadiene styrene (ABS) compounding plant in China, a high-ranking official of the Chinese company said.

The company, which was founded in 1988, has evolved from an importer to a trader to a distributor, and has recently acquired production units in Spain.

“Investment and acquisition will be our focus in [our] transition to a producer,” Sinochem Plastics general manager Zhang Xiaolei told ICIS.

Early this year, the company – through its parent company Sinochem International – completed the acquisition of Spanish ABS producer Elix Polymers, which has a 170,000 tonnes/year of nameplate capacity with actual production at 120,000 tonnes.

Zhang said Elix has a market share of about 40% in the Europe ABS specialty market.

“First, we will import into China Elix’s ABS products, which are all special grades that feature high-end applications. Next, we will explore the possibility of localising Elix’s proprietary know-how into compounding production in China,” Zhang said.

The company is currently in the process of selecting a site for the ABS compounding plant in China, he said.

“We see big potential in 5G technology and medical applications for modified ABS in China in the future, and demand from [the] medical [sector] would be particularly strong,” Zhang said.

ABS demand is projected to grow at a compounded annual growth rate (CAGR) of 5% between 2019-2024, based on the company’s estimates.

NEW PRODUCT FOCUS

Sinochem Plastics’ transition into a manufacturer from a distributor marks another milestone in the company’s innovation, Zhang said.

“We’re not moving to produce everything, but only those advanced materials with high technology barriers and huge market potential,” he said.

Aside from ABS, Sinochem Plastics is also interested in developing other materials such as biodegradable plastics and graphene products.

On 27 May 2019, the company signed a memorandum of understanding with Yuyao PGS New Material Technology and US XG Sciences to jointly develop graphene-modified material. An application centre will be set up in Ningbo for this purpose.

Despite challenging business conditions, marked by a weakening Chinese economy and slumping automotive market, the company’s revenues have continued to grow, Zhang said.

Sinochem Plastics’ revenues in 2018 stood at Chinese yuan (CNY) 20.1bn ($2.9bn), up from CNY15bn in 2017 and CNY12.5bn in 2016.

Meanwhile, the company is exploring opportunities in countries participating in China’s belt-and-road initiative, to grow its business.

“These countries have affluent agricultural resources to produce grease and bio-chemicals. Such non-petroleum green and natural products are increasingly popular in China,” Zhang said.