UAE’s Borouge unfazed by China slowdown as it unveils plans for new plant

Chemicals maker is interested in linking up with the right partners in the Asian country, its chief executive says

The Borouge 4 plant, which is still under construction, in Abu Dhabi. Pawan Singh / The National

Abu Dhabi chemicals maker Borouge expects a “bright future” for the company in China despite the current weakness in the country’s large manufacturing sector, its chief executive has said.

Borouge, a joint venture between UAE state energy company Adnoc and Austrian chemicals producer Borealis, is “resilient” to the challenges around the Chinese economy, Hazeem Al Suwaidi told The National in an interview on Wednesday.

The company is interested in investing in the Asian country by linking up with the “right” entities and providing solutions that are different from those offered by other producers in China, he said.

Borouge mostly produces polyolefins, which have a broad spectrum of end-use applications, from hard plastics such as sheets and pipes to softer products such as films, bags and bubble wrap.

China, which accounts for about 30 per cent of Borouge’s revenue, is the world’s top consumer of petrochemicals.

“Every market has its own strengths and weaknesses … [you] cannot take China out of the equation,” Mr Al Suwaidi said.

China’s post-coronavirus economic surge lost steam last year, and a continuing housing market crisis, weak domestic demand and a trend of nearshoring are expected to weigh on its manufacturing industry this year.

The country’s second-quarter gross domestic product rose by 4.7 per cent annually, China’s National Bureau of Statistics said last week, lower than the 5.1 per cent growth expected in line with a Reuters poll.

“We see differently. We are able to deliver and are manoeuvring very resiliently around the economic challenges and we definitely see a very bright future for us in China,” Mr Al Suwaidi said.

His remarks come after a consortium comprising Borouge, Adnoc and Borealis signed an agreement with Chinese companies to set up a polyolefins complex in the Fujian Province, which will have a capacity of 1.6 million tonnes a year.

The agreement signed with China’s Wanhua Chemical and its subsidiary, Wanrong New Materials, highlights the UAE's strengthening economic relations with China.

The Emirates is already China's largest trading partner in the Arab world, with trade and investment spanning many sectors, including crude oil, petrochemicals and artificial intelligence.

China is the UAE’s leading trade partner, with non-oil bilateral trade reaching Dh264.2 billion ($72 billion) in 2022.

Borouge operates three offices in China – in Guangzhou, Shanghai and Beijing. Globally, the company now has a presence with 14 international offices spread across key markets in the UAE, China, Egypt, India, Japan and other countries in South-East Asia.

The company also operates a compounding plant for speciality automotive services in Shanghai, which is now supplying products to electric vehicle makers in the country, Mr Al Suwaidi said.

Chinese car makers account for more than half of the EVs produced worldwide. Shenzhen-based BYD has rapidly gained market share, particularly in China, and overtook Tesla in terms of overall vehicle sales earlier this year.

“We have an excellent relationship with the majority of automotive manufacturers in China, and we will definitely build further on our positions in automotive in China,” Mr Al Suwaidi said.

Established in 1998, Borouge has a workforce of more than 3,100, with customers in more than 86 countries across Asia, the Middle East and Africa.

In May 2022, Borouge raised $2 billion through an initial public offering and was listed on the Abu Dhabi Securities Exchange.

The IPO, which was about 42 times oversubscribed, was the largest listing in Abu Dhabi at the time.

After its listing, Borouge was included in the FTSE Global Equity Index Series, which is used by investors globally to guide asset-allocation decisions and support portfolio construction.

Mr Al Suwaidi confirmed to The National in March that the company's $6.2 billion Borouge 4 project in Ruwais is “on track” to be completed by the end of 2025.

The plant will increase Borouge’s polyolefin production by about 30 per cent to 6.4 million tonnes.

It will also make the company's production operation at Al Ruwais Industrial City the world's largest single-site polyolefin complex.

The global polyolefin market, which was at $243 billion in 2022, is projected to reach about $604.94 billion by 2032, growing by 9.6 per cent annually, according to Precedence Research.

Asia, home to several large emerging economies, is the centre of consumption and production, with China the driving force in both polythene and polypropylene manufacturing.

Borouge could pursue more mergers and acquisitions, the company’s chief executive said.

“If you look at currently the biggest markets and the highest growth markets when it comes to petrochemicals … it's primarily the Asia-Pacific, the Indian subcontinent and so forth,” Mr Al Suwaidi said.

“We have been operating on the ground [in those markets] for the last 25 years.”