Metallurgy / Chemicals / Rubber & Plastics

On October 21, German Prime Minister Schultz announced after the EU Summit that he would lead a delegation of German enterprises to visit China early next month. European media pointed out that Schultz was the first European Union leader to visit China since November 2019. The day before, the 2022 China Germany Economic Cooperation Forum and the China Germany (Changzhou) Innovation Industrial Park Promotion Conference were held in Frankfurt, Germany. Zhu Weige, Economic and Commercial Consul of the Chinese Consulate General in Frankfurt, said that the bilateral trade volume between China and Germany will reach 245 billion euros in 2021, and China has become Germany's most important trade partner for six consecutive years. He said that at present, more than 5000 German enterprises are developing in China. By the end of 2021, Germany's direct investment in China has exceeded 90 billion euros. At the same time, there are more than 3000 Chinese enterprises in Germany. At present, Germany's direct investment in China continues to increase, and Huacheng's import and export data observation report.

In the past two years, both the economic changes brought about by the spread of the epidemic and the escalating geopolitical conflict between Russia and Ukraine have plunged Europe into a "cold winter". The energy and chemical industry is facing a huge test of life and death, which affects the investment plans of multinational chemical enterprises. Against this background, many multinational chemical giants continue to be optimistic about the Chinese market and begin to increase their project investment in China.

Among transnational enterprises, German chemical enterprises are the most active in investing in China. On October 11, BASF Group of Germany planned to invest in the BASF (Guangdong) Integrated Base Project to build a new world-class neopentyl glycol (NPG) plant with an annual output of 80000 tons, which is expected to be put into production in the fourth quarter of 2025. According to Huacheng's import and export data observation report, the previous September 15, after more than four years of hard progress, BASF Group and China Chemical Engineering Group signed a framework agreement on construction partners in Zhanjiang, Guangdong, to jointly promote the construction of BASF (Guangdong) integrated base project. The BASF (Guangdong) integrated base project invested by BASF Group in Zhanjiang, Guangdong, has a total investment of 10 billion euros, which is the largest foreign investment ever made by BASF. After being put into production, Zhanjiang, Guangdong will become the third largest integrated production base of BASF in the world.

Other German enterprises also actively participate in investment. Only in the near future, Covestro has invested tens of millions of euros to build two new plants in the Shanghai Integrated Base to produce waterborne polyurethane dispersions (PUD) and elastomers respectively. The new PUD plant and its supporting resin production line will be completed in 2024, and the new elastomer plant is expected to be put into operation in 2023. Evonik announced to upgrade its R&D base in Shanghai Xinzhuang Industrial Park, and officially renamed Evonik Shanghai Innovation Park. After upgrading, Shanghai Innovation Park will integrate basic research, product development, process development, experimental factory, application technology, testing and analysis services and venture capital activities. Merck's first production base of organic LCD coating materials in China was completed and put into operation in Jinqiao, Pudong, Shanghai.

According to Huacheng Import and Export Data Observation, among other European enterprises, Clariant, headquartered in Switzerland, announced on October 20 that it would invest 40 million Swiss francs in its Exolit OP halogen-free flame retardant factory in Daya Bay to build a second production line. The high-tech factory, which costs 60 million Swiss francs, is currently under full construction. Clariant strives to push forward according to the original schedule, that is, it will be put into operation in Daya Bay around the middle of 2023, and the second production line will be put into use in 2024. Ineos has signed a series of agreements with PetroChina and Sinopec. The total capacity of the assets involved in these agreements is 7 million tons per year, worth nearly 7 billion US dollars, including the establishment of a 50:50 joint venture to produce acrylonitrile butadiene styrene copolymer (ABS) with its unique technology. Akzo Nobel announced that its East China decorative paint logistics base in Songjiang, Shanghai, was officially started and will be officially put into use in June 2023. The logistics base, with an investment scale of about 75 million yuan, is located in Shanghai Songjiang Decorative Paint Factory and is expected to become the largest logistics base of Akzo Nobel in China after completion. The third phase project of PPG Paint (Zhangjiagang) Co., Ltd., a wholly-owned subsidiary of PPG in China, is planned to be completed and put into production in April next year. The total investment of the project is 75 million US dollars, covering an area of 174 mu. When the project reaches its capacity, it will have an annual production capacity of 145000 tons of high-performance coatings and 5000 tons of polyvinyl chloride (PVC) sealant.

In recent years, China's opening door has become wider and wider, and the business environment has become better and better. The implementation of the Foreign Investment Law of the People's Republic of China, as well as many important open initiatives such as free trade zones and international trade fairs, all reflect China's determination to become a new highland for scientific research innovation and business environment. China accounts for 40% of the global chemical market. Promoting high-level opening up is not only a need for China's development, but also a need for world development. In recent years, the rapid growth of demand for high-end chemicals, especially new materials, is far greater than the increase of supply. It is natural that foreign investment in China's chemical deep-processing production lines in China.

According to the Huacheng Import and Export Data Observation Report, apart from European enterprises, Asahi Huacheng, headquartered in Japan, announced on October 11 that it had decided to introduce high-precision extruders into its resin composite manufacturing plant in Changshu, Jiangsu Province, to expand production capacity, and decided to increase strategic investment in functional materials industry. SK Chemical, a South Korean chemical company, said that it had purchased 10% of the equity of Tree Industry Environmental Protection Company, a Chinese polyester waste recycler, for 23 billion Korean dollars. Mitsubishi Chemical (China) Management Co., Ltd. signed a contract with the Administrative Committee of Suzhou Hi tech Zone to set up a Mitsubishi Chemical Shared Service Center in the zone to intensively manage its business in China.

At the same time, Goldman Sachs, JPMorgan Chase and other large Wall Street banks and other well-known investment companies have recently made their voices heard, highlighting the attractiveness of China's equity assets. Many senior executives of foreign institutions and well-known investors said that they are willing to become long-term investors in China, and they will steadily develop in the Chinese market towards long-term goals, Huacheng Import and Export Data Observation reported.