Communicator

Aerial view of the Jiangyin Port City Economic Zone | Baidu, Sep 9, 2025

The Petrochemical Revolution: How Fujian Zhongjiang's Backward Integration Across the C₃ Value Chain Exemplifies Strategic Transformation in Global Petrochemicals

The global petrochemical industry is undergoing a fundamental transformation as companies across the plastic conversion sector embark on unprecedented backward integration strategies, fundamentally reshaping the traditional boundaries between refining, chemicals production, and downstream processing. This strategic shift represents more than incremental expansion; it signals a complete reimagining of how value chains operate in an era of supply chain volatility, margin compression, and the relentless pursuit of operational efficiency.

The Economics of Scale and Integration

The modern petrochemical landscape has become defined by the economics of mega-scale operations, where companies are discovering that vertical integration offers compelling advantages over traditional market-based transactions. Already, more than 30% of the world's refineries are now integrated with commodity petrochemicals, creating sites that benefit from both diversified product portfolios and enhanced operational synergies. This integration trend has been particularly pronounced in Asia, where approximately 70% of polypropylene plants by capacity are now integrated back to steam cracking or propane dehydrogenation sources of propylene.



CATOFIN PDH Reactors | Photo: Clariant

The financial rationale driving this integration is clear when examining the transaction cost economics that govern petrochemical operations. Companies are finding that the coordination efficiency gained through vertical integration significantly reduces the transaction costs associated with intermediary relationships, while simultaneously providing greater control over quality standards and supply chain reliability. The scale advantages are particularly evident in propane dehydrogenation operations, where single-unit capacities have expanded dramatically, with most recent facilities now reaching the impressive nameplate capacity of 900 thousand tonnes per year of propane.

China's Strategic Transformation and Global Implications

China's chemical industry expansion has become the defining force reshaping global petrochemical dynamics, with the country pursuing aggressive backward integration strategies that extend from plastic conversion all the way to crude oil refining. Chinese enterprises in the polyester value chain, including companies like Hengli, Shenghong, and Hengyi Petrochemical, have established massive refinery and integrated petrochemical complex projects that demonstrate the strategic imperative of securing upstream feedstock sources. This transformation is exemplified by companies that initially established themselves as textile manufacturers but have systematically integrated backward through purified terephthalic acid (PTA) production, paraxylene (PX) manufacturing, and ultimately into crude oil refining.



Ethylene production map centered on Eurasia | Source: portfolio planning PLUS

The scale of China's capacity expansion defies traditional market logic, with ethylene nameplate capacity increasing from approximately 26 million tonnes per year in 2019 to 54 million tonnes by 2024, more than doubling over the six-year period, with a further capacity increase expected to reach 66 million tonnes by 2025 according to industry estimates. China's ethylene and propylene capacity in 2025 is forecast to be 121% and 179% more than local demand respectively, creating structural oversupply that forces Chinese producers to seek international markets for their excess production. This capacity buildup has been facilitated by China's demonstrated ability to construct petrochemical facilities approximately 40% faster than international competitors, with paraxylene plants being completed in around 30 months compared to 48 months elsewhere, while also maintaining capital costs that are approximately 20% lower than the rest of Asia.

The Fujian Zhongjiang Model: From BOPP to Integrated Petrochemicals

The evolution of Fujian Zhongjiang Petrochemicals Group represents a paradigmatic case study in strategic backward integration within the C₃ value chain. The company's transformation from its origins as a biaxially oriented polypropylene film producer to a fully integrated propane-to-polypropylene operator demonstrates how specialized downstream companies can achieve remarkable operational synergies through systematic upstream expansion. Beginning as "the world's film king" in the BOPP sector, China Flexible Packaging Group recognized the vulnerability inherent in depending on volatile propylene markets and embarked on a methodical integration strategy that now spans from LPG import terminals through propane dehydrogenation to polypropylene production and finally to BOPP film manufacturing.



