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[Petrochemical] Wanhua chemical, want to be the next BASF

[Petrochemical] Wanhua chemical, want to be the next BASF

August 14, 2019

on July 29, the American C en (Chemistry and Engineering) magazine published the 2018 globaltop50 global chemical industry. Wanhua chemical entered the list again with RMB 60.6 billion (about US $9.2 billion), ranking 37th, with sales increased by 14.11% over 2017

among the top 50 global chemical companies, Dow DuPont ranks first, with chemical sales of US $86 billion in 2018, followed by BASF with us $74.1 billion; The other Chinese chemical enterprises shortlisted are Sinopec (US $69.2 billion, ranking third), PetroChina (US $24.8 billion, ranking 12th), Syngenta (US $10.4 billion, ranking 31st), which shows the gold content coating in this list

Wanhua chemical plans to put into operation 1.1 million ton/year polyolefin projects in 2020, including 300000 ton/year polypropylene, 350000 ton/year HDPE and 450000 ton/year LLDPE. In addition, there has been news in the market that Wanhua chemical's 1million ton/year ethylene integration project has another phase II action. It seems that in the next few years, the State Intellectual Property Office of Wanhua chemical announced the list of the first batch of national intellectual property advantage enterprises, which intends to continue the investment rhythm of 10billion yuan per year. The strongest chemical enterprises in China are actively deploying polyolefins

in 2009, the controlling shareholder of Wanhua chemical acquired the famous borsodchem company in Hungary (boside chemical, the largest isocyanate producer in central and Eastern Europe) at a price of about 1.5 billion euros. This transaction has become the largest M & a project of China in central and Eastern Europe so far

after 10 years, Wanhua chemical restarted the pace of buying, buying, and buying

on the evening of July 30, Wanhua chemical announced that its wholly-owned overseas subsidiaries had spent 925 million yuan to acquire 100% of the equity of Swedish International Chemical

Swedish international chemical industry is mainly engaged in technology research, foreign technology licensing, engineering design related to technology licensing, technical consulting services, etc. it has its own technologies related to MDI, TDI, hydrogen peroxide, biochemical industry, etc. it is the only technology patentee willing to publicly transfer among the global enterprises with TDI and MDI isocyanate technology. The completion of the wholly-owned acquisition of Swedish chemical by Wanhua chemical will mean that the listed company has taken another key step in terms of technological advantages

in the evening of July 30, Wanhua chemical announced that according to the agreement, Cornell will transfer 2250 shares (accounting for 75% of all issued shares) of Swedish International Chemical directly held by Cornell, and Euro American Energy Technology Co., Ltd. will transfer 750 shares (accounting for 25% of all issued shares) of Swedish International Chemical directly held by Cornell to Wanhua chemical (Hungary) Holding Co., Ltd. by agreement. The total transfer amount of the above equity is about the equivalent of RMB 925 million

for this acquisition, Wanhua chemical said that the main purpose is to loosen the oil return valve in order to optimize the company's R & D capacity in Europe and promote and enhance the company's global industry competitiveness. It is reported that at present, MDI and TDI are basically monopolized by several oligarchs, and Swedish International Chemical is the only one of these giants willing to publicly transfer technology. Wanhua chemical's wholly-owned acquisition of Swedish International Chemical is undoubtedly conducive to consolidating its technological advantages in the domestic market

Wanhua is divided into three parts by product category:

1 Polyurethane series

mdi is the most important and irreplaceable raw material for manufacturing polyurethane polymer materials. Due to its excellent performance, polyurethane can be made into soft, semi-rigid and hard foamed plastics, elastomers (polyurethane elastomers are referred to as TPU), paint coatings, adhesives, sealants, synthetic leather coating resins, elastic fibers, etc., which are widely used in automobile manufacturing, refrigerator manufacturing, transportation, civil construction, footwear Synthetic leather, textile, electromechanical, petrochemical, mining machinery, aviation, medical treatment, agriculture and many other fields

tdi and MDI are the main raw materials of polyurethane, but their subdivision uses are very different due to differences in structure and performance. Polymerized MDI is mainly used in polyurethane rigid foam and semi-rigid foam, and is used in thermal insulation materials, automotive accessories, and construction industries. TDI is mainly used in soft polyurethane foam, furniture padding, sound-absorbing materials, toys and other industries

Wanhua chemical currently has a MDI capacity of 2.1 million tons and a TDI capacity of 550000 tons

according to the 2018 annual report, polyurethane accounted for 51.7% of the company's total revenue and 76% of its profit

at present and in the future, MDI is still the main source of profit for Wanhua chemical. Expanding other businesses can smooth the periodicity of performance. In short, the corresponding models can be selected according to the above three points. However, whether it is petrochemical or fine chemical new materials, it is still cyclical, so Wanhua chemical cannot achieve the same constant growth rate as Moutai and Haitian

however, Wanhua chemical relies on its technological advantages and scale advantages to make its production costs lower than those of its international peers (BASF, kestrang, Huntsman, Dow), so that its peers can make small profits and big profits, and its peers can make losses and profits. Even if the MDI is depressed, Wanhua chemical is still able to maintain an annual net profit of more than 10billion yuan

2. Petrochemical sector

the petrochemical sector of Wanhua chemical started construction in Yantai Industrial Park in 2014, and is an important carrier and pillar of the company's transformation to a comprehensive chemical strategy. The main content is: po/ae project. Through this project, Wanhua chemical has built a complete C3 and C4 industrial chain

in 2017 (po/ae), the project capacity utilization rate was 98%; In 2018 (po/ae), the project capacity utilization rate was 94.5%

in July 2017, the company conducted the second EIA publicity for the polyurethane industrial chain integration ethylene project. The proposed project is located in Wanhua Yantai Industrial Park in Yantai Economic and Technological Development Zone, with a total investment of 17.8 billion yuan

the project will build a total of 6 production units:

