Russia's Sibur develops mutually beneficial partnership with China

Russia's largest petrochemical company, SIBUR, has further expanded its cooperation with China this year.

The company has transitioned to conducting most payments with Chinese customers in yuan and set up product delivery to different regions of the country. Also, SIBUR plans to supply China with maleic anhydride (MAN), which is used to make synthetic fibers for pharmaceuticals and fiberglass plastics.

In addition, SIBUR and Sinopec are continuing their joint project to build the Amur Gas Chemical Complex, a polyethylene and polypropylene production facility in the Russian Far East.

China is one of the world's main consumer of polymers and remains the world's leading importer of polyethylene and polypropylene.

A vast number of daily use items are made of plastic materials, known as polymers. Two of the most popular types of polymers are polyethylene and polypropylene, accounting for a global production of more than $200 billion (1.3 trillion yuan) per year. Polyethylene is used to make plastic bags, food packaging and cosmetic tubes. Polypropylene is used to make stronger and more durable products, including parts for household appliances, car bumpers and plastic furniture.

SIBUR, has emerged as a reliable partner for China in the supply of these raw materials. SIBUR currently ships about 100,000 tons of products – including polyethylene, polypropylene, and synthetic rubbers used to make automobile tires – to Asian countries each month. SIBUR is increasing its supply to Asia by redirecting some of its exports from Europe, which has ceased its purchases of polymers and chemical products from Russia.

China accounts for approximately 80% of SIBUR's total exports, according to Pavel Lyakhovich, managing director of SIBUR. But more than "dumping" its products on the Chinese market, SIBUR has developed a mutually beneficial strategic partnership with China.

In 2015-2016, Sinopec and the China Silk Road Fund acquired stakes in SIBUR. Three years ago, when SIBUR launched its flagship production facility – the $9 billion ZapSib petrochemical plant in Western Siberia – Sinopec became the official distributor of the plant's polyethylene products on the Chinese market. The plant itself was built with the help of workers from China.

Russia and China have continued their cooperation, with trade turnover between the two countries increasing by a third to the equivalent of $172 billion in 11 months of 2022 under the circumstance of global challenges, according to a report on December 7 from Kommersant, a nationally distributed daily newspaper on politics and business published in Russia.

China is currently a net importer of polymers, but market analysts believe that China may become a net exporter of it in the future. At the same time, partnership with SIBUR remains in demand in China due to geographical proximity.