H1N1-A vaccine approved in China
The world’s first H1N1-A flu vaccine was approved in China and has been administered to children, the elderly and relevant professions such as doctors and quarantine implementers. On 3 September, China’s State Food and Drug Administration (SFDA) announced that it had granted a new drug license to Beijing Sinovac to produce its H1N1-A vaccine Panflu. Panflu only needs one injection to become effective while many experts believed at least two dosages would be needed to protect against H1N1-A flu. The fact that only one shot is needed should improve availability of the vaccine.
Besides Sinovac, Henan Province-based Hualan Biotechnology also received approval for its H1N1-A vaccine. Chinese Health Minister Chen Zhu said at a press conference on 8 September that China plans to vaccinate 65 million people by year end. But he stressed that production capacity is far from enough to accommodate China’s population of 1.3 billion. By 7 September, China had diagnosed a total of 5592 H1N1-A infections, with 3852 having recovered. No deaths have been reported so far.
Chinese top 500
State-owned Sinopec and China National Petroleum Corp (CNPC, parent firm of PetroChina) secured the first two positions in the newly released annual list of China’s top 500 companies announced on 5 September. In 2008, Sinopec and CNPC recorded 1.46 trillion (US$215 billion) and 1.27 trillion yuan in revenues respectively. Besides the two petrochemical giants, another State-owned chemical conglomerate, Sinochem, was also ranked into the top 10 Chinese firms in the list. The State Grid, China Mobile, three banks and one insurance firm share the remaining seven positions in the top 10.
Heavy and chemical industries have dominated the newly ranked top 500 in China, whose total profit was US$170.6 billion in 2008, surpassing that of the US top 500, whose total profit was US$98.9 billion. While the financial crisis is one factor enabling China’s 500 to topple their US counterparts, most of China’s top 500 are State-owned firms and there has been criticism that their huge profits mainly come from monopolies.
Polysilicon supplies to be curbed
On 8 September, the Ministry of Industry and Information Technology (MIIT) released a circular, stressing the need to curb the overexpansion of seven industries, including steel, cement and polysilicon. According to the ministry, measures will include strictly limiting industry access, enhancing environmental regulation, restricting the land available for polysilicon plants, and selective lending policies to control the overdeveloped industries.
Meanwhile, wind turbines and polysilicon have been cut off the latest list of preferred imports released by the National Development and Reform Commission (NDRC) on 1 September. Products and technologies ranked on the list enjoy low tariff rates and receive interest subsidies from the government. NDRC said that wind turbines were cut because China had the technology itself, while polysilicon lost its place because of China’s overproduction of the material for photovoltaic cells. Polysilicon output in 2008 was 4100 tonnes but is expected to surge to almost 10 times that by the end of 2009.
Chemical firm eyes overseas assets
Yantai, Shandong Province-based fine chemicals firm Wanhua is reportedly looking to acquire Hungarian chemical firm BorsodChem. With methylene diphenyl isocyanate (MDI) as its major product, BorsodChem has developed businesses across Europe. In 2006, UK private fund Permira acquired the Hungarian firm for €1.6 billion (US$2.35 billion), but BorsodChem now has substantial debts and has been undergoing restructuring. Wanhua is reportedly negotiating with Permira to purchase the company and has already obtained BorsodChem shares worth €130 million.
While Chinese oil makers like Sinopec and PetroChina have widely purchased assets worldwide, overseas expansion of Chinese fine chemical makers is still rare.
Wanhua did not confirm the news. With a sales volume of 7.7 billion yuan and 1.6 billion yuan profit in 2008, the company is a major supplier of MDI in the Chinese market, accounting for 36 per cent of total supplies. But its dominance in Chinese MDI market is being challenged by Bayer with its newly added capacity in Shanghai, and by BASF’s planned production in Chongqing. Analysts say that the acquisition of BorsodChem could allow Wanhua to achieve international expansion.
PetroChina explores Canadian oil sand
On 1 September, Canadian firm Athabasca Oil Sands announced that PetroChina had agreed to purchase 60 per cent exploration rights of two oil sand projects from the company for US$1.7 billion. The sites are thought to hold around the equivalent of five billion barrels of oil and the deal is likely to be finalised by 31 October. The two projects, located in the oil-rich Canadian province of Alberta, could offer a daily output up to 500,000 tonnes of oil.
Chinese oil firms have previously tapped oil sand projects in Canada on a smaller scale. In 2005, China National Offshore Oil Corp (CNOOC) acquired a 17 per cent share of Canadian oil firm MEG for Can$150 million (US$140 million), to tap the latter’s oil sand fields. The same year, Sinopec purchased a 40 per cent share of Canadian firm Synenco to form an oil sand facility with a daily output of 100,000 barrels.
However, while oil sand can be an important supplement to national energy security, its costs are high due to the effort required to remove impurities like sand and asphalt. This has made analysts question the profitability of such projects. however, it is widely believed oil sand exploration could be profitable when the international oil price reaches US$80 per barrel.
CNOOC acquired sea chemicals maker
China National Offshore Oil Corp (CNOOC), China’s third largest oil maker, has freely acquired a 51 per cent share of Haihua Company owned by Weifang municipal government in Shandong Province. Haihua is a leading local chemical company, which is focused on salt chemicals, coal chemicals, and petrochemical productions. In the newly released China top 500 companies, Haihua is ranked 250. Oil refining has been the most profitable of Haihua’s sectors, but the poor availability of crude oil and oil supplies has meant that its three million-tonne capacity cannot be fully satisfied. With cooperation from CNOOC, availability of materials and sales chains for Haihua can be improved, says the Weifang government.
Following the completion of the agreement, CNOOC and Haihua plan to build capacity for salt chemicals and petrochemicals.
For CNOOC, the deal will increase its refining capacity in the Yellow River Delta in east China to between 15 million and 20 million tonnes by 2015, and will allow the firm to obtain a finished oil wholesale license and several gasoline stations. Most of China’s gasoline stations are controlled by Sinopec and PetroChina, and cooperation with Haihua may help CNOOC expand its share of the finished oil product market.