Fuzhou Propane Cryogenic Tank Storage | Seatao, May 29, 2023 

This integration model has enabled the company to achieve unique operational advantages, including circular hydrogen utilization where byproduct hydrogen from propane dehydrogenation fuels adjacent chemical units, reducing operational costs by approximately 15%. The company's current integrated structure encompasses:

• LPG import terminals with 1 million cubic meter storage capacity and an annual throughput capacity of 4 million tonnes
• Propane dehydrogenation plants with 2.5 million tonnes per year propylene capacity using Lummus CATOFIN and Honeywell UOP Oleflex technologies
• Polypropylene plants with 2.2 million tonnes per year capacity via LyondellBasell's Spheripol and SINOPEC ST-PP technologies
• BOPP film lines with 900,000 thousand tonnes per year capacity.

This level of integration allows the company to maintain 40% captive BOPP consumption while simultaneously supplying regional injection molding clusters, demonstrating how backward integration can create both supply security and market flexibility.

Technology and Process Innovation Driving Integration

The technological foundation enabling these massive integration projects has evolved significantly, with process innovations making large-scale operations both technically feasible and economically attractive. In polyethylene production, the latest advances exemplified by Univation's 800,000 tonnes per year UNIPOL PE Process and Chevron Phillips Chemical's MarTech single-loop slurry process deploying 1,000,000 tonnes per year HDPE lines demonstrate how reactor engineering and process optimization have redefined the limits of scale and flexibility. These technological advances are not merely incremental improvements but represent fundamental breakthroughs in managing the intense heat and mixing requirements of high-throughput polymerization while maintaining operational reliability and efficiency. Polypropylene production has witnessed comparable scale expansions, with Fujian Zhongjiang's integrated facilities demonstrating the progression from initial 500,000 tonnes per year production lines to the current world-scale 600,000 tonnes per year units utilizing LyondellBasell's Spheripol technology.



Fujian Meide Petrochemical Fuzhou complex | Baidu, Nov 2023

More dramatic scale increases are now seen at the origin of the C₂ and C₃ value chains. As we previously reported, ethane cracking facilities are now reaching ethylene production capacities of 2.1 million tonnes per year. The propane dehydrogenation sector is experiencing a similar technological evolution, with catalyst systems lying at the heart of process economics. The scale of PDH operations has now reached unprecedented levels, with individual units achieving 900,000 tonnes per year capacity, as demonstrated by Fujian Meide's facility that commenced operations in May 2025 and Fuzhou Wanjing's unit scheduled for startup later in 2025, both utilizing Lummus CATOFIN technology with specialized Clariant catalysts. Advanced PDH technologies now routinely operate at temperatures between 480-600°C under low pressure conditions, achieving propylene yields and selectivity that make large-scale operations economically viable even in regions with higher feedstock costs. The development of these technologies has been crucial in enabling companies to pursue backward integration strategies, as the improved economics of PDH operations make it feasible for downstream plastic producers to justify the substantial capital investments required for upstream expansion.

Strategic Implications and Future Trajectory

The acceleration of vertical integration in the petrochemical sector reflects broader strategic imperatives that extend beyond simple cost optimization. Companies are recognizing that integration provides critical protection against supply chain disruptions, market volatility, and competitive pressures that have intensified in recent years. The consolidation dynamics within different specialty chemical segments are driving companies to focus their portfolios while simultaneously optimizing their business models through strategic integration.



Zhongjing Petrochemical Group facilities in Jiangyin Industrial Zone | Chenhr

The implications of this integration trend extend to global trade patterns and competitive dynamics, as integrated producers gain significant advantages over standalone operations. The economic benefits of integration become particularly pronounced during market downturns, when integrated refinery-petrochemical sites consistently outperform their fuels-only peers due to their diversified revenue streams and operational flexibility. This performance differential is driving further consolidation as companies recognize that scale and integration have become essential requirements for long-term competitiveness in the evolving petrochemical landscape.

The future trajectory of the industry suggests that this integration trend will continue to accelerate, driven by the fundamental economics of large-scale operations and the strategic advantages of supply chain control. As companies like Fujian Zhongjiang demonstrate, successful integration requires not merely the ability to execute large capital projects, but the strategic vision to create synergistic value across the entire value chain while maintaining operational excellence at each stage of production. The companies that master this integration challenge will likely emerge as the dominant players in the next phase of global petrochemical industry evolution.


