ChemChina and Sinochem are negotiating on the new giant chemical company

Nov 7th, 2016

Sinochem and ChemChina are two Chinese state-owned chemical companies that want to build a new giant factory for the production of chemicals, fertilisers and petroleum products. This means that two businesses are planning to merge to create a company giant with revenues of about $100 billion a year. The central government of China is the one that suggested the merger in efforts aimed at reducing the number of companies in public ownership. Moreover, the government’s objective is to create larger and stronger companies that can become more competitive global players in the chemical industry. However, this merger has been reported only by anonymous sources. According to the words of one of the sources, the leaders of both companies had a meeting to discuss a potential merger.

The government has endowed Sinochem with the power to perform a leadership role in the merger with ChemChina. For this purpose, the companies have initiated a comprehensive study of the activities of each other companies, studying financial status and position in the market.

CEOs still do not advertise a possible merger. The Committee for the Control and Management of State Property of China (SASAC), which monitors the activities of public enterprises, has also left a question on the merger negotiations without comment.

However, if ChemСhina and Sinochem merge, the business will be one of the largest chemical associations of two national state-owned companies.