How to interpret the overweight layout of the petrochemical industry after the expansion of the Zhejiang Free Trade Zone?

On September 22, at the press conference of the 2020 China International Petrochemical Conference, Tong Honggen introduced Ningbo's ideas and goals for developing the green petrochemical industry: At present, the Ningbo green petrochemical industry cluster has formed the Zhenhai Area (Petrochemical Economic and Technological Development Zone), There are three agglomeration areas including Beilun Area (Economic and Technological Development Zone) and Daxie Area (Daxie Development Zone)
.
Among them, the Petrochemical Economic and Technological Development Zone is a professional petrochemical park with the largest output value in the country, with the largest Zhenhai liquid chemical terminal and the largest refining and chemical enterprise in the country; Daxie Development Zone has initially built Wanhua Circular Economy Industrial Park, CNOOC Daxie Petrochemical Industrial Park and Donghua Energy Light Hydrocarbon Materials Park, the three ten-billion-level Lingang Industrial Parks, are the world's largest MDI production base and Asia's largest LPG storage and transfer base
.
)
.
The output value of the three major petrochemical agglomeration areas accounts for more than 90% of the total output value of the industry
.

Ningbo green petrochemical industry development foundation and advantages
.

Listed companies behind the green petrochemical industry

Before the expansion of the Zhejiang Free Trade Zone, there was also a larger layout for the green petrochemical industry within the jurisdiction of Zhoushan
.
The green petrochemical base located on Yushan Island in Zhoushan is a landmark project in the Zhejiang Free Trade Zone.
The first phase of the 20 million tons/year refining and chemical integration project has been put into operation at the end of 2019
.

In April this year, the reporter learned from the press conference of the Zhejiang Provincial Government that the second phase of the green petrochemical project with an annual output of 20 million tons of refining and chemical integration projects has been fully started, and the third phase is also being planned
.

It should be pointed out that the main operator of the green petrochemical base in Zhoushan is Zhejiang Petrochemical Co.
, Ltd.
(hereinafter referred to as Zhejiang Petrochemical)
.
The controlling shareholder of Zhejiang Petrochemical is Rongsheng Petrochemical (002493, SZ), which holds 51% equity of Zhejiang Petrochemical, in addition to Tongkun Shares (601233, SH), Juhua Investment, Zhoushan Marine Comprehensive Development and Investment Co.
, Ltd.
(hereinafter referred to as Zhoushan Haitou) and other capital parties
.

On the evening of September 18, Juhua Co.
, Ltd.
(600160, SH) announced that it intends to acquire a 20% stake in Zhejiang Petrochemical held by Juhua Investment by issuing shares and paying cash
.
If the acquisition of Juhua shares is successfully implemented, it will become the second largest shareholder after Rongsheng Petrochemical and tied with Tongkun Investment
.

Compared with the green petrochemical industry in Zhoushan, what are the characteristics of the green petrochemical industry in Ningbo? What are the differences in the development of the green petrochemical industry between the two cities across the sea?

Tong Honggen said in an interview with reporters that Ningbo's green petrochemical industry and Zhoushan's green petrochemical industry have both cooperation and possible competition
.
The green petrochemical base in Zhoushan is mainly developed by Zhejiang Petrochemical, which has expanded in many forms during the development process.
In Ningbo's green petrochemical industry, there are nearly 300 industrial enterprises above designated size, and there are many upstream and downstream enterprises
.
"We hope that different types of chemical products will be aggregated in an industrial chain
.
Therefore, enterprises including Zhenhai Refining and Chemical Co.
, Ltd.
will cooperate with different upstream and downstream suppliers according to different product needs
.
" Tong Honggen introduced
.

In August 2019, the list of the top 100 enterprises in Ningbo was announced, with Zhenhai Refinery at the top of the list
.
"Ningbo Daily" reported at that time that Zhenhai Refinery, which had been ranked first for 15 consecutive years, had a revenue of 113.
787 billion yuan last year (Note: 2018), an increase of 10.
610 billion yuan, an increase of 10.
28%
.
In 2019, the total output value of Ningbo petrochemical industry above-scale enterprises was 360 billion yuan.
Tong Honggen said that Zhenhai Refinery is also one of the main participants in the construction of Ningbo's green petrochemical industry, and there is currently a ten-billion-level project under construction
.
In addition, Ningbo also has a large number of local petrochemical projects such as Daxie Petrochemical, Ningbo Wanhua, Kingfa Technology, Zhongjin Petrochemical, and Yisheng Petrochemical
.

Regarding the development focus of green petrochemicals, Tong Honggen introduced that there are several main tasks: one is to promote the high-end extension of the industrial chain; the other is to strengthen the investment promotion of the industrial chain and the implementation of large projects
.
Aiming at the shortcomings of the petrochemical industry chain, aiming at leading international and domestic enterprises, we will strengthen the investment promotion of supplementary and strong chain projects; the third is to enhance the level of industrial innovation; the fourth is to promote the development of industrial recycling
.

China remains a key investment area for international chemical companies

How to understand the importance of the petrochemical industry?

Compared with the previous "talk about change and discoloration", the "just need for masks" after the outbreak of the new crown epidemic in early 2020 may make more people realize that petrochemical enterprises that provide raw materials for mask production have played such an important role in daily life.

.

Tong Honggen also mentioned in an interview that he hopes the green petrochemical industry can produce petrochemical products with higher added value
.
He gave an example.
Some car manufacturers in Ningbo produce plastic parts and components, and many of the raw materials are high-end chemical products imported from abroad.
He hopes that Ningbo's petrochemical products and car manufacturing can form a better industry in the industry.
Supplements and connections
.

On September 22, the International Exchange and Foreign Enterprise Committee of China Petroleum and Chemical Industry Federation (hereinafter referred to as the Foreign Investment Committee of the Petrochemical Federation) and Roland Berger Enterprise Management (Shanghai) Co.
, Ltd.
jointly released the "Global Petrochemical Multinational Corporation Strategic Development Research White Paper".
"
.
The white paper shows that China is still a key investment area for the international petrochemical industry
.
Thanks to the continuous improvement of the business environment by the Chinese government, in July 2018 and June 2019, the state successively issued policies to encourage the development of the petrochemical industry and foreign investment.
Under the dual attraction of the market and policies, international chemical companies have increased their investment in China
.

Global M&A Trends in Petrochemical Industry 

Zhu Liangwei, Deputy Secretary General of the Foreign Investment Committee of the Petrochemical Federation

Zhu Liangwei, deputy secretary-general of the Foreign Investment Committee of the Petrochemical Federation, said that from the trend of mergers and acquisitions, the value of mergers and acquisitions has continued to grow in the past three years, but the number has declined
.
As far as transaction purposes are concerned, the current mergers and acquisitions of multinational companies are still dominated by strategic investors
.
In general, the M&A volume of multinational companies has decreased and prices have increased.
Asia is the most active region for M&A transactions.
In 2019, Asian M&A transactions accounted for 56% of the global transaction value and 54% of the transaction volume
.

Asia is the region with the most active mergers and acquisitions of petrochemical multinationals
.

There are three main directions for M&A by multinational companies: first, focus on core business to form scale advantages; second, strengthen and extend the industrial chain, such as ChemChina's acquisition of Syngenta; third, invest in new energy
.

The direction of investment and mergers and acquisitions of multinational companies
.