In This Article:
* China's 1st ethane-to-ethylene plant started by SP Chemicals
* Zhejiang Satellite in term ethane deal with Energy Transfers
* British chemical firm INEOS supplies SP Chemicals - analyst
* Zhejiang Satellite also invests in Gulf coast export terminal
* U.S. ethane under 5% trade war tariff (Adds analyst comment; details)
By Chen Aizhu
SINGAPORE, Aug 29 (Reuters) - A large Chinese chemical producer has won regulatory approval to start building a 30 billion yuan ($4.2 billion) petrochemical complex in east China to process ethane from the United States, a company official said on Thursday.
Zhejiang Satellite Petrochemical Co Ltd's plant will be the second China-based petrochemical facility aiming to cash in on cheap and abundant U.S. ethane unlocked by the shale revolution in North America, analysts said.
The approval from the Jiangsu provincial government in early August comes amid an escalating trade war between Beijing and Washington, which led to a tariff being imposed on U.S. crude oil for the first time last week.
China imposed an extra 5% tariff on ethane last September, taking total import duties to 7%. Even so, ethane from U.S. shale gas offers much fatter margins for producers of ethylene than conventional plants that process naphtha into ethylene, said Kelly Cui, senior analyst with Wood Mackenzie.
The United States is the world's only source of an abundant surplus of the natural gas liquid, analysts said.
Last week, Singapore's SP Chemicals started a 650,000 tonnes per year (tpy) ethylene plant in Taixing in Jiangsu province that partly processes U.S. ethane supplied under a long-term agreement, according to local media and analysts.
"This is the first entirely gas-based cracker to begin operating in China and also the first to import U.S. ethane as a feedstock," said Woodmac's Cui.
Zhejiang Satellite will start construction in September on a 1.25 million tonnes per year (tpy) ethylene plant in Lianyungang in Jiangsu province, Ding Liping, an investor relations officer, told Reuters by phone.
"This is the company's phase-one investment for a total of 2.5 million tonnes per year ethylene production facilities that will process fully U.S. ethane," said Ding, adding that construction was expected to take about a year.
The company, headquartered in Jiaxing in east China's Zhejiang province, will then begin an expansion program to double output to 2.5 million tpy, she said.
Zhejiang Satellite, with a market capitalization of 14 billion yuan ($1.97 billion), is China's largest producer of acrylic acid, a chemical used in making paints and wrapping tapes, where demand has grown sharply due to e-commerce.