China's Oil Refiners and Petrochemical Giants Shift Investments to Produce Cutting-Edge Materials for Renewable Energy Technologies

In a bold move to capitalize on the surging demand for energy transition technologies, Chinese oil refiners and petrochemical companies are making substantial investments, amounting to tens of billions of dollars, in the production of high-end chemicals used in solar panels and lithium-ion batteries. This strategic shift highlights China's determination to reduce its reliance on imports and strengthen its position as a dominant force in the renewable energy and electric vehicle supply chains. The companies' endeavors pit them against major players like Dow Chemical, Exxon Mobil, and BASF in the race to secure key materials for the burgeoning clean energy market. Industry executives and analysts reveal that leading the charge in this transformation are companies such as Wanhua Chemical, Zhejiang Petrochemical Corp, Hengli Petrochemical, and state oil giant Sinopec Corp. See also: China's Q1 Renewable Energy Growth Impresses with 86.5% Surge in Installed Capacity Traditionally focused on producing basic petrochemicals for polyester fabrics and plastic packaging, these companies are now venturing into the manufacturing of high-value products, including polyolefin elastomers (POE) for protecting solar panel cells, ultra-high-molecular-weight polyethylene used in lithium-ion battery separators, and carbon fiber utilized in wind turbine blades. The motivation behind this strategic shift lies in the combination of overcapacity and sluggish demand for commodity chemicals, along with the rapidly expanding solar and electric vehicle industries in China. Kelly Cui, a principal analyst based in Shanghai and affiliated with the consultancy Wood Mackenzie, confirms these drivers are pushing companies to pursue high-end, high-performance materials. Moreover, the move aligns with Beijing's agenda to break through technological bottlenecks and strengthen domestic supply chains, while capitalizing on China's position as the world's leading manufacturer of electric vehicles, EV batteries, and solar panels. Notably, ZPC, Hengli Petrochemical, and Shandong Chambroad Petrochemical are each investing in multi-billion-dollar complexes to produce the new materials, with production expected to come online around 2025. Sinopec Corp, being the country's top refiner and basic chemicals producer, is channeling its investments towards high-end chemicals like ethylene vinyl acetate (EVA) for solar panels and large-tow carbon fiber used in aircraft and wind turbine shafts. See also: US Government Allocates $2.91 Billion for Battery Production and Recycling As Hengli Petrochemical's representative states, China has now moved past the stage of scarcity in bulk commodity chemicals, leading to a phase of cost competition. To adapt to the changing landscape, the company is establishing a chemical park worth 20 billion yuan ($2.77 billion) next to its petrochemical complex in Dalian, China. The new plant is set to manufacture engineering plastics, raw materials for bio-degradable plastics, electrolytes for lithium batteries, and plastics for battery separators. Meanwhile, Wanhua Chemical is also making strategic moves by dedicating a specialized battery technology unit and allocating a significant sum of 3.4 billion yuan to procure raw materials essential for anodes, cathodes, and electrolytes used in lithium batteries. A major focal point of China's endeavors is the production capacity for POE, a material crucial for solar panel encapsulation. Industry officials estimate that China's POE production capacity will surge to 1 million metric tons per year by 2025, representing an investment of around 20 billion yuan. The demand for POE is expected to expand at double-digit rates. Numerous companies, including units of Sinopec and PetroChina, are undertaking projects to build or enhance their POE capacity. This shift is aimed at partially replacing China's imports of POE, which have seen substantial growth over the past five years, reaching a record 690,000 tonnes worth 13.7 billion yuan in 2022, according to Chinese customs. See also: CATL Unveils Ultra-High Energy Density "Condensed Matter" Battery for Aviation and Electric Vehicles Despite China's dominant position in global solar capacity and photovoltaic encapsulant film manufacturing, it currently lacks local production of POE pellets. However, experts predict that Wanhua and Sinopec will become China's first commercial POE producers. ZPC, on the other hand, has ambitious plans to bring online a POE facility capable of producing 400,000 metric tonnes per year by 2025 or 2026, as disclosed by an official from Zhejiang's parent company, Rongsheng Petrochemical. With multiple companies planning POE plants, the competition to seize the market share is intense. Analysts warn that speed will be a decisive factor in determining the winners in this rapidly growing sector.

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China’s Oil Refiners and Petrochemical Giants Shift Investments to Produce Cutting-Edge Materials for Renewable Energy Technologies

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