SABIC moves ahead with $6.4 bil petrochemicals project in China

SABIC, the Middle East's biggest petrochemicals producer, announced the final investment decision for its $6.4 billion petrochemicals complex in Fujian, China.

The FID will allow SABIC to move ahead with its 49%-stake partner Fujian Fuhua Gulei Petrochemical to build the project with a mixed feed steam cracker with production capacity of up to 1.8 million mt/year of ethylene, along with ethylene glycol, polyethylene, polypropylene and polycarbonate, SABIC said in a Jan. 22 statement to the Saudi stock exchange.

SABIC started considering the project in September 2018 when it signed a memorandum of understanding with the Fujian Province.

SABIC, which is 70% owned by Saudi Aramco, controls the other 51% of the petrochemicals project.

Construction is expected to begin in the first half of this year, with startup in the second half of 2026 to last for six months, SABIC said.

"This project aims to support SABIC's aspiration in diversifying the company's feedstock sources and expanding its manufacturing presence in Asia as a key market for a wide range of products," SABIC said, adding that Aramco Trading is a "related party."

Global demand

Global ethylene demand will grow 3.1%/year by 2027, with consumption in northeast Asia up 3.9%/year and in Africa up 14%/year, according to a September report by S&P Global Commodity Insights. China has added more than 220 million mt of primary petrochemical capacity since 2000, it noted.

Ethylene capacity has grown from new plants in North America and northeast Asia, leading to declining operating rates during the past three years, according to the report. In 2022, the global industry-wide utilization rate was estimated at about 85%. Global ethylene trade is usually in the form of its derivatives, such as polyethylene, PVC and ethylene oxide and ethylene glycol.

Several Saudi companies, including Saudi Aramco and SABIC, have petrochemical investments in China, where demand for these products was set to rise before COVID-19.

In January, Aramco and Rongsheng Petrochemical announced talks for the Chinese private refiner to buy a 50% stake in Saudi Aramco's Jubail refinery. Rongsheng is also negotiating to sell Aramco an up to a 50% stake in its unit Ningbo Zhongjin Petrochemical, allowing the two sides to upgrade the existing facilities and jointly develop Rongsheng's new materials project.

SABIC also last year started commercial operation of its new polycarbonate plant at the Sinopec SABIC Tianjin Petrochemical joint venture.