Petrochemical producer Borouge grows China presence

Opens new facility Abu Dhabi company's market strategy on petrochemicals Daniel Bardsley Foreign correspondent BEIJING // Abu Dhabi's principal petrochemical producer has further increased its presence in China as part of a strategy to corner a piece of the fastest-growing market for plastics and chemicals. Borouge, which is majority owned by the Abu Dhabi National Oil Company (ADNOC), yesterday launched a marketing and sales company in Beijing. The venture was announced just five months after the company opened a compounding facility in Shanghai and four months after it revealed it would build a second Chinese factory in Guangzhou.

The company is looking to increase sales of compounded plastics used in China's car and white goods manufacturing sectors. "China is clearly an important market for Borouge and our ongoing investments reflect our commitment to a long-term partnership with our customers, the region and the Chinese plastics industry," said Rashed al Shamsi, the chairman of Borouge. China last year became the world's largest car producer and first-half sales this year are up 47 per cent compared with the same period last year.

Patrick Chovanec, an associate professor in the school of economics and management at Tsinghua University in Beijing, said much of China's "import boom" this year was in raw materials for manufacturing rather than finished products for consumers. He said for "value-added" manufacturing, such as the car industry, China would continue to grow in importance, even as some low-cost manufacturing moved to countries such as Vietnam.

"China aspires to be the automobile manufacturing centre for the world - they have the aspiration to be the new Detroit," he said. Borouge is not alone among petrochemical producers in its aggressive approach to the Chinese market. Saudi Basic Industries Corporation, the Middle East's largest publicly traded company, saw profits triple to US$1.34 billion (Dh4.92bn) in the second quarter of this year, helped by surging demand for petrochemical products in China.

The company began production at a joint venture with the local company Sinopec this year. Kuwait Petroleum Corporation is building a separate $8.7bn refinery and petrochemical complex in partnership with Sinopec, the Chinese petrochemicals giant. Borouge, a joint venture between ADNOC and the Austria-based Borealis, itself part-owned by Abu Dhabi Government-linked interests, has its manufacturing headquarters in the UAE capital while its marketing arm is based in Singapore. As well as expanding production facilities in China, Borouge is growing manufacturing capacity at its base in Ruwais, Abu Dhabi.

Production there has tripled this year to two million tonnes as the company develops its Borouge 2 facilities and is set to more than double again by 2014 as further investments are made. Much of this growth in production is aimed at China, which is becoming the largest market in the world for polyolefins, the polypropylene and polyethylene products Borouge makes. About half of the Borouge 2 production will be sent to China, where the company has offices in Beijing, Shanghai, Guangzhou and Hong Kong. Borouge's $70 million plant in Shanghai takes raw materials from the company's UAE facilities and, by adding further substances, creates compounded plastics in pellet form used in the manufacture of plastic components such as car dashboards and interior body panels.

Borouge has said it may build a factory in northern China. It also has a distribution centre in Shanghai that can process 600,000 tonnes of material annually, as well as centres in Guangzhou and Singapore designed for half this amount. business@thenational.ae