MOSCOW (MRC) -- Chemical giant BASF said on Monday it had signed a memorandum of understanding (MoU) with China's Sinopec Corp to build a steam cracker in east China, the second major investment pledged by the German firm in four months, as per Reuters.
China, the world's top chemicals consumer, is allowing greater access by global majors and local independents to its massive chemicals market to feed plastics, coatings and adhesives to the fast-growing consumer electronics and automotive sectors, as well as polyesters for clothing.
According to the MoU, BASF-YPC, the German group's joint venture with Sinopec in Nanjing, will invest in a 50 percent stake in the new cracker. SINOPEC Yangtzi Petrochemical (YPC) will take the other 50 percent.
"This additional investment into a new steam cracker and the expansion of our BASF-YPC joint venture in Nanjing underline the strong partnership between Sinopec and BASF and the commitment to our customers in China," BASF Chief Executive Martin Brudermueller said.
BASF said the new steam cracker will have an annual capacity of one million tonnes of ethylene, a building block for plastics, rubber and synthetic fibre. The group declined to disclose financial details.
A joint venture consisting of French oil group Total , Borealis and NOVA Chemicals last year said it would spend USD1.7 billion on an ethane steam cracker at Port Arthur, Texas, with a similar capacity.
In July, BASF landed a preliminary deal to build China's first wholly foreign-owned chemicals complex in Guangdong, worth some USD10 billion in investment to 2030, aided in part by trade tensions between Beijing and Washington.
The German group made 22 percent of sales in the Asia-Pacific region last year, its annual report shows. It does not break out Chinese numbers.
MRC