This article includes market data from WoodMckenzie, S&P Global, ICIS, Argus Media and other sources.

#refinerieintegration  #backwardintegration  #ethylene  #propylene  #valuechain  #lyondellbasell  #lummus  #uop  #honeywell  #sinopec  #technip 

INEOS' Project One site in Antwerp has already received its first major ‘landmark’: the ethane tank | INEOS, 5 June 2024

Antwerp, Belgium – June 10, 2025

INEOS has officially announced that its landmark €4 billion Project ONE ethane cracker in the Port of Antwerp has reached 70% completion, marking a major milestone for what is described as Europe’s largest chemical investment in a generation.

The announcement was made during a site visit by Belgian Prime Minister Bart De Wever, hosted by INEOS Chairman Sir Jim Ratcliffe. The event highlighted the scale and significance of the
project, which now employs over 2,500 workers on site as construction activity peaks.

"The visit marks a significant milestone for the project, which has now reached 70% completion and employs over 2,500 people on site. Construction is progressing at full pace, with major equipment, including giant furnaces and modular plant components, already installed. Civil works are nearing completion, and utility integration is well underway,” the official INEOS statement reads.

Commissioning and Outlook

Commissioning of Project ONE is scheduled to begin in autumn 2025, with mechanical completion anticipated by the end of 2026. Start-up of the facility is targeted for early 2027. The project is expected to create 450 high-quality permanent jobs and thousands more during the construction phase.

Sustainability and Innovation

Project ONE is designed to set new standards for sustainability in the European chemical sector. The ethane cracker will have a carbon footprint less than half that of the best-performing steam crackers in Europe, thanks to advanced technologies such as ultra-low NOx burners and the capacity to operate on low-carbon hydrogen from day one. The facility will be able to meet 60% of its heat demand with low-carbon hydrogen, with the potential to switch to 100% hydrogen as supply becomes available.

Strategic Importance

Sir Jim Ratcliffe emphasized the project’s strategic importance for Europe’s industrial future, noting that Project ONE is the first new cracker in Europe in a generation. Prime Minister Bart De
Wever praised the project’s progress and its role in reducing CO₂ emissions while supporting the region’s prosperity.

Conclusion

With 70% of construction completed and commissioning on the horizon, Project ONE is on track to transform the industrial landscape of Antwerp and set a benchmark for sustainable chemical production in Europe. The project continues to attract attention as a model for innovation, sustainability, and economic growth in the region.

#cracker  #steamcracker  #gascracker  #projectone  #ineos  #belgium  #antwerp  #technip 

$5.2 Billion Vietnamese Project Records $304 Million Loss in 2024, Continues to Weigh Heavily on SCG’s Financial Results in Early 2025

The Long Son Petrochemical Complex (LSP), Vietnam’s first fully integrated petrochemical facility, has experienced a turbulent launch and operational trajectory since its much-anticipated commercial start-up in late 2024. This article aggregates the latest developments, contextualizes them within broader industry trends, and references previous communications that highlighted both optimism and early warning signs.

Background and Launch

Long Son Petrochemicals Co., Ltd., located in Ba Ria-Vung Tau and wholly owned by Thailand’s SCG Chemicals (a subsidiary of SCG Group), represents a $5.2–5.4 billion investment and is designed to produce 1.55 million tonnes of polyolefins (polyethylene and polypropylene) annually. The complex includes a world-scale, so-called Flex Feed Cracker with a capacity of 998,000 tonnes of ethylene, 500,000 tonnes of propylene, and 101,000 tonnes of butadiene per year, using naphtha, LPG, and soon, ethane as feedstock.

*Data from the Long Son Environmental Permit (in Vietnamese Language) dated August 30, 2023.

Interactive Process Flow Chart of Long Son Petrochemical Complex based on 2023's Environmental Permit Data | Unique Feature available only on Portfolio Planning PLUS Platform.

After years of construction and trial runs, LSP officially began commercial operations on September 30, 2024. The launch was heralded as a transformative step for Vietnam’s plastics and downstream manufacturing sectors, reducing reliance on imports and boosting local industry competitiveness.

