China's oil refining giants have invested billions of U.S. dollars in recent years to boost production of chemicals used in components for the renewable energy industry.
For example, China Petroleum & Chemical Corporation, or Sinopec, the top Chinese oil refiner, has invested in increased production of ethylene-vinyl acetate (EVA) and polyolefin elastomer (POE), Bloomberg reports.
EVA and POE are increasingly used in solar cell manufacturing and with the Chinese boom in solar power capacity installations, refiners are eager to tap into the soaring market.
China's installed solar capacity is expected to top 1 terawatt (TW) by the end of 2026, doubling from the expected capacity of 500 gigawatts (GW) at the end of this year, according to estimates from Rystad Energy. While it will have taken China 13 years to reach 500 GW of solar capacity, it will only need three more years to double it, the energy research firm said earlier this year.
With chemicals such as ethylene-vinyl acetate and polyolefin elastomer finding new applications in the solar cell manufacturing industry, Chinese refiners want to boost revenues from the surging clean energy manufacturing as the margins for those products are very high.
"EVA and POE are currently the most profitable products on ethylene lines," Teng Xiaofang, an analyst with industry consultant SCI99, told Bloomberg.
Sinopec has invested $5.3 billion (38 billion Chinese yuan) in 18 projects at one of its largest plants in Zhenhai, according to Bloomberg. The projects include three units to make the EVA and POE compounds. China's top refiner has also recently announced investments to make EVA and POE at its Guangdong plant and Maoming refinery, respectively.
Sinopec said in its third-quarter report that domestic demand for chemicals picked up with ethylene equivalent consumption up by 6.0% year-on-year between January and September.
In the first nine months of 2023, Sinopec's capital expenditure for the chemicals division was $5.53 billion (39.143 billion yuan), mainly for ethylene projects in Zhenhai and Tianjin Nangang.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More