Project to lift chemical materials supply

China's largest petrochemical base, the newly completed Daxie Petrochemical refining and chemical integration project in Ningbo, Zhejiang province, is expected to significantly boost domestic supply of key chemical materials, company executives and industry experts said.

The nation's petrochemical industry is showing strong signs of recovery, driven by rising domestic demand and robust government support, they added.

China National Offshore Oil Corp announced the completion of the project on Friday. As the largest of its kind in China, the 21 billion yuan ($3.2 billion) project is expected to further fuel the recovery of the nation's petrochemical industry, the company said.

The project, which also utilizes domestically developed technology for direct cracking of heavy oil to produce chemicals, will produce 1.2 million metric tons of polymer-grade ethylene and propylene per year, making it the largest single heavy oil direct conversion unit for polymer-grade olefins in the country, it said.

The high-purity ethylene and propylene produced are essential raw materials for everyday products such as mineral water bottles, food packaging and synthetic clothing.

Industry experts believe that the project will significantly improve China's capacity for efficient conversion of heavy oil and enhance the self-sufficiency of high-end chemical materials.

"By focusing on advanced materials and specialty chemicals, Chinese companies are capturing demand in sectors with higher margins," said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

"The shift is both a response to the growing global preference for sustainable and high-performance products and a way to ensure better returns amid increased competition."

Lin believes that, despite intensifying international competition, China's comprehensive industrial system, vast market size, and ongoing investments in innovation and infrastructure provide a strong competitive advantage.

As China adapts to the global energy transition, its petrochemical industry is expected to emerge as a more sustainable, innovative and globally integrated powerhouse, he said.

China's petrochemical industry is also investing heavily in green technologies and circular economy practices, aligning with the country's broad environmental goals and the global push to reduce carbon emissions, according to Fu Xiangsheng, vice-president of the China Petroleum and Chemical Industry Federation.

The federation has forecast China's petrochemical sector to bolster its profits this year, a key turning point after a period of challenges.

The sector's revenue rose to 16.28 trillion yuan ($2.24 trillion) last year, a 2.1 percent year-on-year increase, signaling a turning point after a period of headwinds.

The Daxie project stands out for its reliance on domestically developed technology for the direct cracking of heavy oil to produce chemicals.

The core production unit boasts a 100 percent domestic technology adoption rate, highlighting China's growing technological prowess in the sector.

CNOOC said the project is expected to significantly improve China's capacity to efficiently convert heavy oil and boost the self-sufficiency of high-end chemical materials. This is particularly important as the global chemical sector faces structural shortages in high-end products, such as new chemical materials and high-end fine chemicals.

Chinese oil refiners and petrochemical companies, including State-owned giants China Petroleum and Chemical Corp, or Sinopec, and China National Petroleum Corp, are increasingly focusing on technological innovation and supply chain advantages to expand their global market share. They are particularly eyeing opportunities arising from growing demand for energy transition technologies.

Analysts said that the shift toward high-end chemicals will be a key driver of improved profit prospects for Chinese petrochemical firms in 2025.

Fu emphasized the importance of China's massive domestic market, which provides a strong foundation for growth. "China is not only the world's largest consumer of petrochemical products, but also a critical hub for global supply chains," he said.

The Belt and Road Initiative is also creating new opportunities for Chinese petrochemical firms to expand into emerging markets through joint ventures and strategic partnerships, he said.

"Chinese firms are tapping into new revenue streams by forging partnerships and joint ventures across Southeast Asia, Africa, and Latin America."