Operational Suspension and Financial Losses

Despite the high-profile start-up, LSP suspended operations in mid-October 2024—just two weeks after commercial production began. This abrupt halt was attributed to:

• High production costs: Naphtha, the primary feedstock, remained expensive amid volatile crude oil prices.
• Weak global demand: A global downturn in the petrochemical market, exacerbated by oversupply and sluggish downstream demand, led to poor product margins.
• Low chemical spread: The spread between naphtha and polyethylene/polypropylene prices dropped to $300–$343 per tonne, below the threshold for profitable operations.

SCG Chemicals reported a staggering loss of $303.6 million from LSP in 2024, with monthly expenses at the complex reaching $35.5 million—40% of which are non-cash items like depreciation. The financial drag from LSP sharply reduced SCG’s consolidated profit, even as its other businesses remained profitable.

Capacity Questions and Technical Details

Our prior communication raised questions about the actual cracker capacity and the interpretation of trial run figures, whereby we issued a mass balancing challenge that still awaits contributions from users of the PPPLUS Platform.

Various data sources have reported diverging plant capacities for both the cracker and the downstream plants. In addition, calculated feedstock requirements to match the reported ethylene and propylene outputs are not making any sense in terms of cracker capacity. The figures we have used to generate the site's mass balance and process flow chart are taken from the Long Son Environmental Permit (in Vietnamese Language) dated August 30, 2023. During the brief operational window, initial output was reported at 74,000 tonnes—well below nameplate, reflecting the ramp-up phase and subsequent shutdown.

Strategic Adjustments and Future Plans

SCG has not abandoned the project. Instead, it is adapting the business model to address structural challenges:

• Feedstock flexibility: LSP is being retrofitted to use imported ethane as a primary feedstock, which offers better margins than naphtha. The company plans to invest an additional $400–700 million to enable the cracker to use up to two-thirds ethane, with completion targeted by end-2027.
• Cost management: SCG is implementing group-wide cost reductions and discontinuing unprofitable businesses, aiming to save 5 billion baht and cut working capital by 10 billion baht by early 2025.
• Potential restart: With recent improvements in polyolefin-to-feedstock spreads (averaging $396/t in April-May 2025), SCG is considering restarting LSP as early as August 2025, contingent on further margin recovery and market stability.

Long Son Petrochemical Complex Assets | Market Intelligence by Portfolio Planning PLUS

Market and Policy Environment

Vietnam’s government has signaled support for LSP’s expansion, promising to streamline procedures and facilitate stable gas imports, including ethane from the U.S.. However, the domestic market remains under pressure from competitive international polyolefin imports and subdued export demand.

Summary on Key Facts and Timeline

• Sep 30, 2024 - Commercial Start-up: Official launch of Vietnam’s first integrated petrochemical complex in Vietnam.
• Mid-Oct 2024 - Suspension of Operations: Halted after two weeks due to poor margins and high costs.
• Full Year 2024 - 2024 Financial Loss: $303.6 million loss from LSP; group profit slashed.
• 2025 - 2027 - Upgrade/Expansion Plans: $400–700 million investment to enable ethane feedstock; expansion under review.
• August 2025 (TBC) - Potential Restart: Dependent on market spreads and demand recovery.

Outlook

The Long Son Petrochemical Complex exemplifies both the promise and pitfalls of mega-projects in volatile global markets. While its technical capabilities and strategic significance remain intact, the project’s near-term viability hinges on market recovery, successful feedstock diversification, and continued government support. SCG’s willingness to invest further and adapt its strategy suggests a long-term commitment, but the road to profitability remains challenging and closely watched by industry observers.

#technipenergies  #basf  #mitsuichemicals  # univation #unipol  #hypol  #steamcracking  #lsp  #steamcracker  #vietnam  #crackerfeedstock  #massbalance  #longson  #scg 

SP Chemicals Gas Cracker. Credit: SP Chemicals.