1, 1million tons/year ethylene unit

2. 400000 T/a PVC plant; (PVC)

3, 150000 T/a ethylene oxide plant; (EO)

4, 450000 T/a linear low density polyethylene plant; (LLDPE)

5, 30/65 propylene oxide/styrene unit; (po/sm)

6, 50000 T/a butadiene plant

according to the 18th annual report, the petrochemical sector accounts for 9.53% of the company's total revenue and 8.7% of its profit

in order to ensure the supply of raw materials, the company has signed a long-term cooperation agreement with mainstream LPG suppliers in the Middle East. Among them, only in the ten-year contract signed with Abu Dhabi oil company last November, it was agreed that Wanhua chemical would purchase 1million tons of petroleum gas every year

throughout 2018, the company purchased 3.8 million tons of LPG, including 1.71 million tons for its own use and 2.09 million tons for trade. The so-called trade is to sell it to others. The profit margin of this part of business is usually low, which is the reason why the profit of Wanhua chemical and petrochemical business is only a single digit. If it is produced as raw materials from home, the profit margin will be higher

there are storage tanks, docks and long-term stable sources of goods. The company wants to establish an LPG fleet to further ensure supply, which is very clear in logic

on July 23, Abu Dhabi National Oil Company (ADNOC) and China Wanhua chemical signed a cooperation framework agreement and a joint venture agreement in Beijing. The relevant agreement is expected to amount to $12billion. It is reported that the agreement will require cooperation in the downstream industry of oil and gas, including LPG shipping

according to Reuters, this shipping joint venture will undertake the new construction plan and operation of two vlgc ships. The agreement is based on the earlier LPG joint venture signed by both parties in February this year

for Wanhua chemical, if it builds its own fleet, it can not only ensure supply, but also help reduce costs. The company has reduced the risk of LPG price fluctuation to the greatest extent by signing long-term contract price and futures hedging. If it can establish its own fleet, it can not only reduce the fluctuation of freight rate, but also control the arrival time of raw materials to the greatest extent. For chemical enterprises that cannot stop work easily, it is crucial to ensure the stable and sustainable supply of raw materials

the establishment of its own LPG fleet will improve the competitiveness of Wanhua chemical and petrochemical business. In the next few years, the petrochemical business is expected to become the largest business of Wanhua chemical, and its profit level will also be improved

3. Fine chemicals and new materials

after the company developed polyurethane business (core business) + petrochemical business (industry chain coverage business), Wanhua chemical continued to expand its industry chain, and the six business divisions were used to expand special chemicals and new materials. Special chemicals and new materials generally refer to sunrise industries with a wide variety, low market share, high gross profit margin and relatively rapid development in the future. The main products of these two sectors are TPU, PC, sap, PMMA and ADI

Wanhua chemical is the third TPU manufacturer in the world. At present, the company's production capacity has reached 120000 tons/year

Wanhua chemical took 5 years. Through independent research and development of sap, the company's current production capacity has reached 60000 tons/year

the three major application fields are glass assembly industry, automobile industry and electronics and electrical appliance industry. At present, the company's production capacity has reached 200000 tons/year

PMMA (polymethylmethacrylate) is widely used in construction, advertising, transportation, medicine, industry, textile and other industries. At present, the company's PMMA capacity has reached 80000 tons/year, and the MMA capacity has reached 50000 tons/year

adi, including HDI, IPDI and hmdi, are special isocyanates, which are mainly produced to improve the shortage of Aromatic isocyanates. Their downstream applications are mainly in the water-based coating industry. Wanhua has broken the monopoly of Europe and the United States and become a competitive ADI supplier

according to the 2018 annual report, fine chemicals and new materials account for 9.5% of the company's total revenue and 8.7% of its profit

Wanhua chemical moat

(1) technological innovation Wanhua's technological innovation

expanded from the initial MDI manufacturing industry to polyurethane, petrochemical, fine chemicals and new materials. Continue to extend upstream and downstream. Form cost advantages for peers, and expand the industrialization of nylon 12 and citral in the future. In 2018, the R & D of Wanhua chemical reached 1.6 billion yuan, and the R & D investment in the past five years reached 5billion yuan

(2) park, scale, integration, refinement, high-end

Wanhua will adhere to park, scale, integration, refinement, high-end. Wanhua's seventh generation MDI technology may achieve a single scale of 1.5 million tons. The problem of product simplification has always been the situation that Wanhua wants to change. At present, Wanhua's main research and development direction has been on high value-added products and refined products in the downstream of petrochemical industry. It is predicted that after 5 or 6 years, the proportion of operating revenue: polyurethane, petrochemical and new materials is 4:4:2. Profits are three pillars. The growth of profits will increase with the scale of revenue

(3) good culture

Wanhua's vision is to create a world-class chemical new material company that is respected by the society, makes employees proud, and inspires, attracts and trains talents with excellent corporate culture, stimulates employees' potential with lofty and clear goals, points out the direction for employees with dedicated and sustainable development strategies, and creates a fair and just cultural environment with efficient management and equal communication

in continuous practice, Wanhua has made the corporate culture deeply rooted in the hearts of the people, ensuring the engagement of employees and the stability of talents

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