chemicals industry

Who's Afraid of a Chinese Giant?

China’s ChemCorp in talks to buy into Pirelli – sources
Soon to be part of a big friendly Chinese chemicals giant? Source: Bloomberg [M]

Everything that happens in China sounds powerful and massive – think mega-cities, mega-markets and mega-corporations – and now, a Chinese chemical giant is in the making.

The government’s industrial policy is driven by size, power and the desire to create new national champions. Though officially denied, this year, we will see a mega-merger between China’s two largest chemical groups, Chemchina and Sinochem according to financial and industry circles.

Marrying the two state-controlled producers would make a company with more than €100 billion ($108.7 billion) in sales, which would displace Germany’s BASF as global leader. The colossus would be involved in many sectors of the industry, from oil refineries and basic chemicals to special products. It’s good news for China: No other country consumes as much in chemicals and beyond that, the government hopes many of its major state-owned companies will come to play a leading role on the world market.

Unsurprisingly, some western chemical companies are scared, including in Germany. Together, Chemchina and Sinochem would be a powerful competitor able to shake up the industry.

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