Taixing, Jiangsu Province, China – May 2025

SP Chemicals, a leading Chinese petrochemical producer, has announced plans to significantly increase its use of ethane as feedstock at its flagship complex in eastern China, reflecting a broader industry move to cut costs and enhance competitiveness amid global oversupply and squeezed margins.

Ethane Utilization Set to Rise

Currently, SP Chemicals’ cracker in Taixing operates with ethane as about 75% of its feedstock. The company is now studying an increase to as much as 90% ethane utilization, according to CEO Chan Hian Siang. This shift is being evaluated in partnership with Technip, a global engineering firm, and would make SP Chemicals one of the most ethane-intensive operators in Asia.

Ethane, a derivative of U.S. shale gas, is typically cheaper than the more commonly used naphtha. With U.S. ethane exports projected to grow by 7% in 2025 and China recently waiving its 125% tariff on U.S. ethane imports, the economics for ethane cracking have become even more favorable. SP Chemicals sources its ethane primarily from Enterprise Products Partners, a major U.S. supplier.

Infrastructure Expansion

To support the increased ethane use, SP Chemicals will invest between 400 and 500 million yuan (approximately $56–69 million) to construct a new 200,000-cubic-meter ethane storage facility at the Taixing site, nearly doubling current storage capacity. The company also plans to build three new Very Large Ethane Carriers (VLECs) by 2028 to secure long-term supply logistics.

Industry Context

The move comes as Asian petrochemical producers face thin profit margins and global oversupply. Flexible crackers—those able to process both naphtha and ethane—are seen as best positioned to weather market volatility. Other regional players, such as South Korea’s YNCC and Thailand’s PTT Global Chemical, are also ramping up ethane use to maintain cost competitiveness.

SP Chemicals was the first in China to operate a fully gas-based ethylene cracker, starting up its 650,000 tpa (now 780,000 tpa) facility in 2019. The cracker supplies ethylene to the company’s vinyl chloride monomer (VCM) and styrene units, as well as the merchant market.

Strategic Impact

By increasing ethane utilization, SP Chemicals aims to:

• Lower feedstock costs and improve margins in a challenging market.
• Enhance operational flexibility and resilience.
• Secure long-term supply through expanded storage and shipping.

CEO Chan Hian Siang noted that “ethane remains cheaper than alternative feedstocks,” underscoring the company’s commitment to cost leadership and innovation.

Outlook

SP Chemicals’ investment in ethane infrastructure and feedstock flexibility positions it at the forefront of China’s petrochemical sector transformation. As U.S. ethane exports rise and China’s demand for cost-competitive chemicals grows, the company’s strategy is likely to set a benchmark for the region’s evolving industry landscape.

#spchemical  #china  #taixing  #crackerfeedstock  #ethane  #gascracker  #technip  #enterpriseproductspartners  #yncc  #ptt 

Renewable Fuel Plant and SAF production added.

#sustainability #saf  #sustainableaviationfuel  #hydrocracking  #fatsandoils  #biodiesel  #renewablennaphtha  #thenetherlands  #rotterdam  #nestle  #technipenergies  #biorefinery 

Lukoil Stravolen petrochemical producer has been created, some of the technologies added with known capacities.


#lukoil  #stravolen  #univation  #unipolpe  #grace  #unipolpp  #ethyleneplant  #steamcracker  #technip 

Kazanorgsintez PJSC company and its manufacturing site have been created. Multiple assets have been added. 

#ethyleneplant #technip  #univation  #unipol  #ldpe  #autoclave  #highpressure  #russia  #kazan 

Dec 16, 2024 | Phillips 66 News Release

Two world-scale joint venture projects being developed by Chevron Phillips Chemical Company (CPChem) and QatarEnergy remain on track to start operations in 2026, Phillips 66 said on Monday. Phillips 66 and Chevron hold equal stakes in Chevron Phillips Chemical.

The US project is Golden Triangle Polymers, an integrated polyethylene (PE) complex in Orange, Texas. Chevron Phillips holds a 51% stake, and construction started in 2023.

The Qatari project in Ras Laffan is another integrated PE project. It is a 70:30 joint venture between QatarEnergy and CP Chem. Construction on this project started in 2024.

