06:16 AM | April 5, 2021 | Kartik Kohli
Sinopec–SK Wuhan Petrochemical Co. (Wuhan, China), a joint venture (JV) between Sinopec and SK Global Chemical (Seoul, South Korea), a subsidiary of SK Innovation, plans to complete expansion of petrochemical facilities at Wuhan and start full operation in the second half of 2021. The company completed the extension of ethylene production facilities in December last year, and successfully carried out the initial operation. These facilities are maintaining an operating ratio of around 90%. Polypropylene (PP) and butadiene facilities have been completed in March and are in operation without major issues, says SK Innovation.
When the expansion of petrochemical production facilities is completed in the second half of 2021, Sinopec–SK Petrochemical will secure production capacity of 3 million metric tons/year (MMt/y) of petchem products, including 1.1 MMt/y of ethylene, 900,000 metric tons/year polyethylene (PE), 300,000 metric tons/year of PP, and 19,000 metric tons/year of butadiene. “This is approximately 40% increase from 2.2 MMt/year of petchem production capacity Sinopec–SK Petrochemical used to have.”
SK Innovation says that ethylene markets have shown an upturn trend in prices, boosted by the expectation for recovery after the global supply of COVID-19 vaccines, and supply shortage caused by the stoppage of massive petchem facilities after the cold snap in Texas in February.
Ethylene prices have plummeted to $399/metric ton in April 2020, and regained strength to $1,133/metric ton in March 2021, it adds.
SK Innovation says that chairman Chey Tae-won of SK Group regards Sinopec–SK Petrochemical as one of the core businesses under the China Insider strategy, and the largest petchem joint project in the history of diplomatic ties with China since 1992.
Ever since the discussions for establishment began in 2006, Sinopec–SK Petrochemical overcame the difficulties of the global financial crisis in 2008 and was founded seven years later in October 2013, adds SK Innovation. SK Global Chemical and Sinopec invested a total of 3.3 trillion South Korean won ($2.9 billion) in the project. Sinopec holds a 65% stake in the JV and SK Global Chemical holds the rest.
The JV entity in 2019 acquired the Sinopec-owned 170,000 b/d Wuhan refinery in Hubei Province for about $1.9 billion. The deal will allow it to secure feedstocks to make petchem products and integrate refining and petchem operations at Wuhan. The transaction marked the first time a South Korean company has taken a direct ownership stake in a refinery in China.