Remarquably, these two ethane crackers employing Technip tecnology will be the world's two largest, producing each above 2 Mt/a of ethylene when they are starting up, and each of the two CPChem MarTECH Single Loop polymerization plants also the world's largest with an output of 1 Mt/a of HDPE each at Golden Triangle and 850 Kt/a each at Ras Laffan.


#phillips  #chevron  #qatarenergy  #cpchem  #technip  #martech  #slurryloop  #ethylene  #polyethylene  #raslaffan  #goldentriangle  #steamcracking

A detailed description of Project ONE is now provided, which includes details about location,  logistics and mobility. ethane cracker technology, and utilities.
 

#co2emissions #emissions  #carbonfootprint  #sustainability  #ethane  #gascracker  #technip  #ineos  #antwerp  #belgium  #pipeline 

PE, PP, steam cracking, RFCC technologies and their production capacities have been identified. Mass balance improvement performed.


#unipolpp  #martech  #dualloop  #martechadl  #technip  #rfcc  #wrgrace  #cpchem 

 

Lummus Catofin catalytic dehydrogenation and Technip Lliquid steam cracker plants have been added together with their main productions.


#dalian  #hengli  #china  #liaoning  #catofin  #pdh  #dehydrogenation  #propene  #ethylene  #isobutene  #steamcracker  #liquidfeed  #technip 

On Oct 1st, 2024, Technip Energies announced that the Long Son Petrochemicals Co., Ltd. (LSP) olefins plant in Long Son Island, Ba Ria-Vung Tau province,  Vietnam, passed its final performance acceptance test.

Technip Energies provided licensing, engineering, procurement, construction, commissioning, start-up and initial operation for the 1,350,000 tonnes/year cracker. As Vietnam’s first olefins plant, the flexible feed cracker, can utilize both naphtha and liquified petroleum gas (LPG) feeds to produce ethylene, propylene, and butadiene.

The plant successfully started up end 2023 to reach its full capacity shortly after the start-up and pass its first performance test in February 2024. The plant, which broke ground end 2018, includes Technip Energies’ licensed ethylene technology, including Ultra Selective Conversion (USC®) furnaces preferred for high selectivity and low cost, and the Heat-Integrated Rectifier System®, preferred for energy efficient ethylene recovery.

However, Listed Siam Cement Group (SCG), Thailand's largest cement maker and industrial conglomerate, has suspended operations at its Long Son Petrochemicals (LSP) complex in order to cope with high production costs and the impact of a downturn in the global petrochemical market.

The suspension, slated to last for at least six months, began in mid-October, only roughly two weeks after LSP commenced commercial operations on Sept 30, with a production capacity of 74,000 tonnes.

A resumption of operations will mainly depend on the spread, according to SCG.

The petrochemical complex uses naphtha, which is a product of fossil fuels, as a key raw material to produce high density polyethylene (HDPE), but the prices of naphtha are expensive.

"The spread between naphtha and HDPE prices is US$300 per tonne because of a slowdown in the global petrochemical market," said Sakchai Patiparnpreechavud, chief executive and president of SCG Chemicals. "If the spread increases to $400 per tonne, we will consider resuming operations at LSP."

The suspension does not mean SCG Chemicals will stop investing in this petrochemical complex, he said.

SCG Chemicals plans to upgrade LSP, enabling it to use ethane, a colourless, odourless, gaseous hydrocarbon, as a raw material because it is cheaper than naphtha.

Mr Sakchai said the company will spend $700 million on the new investment, especially to build an ethane storage facility.

#technip  #scg  #siamcementgroup  #longson  #naphtha  #lpg  #steamcracker  #ethylene  #propylene  #butadiene  #olefins  #hdpe  #ethane  #storagefacility 

The Mass Balance of Joffre chemical site has been completed, which also includes onsite INEOS LAO plant, the onsite DOW-Nova Ethane Cracker E3 JV and ethylene shipment to nearby DOW Prentiss site from the E3 plant.

#dow  #nova  #canada  #steamcracker  #ethylene  #polyethylene  #unipol  #sclairtech  #technip